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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE
ACT OF 1934
OR
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2021
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
OR
☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission File Number: 001-36515
MATERIALISE NV
(Exact name of Registrant as specified in its charter)
Not Applicable
(Translation of Registrant’s name into English)
Kingdom of Belgium
(Jurisdiction of incorporation or organization)
Technologielaan 15, 3001 Leuven, Belgium
(Address of principal executive offices)
Peter Leys, telephone +32 (16) 39 66 11, facsimile +32 (16) 39 66 00, Technologielaan 15, 3001 Leuven, Belgium
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class
American Depositary Shares, each representing one
Ordinary Share, no nominal value per share
Ordinary Shares, no nominal value per share*
Trading Symbol
MTLS
Name of each exchange on which registered
The Nasdaq Stock Market LLC
The Nasdaq Stock Market LLC
* Not for trading but only in connection with the registration of the American Depositary Shares pursuant to the requirements of the Securities and
Exchange Commission.
Securities registered or to be registered pursuant to Section 12(g) of the Act: None.
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None.
The number of outstanding shares of each of the issuer’s classes of capital or common stock as of December 31, 2021 was: 59,063,521 Ordinary Shares
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☒ No
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934. ☐ Yes ☒ No
Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such
files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company.
See the definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non accelerated filer
☐
☐
Accelerated filer
Emerging growth company
☒
☐
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected
not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of
the Exchange Act. ☐
†
The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its
Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that
prepared or issued its audit report. ☒
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP ☐
International Financial Reporting Standards as issued by the International Accounting Standards
Board ☒
Other ☐
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to
follow. ☐ Item 17 ☐ Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). ☐ Yes ☒ No
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. ☐ Yes ☐ No
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ITEM 1.
ITEM 2.
ITEM 3.
ITEM 4.
ITEM 4A.
ITEM 5.
ITEM 6.
ITEM 7.
ITEM 8.
ITEM 9.
ITEM 10.
ITEM 11.
ITEM 12.
ITEM 13.
ITEM 14.
ITEM 15.
ITEM 16A.
ITEM 16B.
ITEM 16C.
ITEM 16D.
ITEM 16E.
ITEM 16F.
ITEM 16G.
ITEM 16H.
ITEM 16I.
ITEM 17.
ITEM 18.
ITEM 19.
TABLE OF CONTENTS
Identity of Directors, Senior Management and Advisers
Offer Statistics and Expected Timetable
Key Information
Information on the Company
Unresolved Staff Comments
Operating and Financial Review and Prospects
Directors, Senior Management and Employees
Major Shareholders and Related Party Transactions
Financial Information
The Offer and Listing
Additional Information
Quantitative and Qualitative Disclosures About Market Risk
Description of Securities Other than Equity Securities
Defaults, Dividend Arrearages and Delinquencies
Material Modifications to the Rights of Security Holders and Use of Proceeds
Controls and Procedures
Audit Committee Financial Expert
Code Of Ethics
Principal Accountant Fees and Services
Exemptions from the Listing Standards for Audit Committees
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Change in Registrant’s Certifying Accountant
Corporate Governance
Mine Safety Disclosure
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Financial Statements
Financial Statements
Exhibits
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INTRODUCTION
Except as otherwise required by the context, references to (i) “Materialise,” “Company,” “we,” “us” and “our” are to Materialise NV and
its subsidiaries, (ii) “ACTech” are to ACTech Holding GmbH and its subsidiaries, which we acquired in 2017, (iii) “Engimplan” are to Engimplan
Engenharia De Implante Indústria E Comércio Ltda., in which we acquired a controlling interest in 2019 and in which we acquired the remaining
interest in 2020, making us Engimplan’s sole shareholder (through our Brazilian subsidiary), (iv) “Materialise Motion” are to Materialise Motion NV, a
joint venture we established in 2014 under the name “RSPrint Powered by Materialise” NV and in which we acquired the remaining interest in 2020,
together with substantially all of the assets of RSScan International NV, or RS Scan, making us Materialise Motion’s sole shareholder, and (v) “Link3D”
are to Link3D Inc., which we acquired an option to buy in 2021, which we exercised in 2022.
Our trademark portfolio contained 185 registered trademarks and 1 pending trademark application as of December 31, 2021. All other
trademarks or trade names referred to in this annual report are the property of their respective owners. Solely for convenience, the trademarks and trade
names in this annual report are referred to without the ® and ™ symbols, but such references should not be construed as any indicator that their
respective owners will not assert, to the fullest extent under applicable law, their rights thereto.
All references in this annual report to “U.S. dollars” or “$” are to the legal currency of the United States and all references to “€” or “euro”
are to the currency introduced at the start of the third stage of the European economic and monetary union pursuant to the treaty establishing the
European Community, as amended.
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
This annual report includes certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, concerning our business,
operations and financial performance and condition as well as our plans, objectives and expectations for our business operations and financial
performance and condition. Any statements that are not of historical facts may be deemed to be forward-looking statements. You can identify these
forward-looking statements by words such as “believes,” “estimates,” “anticipates,” “expects,” “plans,” “intends,” “may,” “could,” “might,” “will,”
“should,” “aims,” or other similar expressions that convey uncertainty of future events or outcomes. Forward-looking statements appear in a number of
places throughout this annual report and include statements regarding our intentions, beliefs, assumptions, projections, outlook, analyses or current
expectations concerning, among other things, our intellectual property position, research and development projects, acquisitions, results of operations,
cash needs, spending of the remaining net proceeds from our initial public offering, capital expenditures, financial condition, liquidity, prospects, growth
and strategies, regulatory approvals and clearances, the markets and industry in which we operate and the trends and competition that may affect the
markets, industry or us. In particular, under “Item 5. Operating and Financial Review and Prospects—D. Trend Information” of this annual report and in
the notes to our audited consolidated financial statements, we discuss, based on our current assessment of the ongoing coronavirus disease 2019, or
COVID-19, pandemic and the current armed conflict in Ukraine, how our business, results of operations, and financial condition could be impacted
during the year 2021 and beyond.
By their nature, forward-looking statements involve risks and uncertainties because they relate to events, competitive dynamics and
industry change, and depend on economic circumstances that may or may not occur in the future or may occur on longer or shorter timelines than
anticipated. Although we believe that we have a reasonable basis for each forward-looking statement contained in this annual report, we caution you that
forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that are in
some cases beyond our control. All of our forward-looking statements are subject to risks and uncertainties that may cause our actual results to differ
materially from our expectations.
Actual results could differ materially from our forward-looking statements due to a number of factors, including, without limitation, risks
related to:
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our ability to enhance and adapt our software, products and services to meet changing technology and customer needs;
fluctuations in our revenue and results of operations;
impacts on our business, financial conditions and results of operations from the current armed conflict in Ukraine;
impacts on our business, financial condition and results of operations from the current global health crisis related to the COVID-19
pandemic;
our ability to operate in a highly competitive and rapidly changing industry;
our ability to adequately increase demand for our products and services;
our collaborations, in-licensing arrangements, joint ventures, strategic alliances or partnerships with third parties;
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our ability to integrate acquired businesses or technologies effectively;
our dependence upon sales to certain industries;
our relationships with suppliers;
our ability to attract and retain employees and contractors;
any disruptions to our service center operations, including by accidents, warfare, natural disasters or otherwise;
our ability to raise additional capital on attractive terms, or at all, if needed to meet our growth strategy;
our ability to adequately protect our intellectual property and proprietary technology;
our international operations;
our ability to comply with applicable governmental laws and regulations to which our products, services and operations are subject;
and
other risk factors as set forth under “Item 3. Key Information – D. Risk Factors.”
Any forward-looking statements that we make in this annual report speak only as of the date of such statement, and we undertake no
obligation to update such statements to reflect events or circumstances after the date of this annual report or to reflect the occurrence of unanticipated
events. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance,
unless expressed as such, and should only be viewed as historical data. You should, however, review the factors and risks we describe in the reports we
will file from time to time with the U.S. Securities and Exchange Commission, or the SEC, after the date of this annual report. See “Item 10. Additional
Information – H. Documents on Display.”
You should also read carefully the factors described in “Item 3. Key Information – D. Risk Factors” and elsewhere in this annual report to
better understand the risks and uncertainties inherent in our business and underlying any forward-looking statements. As a result of these factors, we
cannot assure you that the forward-looking statements in this annual report will prove to be accurate. Furthermore, if our forward-looking statements
prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not
regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified
timeframe, or at all.
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ITEM 1.
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not applicable.
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PART I
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ITEM 2.
OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
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ITEM 3.
KEY INFORMATION
A.
[Reserved]
B.
Capitalization and Indebtedness
Not applicable.
C. Reasons for the Offer and Use of Proceeds
Not applicable.
D. Risk Factors
Summary of Risk Factors
Risks Relating to the COVID-19 Pandemic
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The ongoing COVID-19 global health crisis adversely impacted our business and results of operations in 2021 and may continue to
have a material adverse impact on our business, results of operations, financial condition, cash flows or liquidity.
Risks Relating to Our Business
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We may not be able to maintain or increase the market share or reputation of our software and other products and services that they
need to remain or become a market standard.
We may not be successful in continuing to enhance and adapt our software, products and services in line with developments in
market technologies and demands.
The research and development programs that we are currently engaged in, or that we may establish in the future, may not be
successful and our significant investments in these programs may be lost.
Existing and increased competition may reduce our revenue and profits.
We rely on collaborations with users of our additive manufacturing solutions to be present in certain large-scale markets and,
indirectly, to expand into potentially high-growth specialty markets. Our inability to continue to develop or maintain these
relationships in the future could harm our ability to remain competitive in existing markets and expand into other markets.
Our revenue and results of operations may fluctuate.
Demand for additive manufacturing generally and our additive manufacturing software solutions, products and services in particular
may not increase adequately.
We are dependent upon sales to certain industries.
If our relationships with suppliers, including with limited source suppliers of consumables, were to terminate or our manufacturing
arrangements were to be disrupted, our business could be adversely affected.
The dominant software subscription model in the industrial sector is changing, and we may not be successful in developing a cloud-
based platform to offer our software.
We depend on the knowledge and skills of key personnel throughout our entire organization, and if we are unable to retain and
motivate them or recruit additional qualified personnel, our operations could suffer.
We may need to raise additional capital from time to time in order to meet our growth strategy and may be unable to do so on
attractive terms, or at all.
As a result of the armed conflict in Ukraine, we have ceased our operations in our office in Kyiv.
Our international operations subject us to various risks, and our failure to manage these risks could adversely affect our results of
operations.
We may engage in acquisitions or investments that could disrupt our business, cause dilution to our shareholders and harm our
financial condition and results of operations.
We may enter into collaborations, in-licensing arrangements, joint ventures, strategic alliances or partnerships with third parties that
may not result in the development of commercially viable products or the generation of significant future revenue.
Failure to comply with applicable anti-corruption and trade sanctions legislation could result in fines, criminal penalties and an
adverse effect on our business.
Errors or defects in our software or other products could cause us to incur additional costs, lose revenue and business opportunities,
damage our reputation and expose us to potential liability.
We rely on our information technology systems to manage numerous aspects of our business and customer and supplier
relationships, and a disruption of these systems could adversely affect our results of operations.
A breach of security in our products or computer systems may compromise the integrity of our products, harm our reputation, create
additional liability and adversely impact our financial results.
If our service center operations are disrupted, sales of our 3D printing services, including the medical devices that we print, may be
affected, which could have an adverse effect on our results of operations.
Risks Related to Our Materialise Medical Segment and Regulatory Environment
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Our medical business, financial condition, results of operations and cash flows could be significantly and negatively affected by
substantial government regulations.
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Risks Related to Our Intellectual Property
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If we are unable to obtain patent protection for our products or otherwise protect our intellectual property rights, our business could
suffer.
We cannot predict the outcome of an arbitration proceeding in which we are involved.
Risks Related to the American Depositary Shares (ADSs)
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We do not expect to be a passive foreign investment company for U.S. federal income tax purposes; however, there is a risk that we
may be classified as a passive foreign investment company, which could result in materially adverse U.S. federal income tax
consequences to U.S. investors.
Risks Relating to the COVID-19 Pandemic
The ongoing COVID-19 global health crisis adversely impacted our business and results of operations in 2021 and may continue to have a
material adverse impact on our business, results of operations, financial condition, cash flows or liquidity.
The worldwide COVID-19 pandemic has negatively impacted the global, U.S. and E.U. economies, disrupted consumer spending and
global supply chains, and created significant volatility and disruption of labor and financial markets since the first quarter of 2020. In response to the
ongoing COVID-19 pandemic, governments worldwide have, at various times, closed business, restricted travel, implemented emergency quarantines,
imposed social distancing measures and adopted testing and vaccine mandates, and businesses and individuals have reduced travel, cancelled meetings
and events and implemented work-from-home policies, which have caused significant disruption to the global economy and normal business operations.
The ongoing COVID-19 pandemic may continue have broader macroeconomic implications, including a decrease in or halt to economic growth, the
effects of which could be long lasting.
In an effort to protect the health and safety of employees, we, and many of our customers, partners, suppliers and other counterparties,
currently require that employees work, at least partially, from home and restrict travel as much as possible, which affects, among other things, our and
their ability to engage in production and research and development activities, to attend industry events and to engage in commercial visits. In particular,
during the first half of 2021, the economic downturn resulting from the COVID-19 pandemic caused a significant reduction in demand for services,
production and investments, and affected our global operations negatively. In the event we or our customers, partners, suppliers and other counterparties
continue to maintain, expand or re-introduce all or certain of these restrictions and measures, we may suffer further disruptions to business operations,
including the closure of manufacturing facilities, warehouses and logistics supply chains worldwide. Furthermore, the COVID-19 and the responses
thereto could have a range of other effects on us. For example, the implementation of business continuity plans in a fast-moving public health
emergency could have an adverse effect on our internal controls (potentially giving rise to significant deficiencies or material weaknesses) and increase
our vulnerability to information technology and other systems disruptions.
In particular, during the first half of 2021, the ongoing COVID-19 pandemic negatively affected the results of operations in our Materialise
Software and Materialise Manufacturing segments. As of the date of this report, we are unable to predict the duration and severity of the ongoing
COVID-19 pandemic and the political and economic responses thereto and, as a result, we are unable to assess with certainty its impact on our business
and operations, results of operations, financial condition, cash flows and liquidity during 2022 and beyond. The COVID-19 pandemic and related
responses have and may continue to evolve, making their impact highly uncertain, and are subject to many factors beyond our control, such as the
outbreak of new variants of the virus, the speed of contagion, the implementation of effective preventative and containment measures, the impact of the
existing or future vaccination programs and the development of other effective medical solutions, the timing and scope of governmental restrictions on
public gatherings, mobility and other activities, financial and other market reactions, and reactions and responses of the public. In particular, although
we have included under “Item 5. Operating and Financial Review and Prospects—D. Trend Information” of this annual report and in the notes to our
audited consolidated financial statements a discussion, based on our current assessment of the COVID-19 pandemic, of how our business, results of
operations, and financial condition could be impacted during the year 2022, this discussion should be considered as highly uncertain. While we expect
we will continue to suffer adverse effects, the more severe the outbreak is and the longer it lasts, the more likely it is that the effects on us and our
business will be materially adverse.
Risks Relating to Our Business
We may not be able to maintain or increase the market share or reputation of our software and other products and services that they need to remain
or become a market standard.
The additive manufacturing, or 3D printing, industry is rapidly growing on a global scale and is subject to constant innovation and
technological change. A variety of technologies compete against one another in our market, which is driven, in part, by technological advances and
end-user requirements and preferences, as well as by the emergence of new standards and practices. As the additive manufacturing market evolves, the
industry standards that are adopted and adhered to are a function of the inherent qualities of the technology as well as the willingness of members of the
industry to adopt them. To remain competitive, we depend in large part on our ability to increase and maintain market share and influence in the industry
in order to be recognized as a market standard. Nonetheless, in the future, our influence in setting standards for the additive manufacturing industry may
be limited and the standards adopted by the market may not be compatible with our present or future products and services.
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We may not be successful in continuing to enhance and adapt our software, products and services in line with developments in market technologies
and demands.
Our present or future software, products and services could be rendered obsolete or uneconomical by technological advances by one or
more of our present or future competitors, by other technologies or by new customer needs. Our ability to remain competitive will depend, in large part,
on our ability to enhance and adapt our current software, product and services to developments in technologies and to new and changing customer needs
(in particular in relation to the manufacturing of end parts and the offering of cloud-based software solutions). We believe that to remain competitive we
must continuously enhance and expand the functionality and features of our products, services and technologies. However, there can be no assurance
that we will be able to:
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maintain and enhance the market share of our current products, services and technologies;
enhance our existing product, services and technologies;
develop new products, services and technologies that address the increasingly sophisticated and varied needs of prospective
end-users (including in the emerging market of using additive manufacturing for end parts instead of prototypes and the trend of
offering more cloud-enabled software solutions);
respond to technological advances and emerging industry standards and practices on a cost-effective and timely basis;
adequately protect our intellectual property as we develop new products, services and technologies and anticipate intellectual
property claims from third parties; or
integrate the product portfolio of Link3D into our own product portfolio.
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The research and development programs that we are currently engaged in, or that we may establish in the future, may not be successful and our
significant investments in these programs may be lost.
To remain competitive, we invest, and intend to continue to invest, significant amounts in various research and development programs.
There can be no assurances, however, that these research and development programs will improve our existing additive manufacturing software
solutions, products and services or create new software, products or services. Even if some of these programs are successful, it is possible that the new
software, products or services developed from such programs will not be commercially viable, that new 3D printing technologies that we, or others,
develop will eventually supplant our current 3D printing technologies, that changes in the manufacturing or use of 3D printers will adversely affect the
need or demand for our software, products or services or that our competitors will create or successfully market 3D printing technologies that will
replace our solutions, products and services in the market. As a result, any of our software solutions, products or services may be rendered obsolete or
uneconomical and our significant investments in all or some of our research and development programs may be lost.
Existing and increased competition may reduce our revenue and profits.
The market segments in which we operate, Materialise Software, Materialise Medical and Materialise Manufacturing, are characterized by
vigorous competition, by entry of competitors with innovative technologies, by consolidation of companies with complementary products, services and
technologies, and by entry of large corporations in any one or more of our market segments.
In particular, the barriers to enter the software, medical and industrial markets with 3D printing solutions are decreasing rapidly.
In the Materialise Software segment, the availability of computing devices with continually expanding performance at progressively lower
prices contributes to the ease of market entry. Additionally, there are certain open-source software applications that are being offered free of charge or
for a nominal fee that can place additional competitive pressure on us. 3D printer manufacturers, which closely work with their customers, may also
successfully bundle their own software solutions with their equipment, which may make our independent software solutions obsolete. In addition,
companies that have greater financial, technical, sales and marketing and other resources, including market leaders with significant in-house capacities
in software development, or existing computer-aided design, or CAD, or computer-aided manufacturing, or CAM, or manufacturing execution system,
or MES, software providers, are entering the additive manufacturing market and may very rapidly gain a significant share of the markets that we target
(including through the acquisition of startup and scale-up companies that are active in the development and sale of additive manufacturing software
tools).
In the Materialise Medical segment, medical device companies are investing in 3D printing solutions that may compete with our software
solutions, products and services. Companies that initially rely on us to enter the additive manufacturing market for medical applications may, as they
gain experience and as 3D printing technology gains strategic importance, decide to develop their own in-house solutions and enter the market
themselves with their own software, products or services, thus becoming competitors and denying us continued access to their distribution channels. In
addition, startup and scale-up companies, as well as companies that have greater financial, technical, sales and marketing and other resources, are
entering the additive manufacturing market and may very rapidly gain a significant share of the markets that we target.
In the Materialise Manufacturing segment, as additive manufacturing gains importance as a strategic technology, our customers are likely
to bring 3D manufacturing in-house and reduce or even discontinue using our 3D printing services. In addition, competitors with more efficient or
profitable business models, superior techniques or more advanced technologies may take market share away from us. Also, in certain specific markets
that our Materialise Manufacturing segment targets, including, among others, the shoe wear, eyewear and fixtures markets, established players may
develop their own competitive solutions or may engage in collaborations with competitors of ours, preventing us from gaining a viable position in these
markets.
Because of these and other factors, competitive conditions in the industry are likely to intensify in the future. Increased competition could
result in price reductions, reduced revenue and operating margins and loss of market share, any of which would likely harm our results of operations.
We rely on collaborations with users of our additive manufacturing solutions to be present in certain large-scale markets and, indirectly, to expand
into potentially high-growth specialty markets. Our inability to continue to develop or maintain these relationships in the future could harm our
ability to remain competitive in existing markets and expand into other markets.
Our strategy includes entering into collaborations with our customers in certain large-scale markets and leveraging these collaborations to
enter into other underserved specialty markets. In the medical market, we have entered into collaborations with DePuy Synthes Companies of
Johnson & Johnson, or DePuy Synthes, and Zimmer Biomet Holdings, Inc., or Zimmer Biomet, as well as with Encore Medical, L.P. (d/b/a DJO
Surgical), or DJO Surgical, Limacorporate Spa, or Lima, Mathys AG, or Mathys (which is now part of the same group as DJO Surgical), Smith &
Nephew Inc., or Smith & Nephew, Corin Ltd, or Corin, Medtronic Inc., or Medtronic, and Abbott Laboratories Inc., or Abbott. Increased adoption of
our software, products and services, especially in potentially high-growth specialty markets, will depend in part on our current and future collaborators’
willingness to continue to adopt our additive manufacturing solutions in their markets and on our ability to continue to collaborate with these and other
players. Certain of our customers that have initially relied on our 3D printing software and services have announced their intention to bring their 3D
printing operations in-house and enter the market themselves, and other customers may also do so in the future as they gain experience and as 3D
printing technology gains strategic importance, thus denying us continued access to their distribution channels. In addition, a change of control of any of
our collaboration partners may negatively impact our relationship. If we are not able to maintain our existing collaborations and develop new
collaborative relationships, our foothold in larger markets and expansion into potentially high-growth specialty markets could be harmed significantly.
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Our revenue and results of operations may fluctuate.
Our revenue and results of operations may fluctuate from quarter-to-quarter and year-to-year and are likely to continue to vary due to a
number of factors, many of which are not within our control. You should not rely on our past results as an indication of our future performance.
Fluctuations in our results of operations and financial condition may occur due to a number of factors, including, but not limited to, those
listed below and those identified throughout this annual report:
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our ability to continue, renew or replace relationships with key customers;
the degree of market acceptance of our software and our products;
the mix of software, products and services that we sell during any period, as well as the mix of the various markets in which we
make sales during said periods;
a decline in new or renewed periodic licenses or maintenance contracts;
delays in the introduction of new features;
the entry of new competitors into our market;
the development and degree of market acceptance of new competitive systems or processes by others;
changes in our pricing policies or those of our competitors, including our responses to price competition;
changes in the amount we spend in our marketing and other efforts;
delays between our expenditures to develop, acquire or license new technologies and processes, and the generation of sales related
thereto;
the amounts we spend on, and the success rate of, our research and development activities;
changes in the regulatory environment, including changes in regulatory laws and regulations and the interpretation thereof,
applicable to our software programs, products or services;
delays in obtaining regulatory approval for our products, services or software programs;
interruptions to or other problems with our website and interactive user interface, information technology systems, manufacturing
processes or other operations;
general economic and industry conditions that affect end-user demand and end-user levels of product design and manufacturing,
including the adverse effects of global economic uncertainties such as the global economic uncertainty related to the ongoing
COVID-19 pandemic or the armed conflict in Ukraine; and
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changes in accounting rules and tax laws.
Inflation might have an adverse effect on our results.
From a macro-economic perspective, prior to 2021, inflation had remained well under control. However, inflation and labor expenses have
risen rapidly over the course of 2021, both inside and outside the Eurozone, and have continued to increase in 2022. We believe it will be challenging to
keep sales prices for our products and services aligned with increasing salaries in general (and in Belgium in particular, where salaries are indexed to
inflation increases by law) as well as increasing costs of materials, energy and services, and capital expenditures. We have taken and are continuing to
take action to mitigate the effects of inflation. There is no guarantee that any actions we take to manage inflation or increased labor costs will mitigate
the adverse impact that rising inflation and increased labor costs could have on our results of operations, financial condition or cash flows.
Demand for additive manufacturing generally and our additive manufacturing software solutions, products and services in particular may not
increase adequately, or at all.
The industrial and medical industries are generally dominated by conventional production methods with limited use of additive
manufacturing technology in certain specific instances. If additive manufacturing technology, in particular, but not limited to, for the production of end
parts, does not gain more mainstream market acceptance, or gains market acceptance at a significantly slower pace than currently expected, or if the
marketplace adopts additive manufacturing based on a technology other than the technologies that we currently use or serve (including in the medical,
eyewear, footwear and fixtures markets that we target), we may not be able to meet our growth objectives or increase or sustain the level of sales of our
additive manufacturing software solutions, products and services, and our results of operations would be adversely affected as a result.
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We are dependent upon sales to certain industries.
Our revenue from products is currently relatively concentrated in the industrial and medical industries, and particularly in the automotive
and orthopedic/cranio-maxillofacial segments within such industries, respectively, and we expect additional growth to come from certain other specific
markets, such as the aerospace, eyewear and footwear markets. To the extent any of these industries experience, or continue to experience, a downturn,
our results of operations may be adversely affected. Additionally, if any of these industries or their respective suppliers or other providers of
manufacturing services develop new technologies or alternatives to manufacture the products that are currently manufactured using our 3D printing
software, products and services, it may adversely affect our results of operations.
If our relationships with suppliers, including with limited source suppliers of consumables, were to terminate or our manufacturing arrangements
were to be disrupted, our business could be adversely affected.
We purchase consumables and other components that are used in our production from third party suppliers. We currently use only a limited
number of suppliers for several of the raw materials that we use for our printing activities. Our reliance on a limited number of vendors involves a
number of risks, including:
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potential shortages of some key consumables or other components;
printed material performance or quality shortfalls, if traceable to particular consumables or other components, since the supplier of
the faulty consumable or component cannot readily be replaced;
discontinuation of a consumable or other component on which we rely;
potential insolvency of these vendors; and
reduced control over delivery schedules, manufacturing capabilities, quality and costs.
If certain suppliers were to decide to discontinue production, or the supply to us, of a consumable or other component that we use, the
unanticipated change in the availability of supplies, or unanticipated supply limitations, could cause delays in, or loss of, sales, increased production or
related costs and, consequently, reduced margins, and damage to our reputation. In addition, because we use a limited number of suppliers, increases in
the prices charged by our suppliers may have an adverse effect on our results of operations, as we may be unable to find a supplier who can supply us at
a lower price. As a result, the loss of a limited source supplier could adversely affect our relationships with our customers and our results of operations
and financial condition.
The dominant software subscription model in the industrial sector is changing, and we may not be successful in developing a cloud-based platform
to offer our software.
We offer most of our current software products through on-premises licensing (either on a perpetual or annual basis). We believe the
industrial software market is evolving to SaaS (Software as a Service) and other cloud-based models of software deployment where software providers
typically license their applications to customers for use as a service on demand through web browser technologies. While we are deploying an
increasing number of cloud-enabled platform components, and are in the process of integrating the recently acquired Link3D platform into a unified
additive manufacturing platform to offer our software products either by means of a SaaS or a cloud-based subscription model, there is no guarantee that
we will be able to complete this integration successfully or in a timely manner or that our platform will be adopted by customers over other platforms.
A SaaS or cloud-based “pay per use” software offering differs significantly from the perpetual and annual licensing models that we
currently offer. An increase in the prevalence of SaaS and cloud-based delivery models offered by us or our competitors could unfavorably impact the
pricing of our on-premises software offerings and have a dampening impact on overall demand for our on-premises software product offerings, which
could reduce our revenues and profitability. In addition, to the extent that demand for our SaaS or cloud-based offerings increases in the future, we may
experience volatility in our reported revenues and operating results due to the differences in timing of revenue recognition between our perpetual and
annual software licenses and our SaaS and cloud-based offering arrangements.
Furthermore, any SaaS or cloud-based software products we offer may reside upon and be hosted by third party providers. A security
breach, whether of our products, of our customers’ network security and systems or of third party hosting services, could disrupt access to our
customers’ stored information and could lead to the loss of, damage to or public disclosure of our customers’ stored information.
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We depend on the knowledge and skills of key personnel throughout our entire organization, and if we are unable to retain and motivate them or
recruit additional qualified personnel, our operations could suffer.
Our success depends upon the continued service and performance of key personnel at all levels within our organization, including machine
operators, engineers, designers, software developers, salespeople, product managers and senior management, and our ability to identify, hire, develop,
motivate and retain qualified personnel in the future. Competition for key employees in our industry is intense and we cannot guarantee that we will be
able to retain our personnel or attract new, qualified personnel. We may need to invest significant amounts of cash and equity to attract and retain new
employees and we may not realize returns on these investments. The loss of the services of key personnel could prevent or delay the implementation and
completion of our strategic objectives, could divert management’s attention to seeking certain qualified replacements or could adversely affect our
ability to manage our company effectively. Each member of our personnel may resign at any time. Only some of the members of our personnel are
subject to non-competition agreements, which may also be difficult to enforce. Accordingly, the adverse effect resulting from the loss of certain member
of our key personnel could be compounded by our inability to prevent them from competing with us. We do not carry key-man insurance on any
member of our senior management team or other key personnel. If we lose the ability to hire and retain key executives and employees with a diversity
and high level of skills in appropriate domains (such as research and development and sales), it could have a material adverse impact on our business
activities and results of operations.
In addition, the success of our acquisitions may depend in part on our ability to retain senior management and other key personnel of the
acquired company following the acquisition and to continue to attract such persons to our company. For example, the companies we acquire may depend
on small teams of founders and senior managers with extensive market knowledge and relationships or that exercise substantial influence over the
acquired business. As result, the loss of such persons could adversely affect us.
We may need to raise additional capital from time to time in order to meet our growth strategy and may be unable to do so on attractive terms, or at
all.
We intend to continue to make investments to support the growth of our business and may require additional funds to respond to business
challenges, including the need to implement our growth strategy, increase market share in our current markets or expand into other markets, or broaden
our technology, intellectual property or service capabilities. Accordingly, we may require additional investments of capital from time to time, and our
existing sources of cash and any funds generated from operations may not provide us with sufficient capital. For various reasons, including any
noncompliance with existing or future lending arrangements, additional financing, may not be available when needed, or may not be available on terms
favorable to us. If we fail to obtain adequate capital on a timely basis or if capital cannot be obtained on terms satisfactory to us, we may not be able to
achieve our planned rate of growth, which will adversely affect our results of operations.
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Our international operations subject us to various risks, and our failure to manage these risks could adversely affect our results of operations.
We face significant operational risks as a result of doing business internationally, including, among others:
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fluctuations in foreign currency exchange rates;
potentially longer sales and payment cycles;
potentially greater difficulties in collecting accounts receivable;
potentially adverse tax consequences, including liabilities imposed from inconsistent enforcement;
challenges in providing solutions across a significant distance, in different languages and among different cultures;
the impact of global public health crises, such as the ongoing impact of the COVID-19 pandemic on almost all large economies
worldwide;
transportation delays;
becoming subject to the different, complex and changing laws, regulations and court systems of multiple jurisdictions and
compliance with a wide variety of foreign laws, treaties and regulations;
reduced protection of, or significant difficulties in enforcing, intellectual property rights in certain countries;
difficulties in staffing and managing foreign operations, particularly in new geographic locations;
restrictions imposed by local labor practices and laws on our business and operations, including unilateral cancellation or
modification of contracts;
expropriation or nationalization of property;
rapid changes in government, economic and political policies and conditions, political or civil unrest or instability, terrorism or
pandemics, epidemics and other similar outbreaks or events, such as the armed conflict in Ukraine;
operating in countries with a higher incidence of corruption and fraudulent business practices;
seasonal reductions in business activity in certain parts of the world, particularly during the summer months in Europe;
costs and difficulties of customizing products for foreign countries; and
tariffs, trade barriers and other regulatory or contractual limitations on our ability to sell or develop our products in certain foreign
markets.
We maintain an important software research and development and engineering center in Malaysia. In Malaysia, the government may exercise substantial
control over certain sectors of the economy through regulation and state ownership. Changes in the laws and regulations of Malaysia, or in their
interpretation or enforcement, including with respect to operations such as ours, which rely to a large extent on local private entrepreneurs, may
significantly impact our activities in Malaysia, which would limit our future growth and adversely affect our results of operations.
In addition, in August 2019, we acquired a 75% interest in Engimplan, a Brazil-based manufacturer of orthopedic and cranio-maxillofacial (CMF)
implants and instruments and in December 2020, we acquired the remaining 25% interest in Engimplan, making us Engimplan’s sole shareholder
(through our Brazilian subsidiary). Brazil has experienced recent political and economic uncertainty and instability, including as a result of country-wide
money laundering and corruption probes. Our failure to manage the market and operational risks associated with our international operations effectively
could limit the future growth of our business and adversely affect our results of operations.
As a result of the armed conflict in Ukraine, we have ceased our operations in our office in Kyiv.
We historically have maintained an office in Kyiv, Ukraine from which we provided internal medical and software development services
and supporting activities for our global operations. On February 24, 2022, the Russian Federation invaded Ukraine and, as a result, our operations in
Kyiv have come to a standstill.
While some of our personnel have remained in Kyiv, most have fled the city, either to other parts of Ukraine or to Ukraine’s neighboring
countries, with many of our personnel relocating to our office in Wroclaw, Poland. As of the date of this report, although most of our personnel continue
working for us, either from our Wroclaw office or remotely, others remain unable to perform their work. Despite our initiating an intense relocation and
support program, it is impossible to determine how much of our Ukrainian workforce will be able or willing to continue working for us. Furthermore,
we have incurred and will continue to incur expenses related to these relocation and support efforts, the extent of which we cannot estimate.
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The cessation of our Kyiv office’s operations impacts the services that we provide to customers globally, and has necessitated a
recalibration of the development timelines of certain of our software products. In addition, although only a small percentage of our historical revenues
was generated in Russia, we expect that the trade sanctions that have been imposed against Russia by, among others, the United States and the European
Union, will have an impact on our sales.
As of the date of this report, we are unable to predict how the armed conflict in Ukraine will evolve and what the political and economic
repercussions will be. As a result, we are unable to assess with certainty its impact on our business and operations, results of operations, financial
condition, cash flows and liquidity. In particular, although we have included under “Item 5. Operating and Financial Review and Prospects—D. Trend
Information” of this annual report and in the notes to our audited consolidated financial statements a discussion, based on our current assessment of the
armed conflict in Ukraine, of how our business, results of operations, and financial condition could be impacted during the year 2022, this discussion
should be considered as highly uncertain. While we expect we will suffer adverse effects, the severity is currently impossible to assess.
Our international operations pose currency risks, which may adversely affect our results of operations and net income.
Our results of operations may be affected by volatility in currency exchange rates and our ability to effectively manage our currency
transaction risks. In general, we conduct our business, earn revenue and incur costs in the local currency of the countries in which we operate. During
the year ended December 31, 2021, 65% of our revenue was generated, and approximately 75% of our total costs were incurred in euros. As we
continue to expand internationally, our exposure to currency risks will increase. Historically, although we seek to monitor the ratio of revenues to
expenses in certain foreign currencies, we have not managed all our foreign currency exposure in a manner that would eliminate the effects of changes
in foreign exchange rates. Changes in exchange rates between the foreign currencies in which we do business and the euro will affect our revenue, cost
of sales, and operating margins, and could result in exchange losses in any given reporting period.
Changes in tax laws, treaties or regulations could adversely affect our financial results.
Our future effective tax rates could be adversely affected by changes in tax laws, treaties and regulations, both internationally and
domestically, including possible changes to the patent income deduction and innovation income deduction regime in Belgium or the way it
proportionately impacts our effective tax rate. An increase of our future effective tax rates could have a material adverse effect on our business, financial
position, results of operations and cash flows.
We may engage in acquisitions or investments that could disrupt our business, cause dilution to our shareholders and harm our financial condition
and results of operations.
We have in the past and intend to continue to evaluate opportunities to acquire or invest in, companies that we believe have products,
services, competencies or capabilities that are a strategic or commercial fit with any of our businesses or that otherwise offer opportunities for our
company.
In connection with acquisitions or investments, we may:
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issue American Depositary Shares, or ADSs, or other forms of equity that would dilute our existing shareholders’ percentage of
ownership;
incur debt and assume liabilities; and/or
incur amortization expenses related to intangible assets or incur large and immediate write-offs.
If we complete an acquisition or investment, we cannot assure you that it will ultimately strengthen our competitive position or that it will
be viewed positively by customers, suppliers, employees, financial markets or investors. Furthermore, future acquisitions or investments could pose
numerous additional risks to our operations, including:
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problems integrating the purchased business, products, services or technologies;
challenges in achieving strategic objectives, cost savings and other anticipated benefits;
increases to our expenses;
the potential write down of assets or goodwill acquired in the context of an acquisition or investment;
due diligence investigations failing to discover undisclosed liabilities or risks affecting the acquired businesses;
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the assumption of significant liabilities that exceed the limitations of any applicable indemnification provisions or the financial
resources of any indemnifying party;
inability to maintain relationships with key customers, vendors and other business partners of our current or acquired businesses;
diversion of management’s attention from their day-to-day responsibilities;
difficulty in maintaining controls, procedures and policies during the transition and integration;
entrance into marketplaces where we have no or limited prior experience and where competitors have stronger marketplace
positions;
potential loss of key employees, particularly those of the acquired entity; and
historical financial information may no longer be representative or indicative of our results as a combined company.
Alternatively, while certain acquisitions or investments may be of strategic importance for the execution of our business plan, we may not
ultimately be able to complete such acquisitions or investments on favorable terms, or at all, which may in turn materially affect our ability to grow or
even cause us to lose market share, and could have a material adverse effect on our business, financial condition and results of operations.
We may enter into collaborations, in-licensing arrangements, joint ventures, strategic alliances or partnerships with third parties that may not result
in the development of commercially viable products or the generation of significant future revenue.
In the ordinary course of our business, we may enter into collaborations, in-licensing arrangements, joint ventures, strategic alliances or
partnerships to develop proposed products or services and to pursue new markets. For example, in the Materialise Medical segment, we have
collaborations with leading medical device companies and academic institutions for the development and distribution of our surgical planning software,
services, and products, including with DePuy Synthes, Zimmer Biomet, DJO Surgical, Lima, Medtronic, Abbott, Corin, Mathys and the University of
Michigan. Furthermore, in the Materialise Software segment, we have established collaborations with Siemens PLM, or Siemens and, in the Materialise
Manufacturing segment, we have established collaborations with HOYA Vision Care Company, or HOYA, PTC Inc., or PTC, and BASF 3D Printing
Solutions GmbH. Proposing, negotiating and implementing collaborations, in-licensing arrangements, joint ventures, strategic alliances or partnerships
may be a lengthy and complex process. Other companies, including those with substantially greater financial, marketing, sales, technology or other
business resources, may compete with us for these opportunities or arrangements. We may not succeed in maintaining, renewing or extending existing
collaborations or in identifying, securing, or completing any such new transactions or arrangements in a timely manner, on a cost-effective basis, on
acceptable terms or at all. We may also not realize the anticipated benefits of any such transaction or arrangement. In particular, these collaborations
may not result in the development of products or services that achieve commercial success or result in significant revenue and could be terminated prior
to developing any products or services.
Additionally, we may not be in a position to exercise sole decision making authority regarding the transaction or arrangement, which could
create the potential risk of creating impasses on decisions, and our collaboration partners may have economic or business interests or goals that are, or
that may become, inconsistent with our economic or business interests or goals. It is possible that conflicts may arise with our current or future
collaboration partners, such as conflicts concerning the achievement of performance milestones, or the interpretation of terms under any agreement, such
as those related to financial obligations, the ownership or license rights or control of intellectual property developed before or during the collaboration or
indemnification. If any conflicts arise with our current or future collaboration partners, they may act in their self-interest, which may be adverse to our
best interest, and they may breach their obligations to us. In addition, we have limited control over the amount and timing of resources that our current
collaboration partners or any future collaboration partners devote to our collaboration partners’ or our future products or services. Disputes with our
collaboration partners may result in litigation or arbitration that would increase our expenses and divert the attention of our management. For example,
we are currently involved in an arbitration dispute with Zimmer Biomet regarding certain alleged indemnification obligations. Further, these transactions
and arrangements are contractual in nature and may be terminated or dissolved under the terms of the applicable agreements and, in such event, we may
not continue to have rights to the products or access to the markets relating to such transaction or arrangement or may need to purchase such rights at a
premium.
Failure to comply with applicable anti-corruption and trade sanctions legislation could result in fines, criminal penalties and an adverse effect on
our business.
We operate in a number of countries throughout the world and we are committed to doing business in accordance with applicable anti-
corruption laws. We are subject, however, to the risk that our officers, directors, employees, agents and collaboration partners may take action
determined to be in violation of such anti-corruption laws, including the U.S. Foreign Corrupt Practices Act of 1977, the U.K. Bribery Act 2010 and the
Belgian Penal Code, as well as trade sanctions administered by the Office of Foreign Assets Control and the U.S. Department of Commerce. Any such
violation could result in substantial fines, sanctions, civil and/or criminal penalties or curtailment of operations in certain jurisdictions, and might
adversely affect our results of operations. In addition, actual or alleged violations could damage our reputation and ability to do business.
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Errors or defects in our software or other products could cause us to incur additional costs, lose revenue and business opportunities, damage our
reputation and expose us to potential liability.
Sophisticated software and complex 3D printed products may contain errors, defects or other performance problems at any point in the life
of the product. If errors or defects are discovered in our current or future software or other products, we may not be able to correct them in a timely
manner, or provide an adequate response to our customers. We may therefore need to expend significant financial, technical and management resources,
or divert some of our development resources, in order to resolve or work around those defects. We may also experience an increase in our service and
warranty costs. Particularly in the medical sector, errors or defects in our software or products could lead to claims by patients against us and our
customers and expose us to lawsuits that may damage our and our customers’ reputations. Claims may be made by individuals or by classes of users.
Our product liability and related insurance policies may not apply or sufficiently cover any product liability lawsuit that arises from defective software
or products. Customers such as our collaboration partners may also seek indemnification for third party claims allegedly arising from breaches of
warranties under our collaboration agreements.
Errors, defects or other performance problems in our software or other products may also result in the loss of, or delay in, the market
acceptance of our software, our products and related 3D printing or engineering services or postponement of customer deployment. Such difficulties
could also cause us to lose customers and, particularly in the case of our largest customers, the potentially substantial associated revenue which would
have been generated by our sales to companies participating in our customer’s supply chain. Technical problems, or the loss of a customer with a
particularly important global reputation, could also damage our own business reputation and cause us to lose new business opportunities.
We rely on our information technology systems to manage numerous aspects of our business and customer and supplier relationships, and a
disruption of these systems could adversely affect our results of operations.
We rely on our information technology systems and databases to manage numerous aspects of our business and to provide analytical
information to management. Our information technology systems allow us to, among other things, optimize our software development and research and
development efforts, organize our in-house 3D printing services logistics, efficiently purchase products from our suppliers, provide other procurement
and logistic services, ship and invoice products to our customers on a timely basis, maintain cost-effective operations and generally provide service to
our customers. Our information technology systems are an essential component of our business and growth strategies, and a disruption to our
information technology systems could significantly limit our ability to manage and operate our business efficiently. Although we take steps to secure our
information technology systems, including our computer systems, intranet and internet sites, email and other telecommunications and data networks, the
security measures we have implemented may not be effective and our systems may be vulnerable to, among other things, damage and interruption from
power loss, including as a result of natural disasters, computer system and network failures, loss of telecommunication services, operator negligence,
loss of data, security breaches, computer viruses and other disruptive events. Any such disruption could adversely affect our reputation, brand and
financial condition.
In addition, during the next few years, we expect to gradually replace a number of our information technology systems with new, cloud-
based systems. This transformation is intended to further increase our security and data integrity. Disruptions during the configuration, implementation
or operation of, or during the migration to, these new systems may have an impact on our operations and could adversely affect us.
A breach of security in our products or computer systems may compromise the integrity of our products, harm our reputation, create additional
liability and adversely impact our financial results.
We make significant efforts to maintain the security and integrity of our product source code and computer systems. The risk of a security
breach or disruption, particularly through cyber-attack or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has
increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. These threats include
identity theft, unauthorized access, DNS attacks, wireless network attacks, viruses and worms, advanced persistent threat (APT), application centric
attacks, peer-to-peer attacks, phishing, backdoor trojans and distributed denial of service (DDoS) attacks. Any of the foregoing could attack our products
and computer systems. Despite significant efforts to create and continuously reinforce the security barriers to such programs, it is virtually impossible
for us to entirely eliminate this risk. Like all software products and computer systems, our software products and computer systems are vulnerable to
such cyber-attacks, and our computer systems have been subject to certain cyber security incidents in the past. The impact of cyber-attacks could disrupt
the proper functioning of our software products and computer systems, cause errors in the output of our or our customers’ work, allow unauthorized
access to sensitive, proprietary or confidential information of our company, our customers or the patients that we and our customers serve through our
medical solutions. Moreover, as we continue to invest in new lines of products and services we are exposed to increased security risks and the potential
for unauthorized access to, or improper use of, the information of our product and service users. If any of the foregoing occur, our reputation may suffer,
customers may stop buying our products or services, we could face lawsuits and potential liability, and our results of operations could be adversely
affected.
We rely on third-party technology, platform, carriers, server and hardware providers and as well as local servers, and a failure of service by these
providers or by our local servers could adversely affect our business and reputation.
We use third party cloud providers to host a major part of our servers. If these providers are unable to handle current or higher volumes of
use, experiences any interruption in operations or ceases operations for any reason or if we are unable to agree on satisfactory terms for a continued
hosting relationship, we would be forced to enter into a relationship with other service providers or assume these hosting responsibilities ourselves. If we
are forced to switch hosting facilities, we may not be successful in finding an alternative service provider on acceptable terms or in hosting the computer
servers ourselves. We may also be limited in our remedies against our third party hosting providers in the event of a failure of service. A failure or
limitation of service or available capacity by our third party hosting providers could adversely affect our business and reputation.
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In addition to using third party cloud providers, we have also established local servers and infrastructure in multiple offices, including in
Leuven. A failure of these local servers could adversely affect our business and reputation.
Workplace accidents or environmental damage could result in substantial remedial obligations and damage to our reputation.
Accidents or other incidents that occur at our service centers and other facilities or involve our personnel or operations could result in
claims for damages against us. In addition, in the event we are found to be financially responsible, as a result of environmental or other laws or by court
order, for environmental damages alleged to have been caused by us or occurring on our premises, we could be required to pay substantial monetary
damages or undertake expensive remedial obligations. The amount of any costs, including fines or damages payments that we might incur under such
circumstances could substantially exceed any insurance we have to cover such losses. Any of these events, alone or in combination, could have a
material adverse effect on our business, financial condition and results of operations and could adversely affect our reputation.
Our operations are subject to environmental laws and other government regulations that could result in liabilities in the future.
We are subject to local environmental laws and regulations governing our operations, including, but not limited to, emissions into the air
and water and the use, handling, disposal and remediation of hazardous substances. A certain risk of environmental liability is inherent in our production
activities. Under certain environmental laws, we could be held solely or jointly and severally responsible, regardless of fault, for the remediation of any
hazardous substance contamination at our service centers and other facilities and the respective consequences arising out of human exposure to such
substances or other environmental damage. We may not have been and may not be at all times in complete compliance with environmental laws,
regulations and permits, and the nature of our operations exposes us to the risk of liabilities or claims with respect to environmental and worker health
and safety matters. If we violate or fail to comply with environmental laws, regulations and permits, we could be subject to penalties, fines, restrictions
on operations or other sanctions, and our operations could be interrupted. The cost of complying with current and future environmental, health and
safety laws applicable to our operations, or the liabilities arising from past releases of, or exposure to, hazardous substances, may result in future
expenditures. Any of these developments, alone or in combination, could have a material adverse effect on our business, financial condition and results
of operations.
If our service center operations are disrupted, sales of our 3D printing services, including the medical devices that we print, may be affected, which
could have an adverse effect on our results of operations.
We have seven 3D printing service centers in Europe, the United States, Brazil and Japan, including our principal 3D printing service
center located in Leuven, Belgium. If the operations of these facilities are materially disrupted, whether by fires or other industrial accidents, extreme
weather, natural disasters, labor stoppages, acts of terror, or otherwise, we would be unable to fulfill customer orders for the period of the disruption, we
would not be able to recognize revenue on orders, we could suffer damage to our reputation, and we might need to modify our standard sales terms to
secure the commitment of new customers during the period of the disruption and perhaps longer. Depending on the cause of the disruption, we could
incur significant costs to remedy the disruption and resume providing 3D printing services. Such a disruption could have an adverse effect on our results
of operations.
We could experience unforeseen difficulties in building and operating key portions of our 3D printing infrastructure.
We have designed and built our own 3D printing operations, some of the 3D printer platforms in use and other key portions of our
technical infrastructure through which we serve our products and services, and we plan to continue to expand the size of our infrastructure through
expanding our 3D printing facilities. The infrastructure expansion we may undertake may be complex, and unanticipated delays in the completion of
these projects or availability of components may lead to increased project costs, operational inefficiencies, or interruptions in the delivery or degradation
of the quality of our products. In addition, there may be issues related to this infrastructure that are not identified during the design and implementation
phases, which may only become evident after we have started to fully utilize the underlying equipment, that could further degrade the user experience or
increase our costs.
We may not have adequate insurance for potential liabilities, including liabilities arising from litigation.
In the ordinary course of business, we have been, and in the future may be, subject to various product and non-product related claims,
lawsuits and administrative proceedings seeking damages or other remedies arising out of our commercial operations, including litigation related to
defects in our software or other products. We maintain insurance to cover our potential exposure for a number of claims and losses. However, our
insurance coverage is subject to various exclusions, self-retentions and deductibles, may be inadequate or unavailable to protect us fully, and may be
cancelled or otherwise terminated by the insurer. Furthermore, we face the following additional risks related to our insurance coverage:
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we may not be able to continue to obtain insurance coverage on commercially reasonable terms, or at all, including with respect to
our activities in the medical industry;
we may be faced with types of liabilities that are not covered under our insurance policies, such as environmental contamination,
terrorist attacks or alleged infringements of third parties’ intellectual property rights, and that exceed any amounts that we may have
reserved for such liabilities;
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the amount of any liabilities that we may face may exceed our policy limits; and
we may incur losses resulting from the interruption of our business that may not be fully covered under our insurance policies.
Even a partially uninsured claim of significant size, if successful or if settled for a substantial amount of money, could have a material
adverse effect on our business, financial condition, results of operations and liquidity. However, even if we successfully defend ourselves against any
such claim, we could be forced to spend a substantial amount of money in litigation expenses, our management could be required to spend valuable time
defending these claims and our reputation could suffer, any of which could adversely affect our results of operations.
Current and future global economic uncertainties and political conditions may adversely affect our results of operations.
Our results of operations could be substantially affected not only by global economic conditions, but also by local operating, economic,
public health or environmental conditions, which can vary substantially by market. Unfavorable conditions can depress sales in a given market and may
result in actions that adversely affect our margins, constrain our operating flexibility or result in charges that are unusual or non-recurring. Certain
macroeconomic events, such as adverse conditions in the global economy, including with the continuing market disruptions caused by the ongoing
COVID-19 pandemic and related responses thereto, the consequences of the armed conflict in Ukraine, and the economic and political challenges facing
China, Brazil, the United States, and certain Eurozone countries, could have a more wide-ranging and prolonged impact on the general business
environment, which could also adversely affect us. These economic developments could affect us in numerous ways, many of which we cannot predict.
We are unable to predict the likely duration and severity of the current disruption in financial markets and adverse economic conditions, or the effects
these disruptions and conditions could have on us.
In addition, political and economic developments could also result in changes to legislation or reformation of government policies, rules
and regulations, including in relation to tax and trade. Such changes could have a significant impact on our business by increasing the cost of doing
business, affecting our ability to sell our software, products and services and negatively impacting our profitability. For example, on February 24, 2022,
the Russian Federation invaded Ukraine, as a result of which immediate severe trade sanctions were issued, in particular by the the United States and the
European Union.
We face potential liability related to the privacy and security of personal information we collect.
In particular, but not exclusively, in connection with our Materialise Medical segment and the personalized wearables business we are
pursuing within our Materialise Manufacturing segment, we may have access to personal information that is subject to a number of U.S. federal and
state, E.U. and other applicable foreign laws protecting the confidentiality of certain patient health or other private information, including patient
records, and restricting the use and disclosure of that protected information.
In the United States, we are subject to the Health Insurance Portability and Accountability Act, or HIPAA, the Health Information
Technology for Economic and Clinical Health Act of 2009, regulations issued pursuant to these statutes, state privacy and security laws and regulations.
These statutes, regulations and contractual obligations impose numerous requirements regarding the use and disclosure of personal health information
with which we must comply. In addition, a new privacy law, the California Consumer Privacy Act, or CCPA, effective as of January 1, 2020, requires,
among other things, covered companies, including us, to provide new disclosures to California consumers and afford such consumers the ability to opt
out of certain sales of personal information. We cannot yet predict the impact of the CCPA on our business or operations, but it may require us to modify
our data processing practices and policies and to incur substantial costs and expenses in an effort to comply.
In the European Union, the General Data Protection Regulation, or the GDPR, was passed on May 24, 2016, and replaced the E.U. Data
Protection Directive when it came into force on May 25, 2018. GDPR introduced new data protection requirements in the European Union,
unprecedented regulatory risk for non-compliant data processors and controllers and sizeable penalties for serious breaches—up to €20 million or 4% of
global turnover, whichever is higher. The GDPR also significantly expands the territorial reach of existing E.U. data protection and privacy rules. Our
business processes have been and continue to be modified in order to incorporate the requirements of the GDPR. In addition, in connection with its
withdrawal from the European Union, the United Kingdom implemented the GDPR as of January 1, 2021 (as it existed on December 31, 2020 but
subject to certain U.K.-specific amendments), or U.K. GDPR.
In ensuring continued compliance with the E.U. regime, our transfer of any personal data from the European Union to the United States
must be done in a manner which satisfies E.U. cross-border data transfer requirements. The E.U.-U.S. Privacy Shield, which had been adopted by the
United States and the European Union as a framework for protecting the fundamental rights of anyone in the European Union whose personal data is
transferred to the United States for commercial purposes, was subsequently invalidated by the European Court of Justice on July 16, 2020 for not
meeting E.U. regulatory requirements. We are investigating and undertaking appropriate steps to mitigate the risks caused by the invalidation of the
Privacy Shield, including the use and implementation of the standard contractual clauses for the transfer of personal data to third countries as published
by the European Commission on June 4, 2021.
In addition, the use and disclosure of personal health and other private information is subject to regulation in other jurisdictions in which
we do business or expect to do business in the future. Those jurisdictions may attempt to apply such laws extraterritorially or through treaties or other
arrangements with European governmental entities. We might unintentionally violate such laws, such laws may be modified and new laws may be
enacted in the future which may increase the chance that we violate them. For example, each of the GDPR and the U.K. GDPR contains rules relating to
the collection and processing of personal information, which are not identical to the current rules under national privacy laws and which
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contain more strict provisions. Any such developments, or developments stemming from enactment or modification of other laws, or the failure by us to
comply with their requirements or to accurately anticipate the application or interpretation of these laws could create material liability to us, result in
adverse publicity and negatively affect our medical business.
Our failure to accurately anticipate the application or interpretation of these statutes, regulations and contractual obligations as we develop
our medical and other products and services, a failure by us to comply with their requirements (e.g., evolving encryption and security requirements) or
an allegation that defects in our medical or other products have resulted in noncompliance by our customers could create material civil and/or criminal
liability for us, resulting in adverse publicity and negatively affecting our medical business. Any legislation or regulation in the area of privacy and
security of personal information could affect the way we operate and could harm our business. The costs of compliance with, and the other burdens
imposed by, these and other laws or regulatory actions may prevent us from selling our solutions or increase the costs associated with selling our
products and services, and may affect our ability to invest in or jointly develop our products and services in the United States, the European Union and
in foreign jurisdictions. Further, we cannot assure you that our privacy and security policies and practices will be found sufficient to protect us from
liability or adverse publicity relating to the privacy and security of personal information.
Risks Related to Our Materialise Medical Segment and Regulatory Environment
Our medical business, financial condition, results of operations and cash flows could be significantly and negatively affected by substantial
government regulations.
Our medical products are subject to rigorous regulation by the European Commission, the U.S. Food and Drug Administration, or the
FDA, and numerous other applicable governmental authorities. In general, the development, testing, manufacturing and marketing of our medical
products are subject to extensive regulation and review by numerous governmental authorities in the European Union, the United States, the United
Kingdom, Canada, Brazil, Japan and Australia, and in other markets where we are currently active or may become active in the future. The regulatory
process requires the expenditure of significant time, effort and expense to bring new medical products to market, and we cannot be certain that we will
receive regulatory approvals, certifications or registrations in any country in which we plan to market our medical products.
The laws and regulations, including the requirements for approvals, certifications or registrations and the time required for regulatory
review, vary from country to country. For example, to market our medical products within the member states of the European Union, we are required to
comply with the European Medical Device Directive. Under the European Medical Device Directive, all medical devices except custom-made and
investigational devices must bear the CE mark. To obtain authorization to affix the CE mark to our medical products, a recognized European notified
body must assess our quality systems and the product’s conformity to the requirements of the European Medical Device Directive. Recently, this process
has been impacted by the general lack of capacity of notified bodies properly designated under the new E.U. Medical Device Regulation, which has
become effective on May 26, 2021, as well as difficulties due to the ongoing COVID-19 pandemic in executing on-site audits. These issues may delay
the (re)certification and commercialization of our new or updated medical products in the European Economic Area, or EEA. Similarly, in the United
States, we are required to obtain clearance or approval from the FDA prior to marketing our medical products.
The regulatory approval process outside the European Union and the United States may include all of the risks associated with obtaining
CE or FDA clearance or approval in addition to other risks. Clearance or approval by the FDA in the United States, or conformity assessment and
affixing a CE mark in the EEA does not ensure approval or certification by regulatory authorities in other countries, and approval or certification by one
foreign regulatory authority does not ensure approval by regulatory authorities in other countries. We may be required to perform additional pre-clinical
or clinical studies even if FDA clearance or approval, or the right to bear the CE label, has been obtained. We may not obtain regulatory approvals or
certifications outside the European Union and the United States on a timely basis, if at all. If we fail to receive necessary approvals to commercialize our
medical products in jurisdictions outside the European Union and the United States on a timely basis, or at all, our medical business, financial condition
and results of operations could be adversely affected.
As a manufacturer of medical devices, we participate in the Medical Device Single Audit Program, or MDSAP, which is a prerequisite for
market entry in Canada, and which makes results from external audits by an accredited auditing organization available to the regulatory authorities of
the United States, Canada, Brazil, Japan and Australia. A single audit is used in lieu of multiple separate audits or inspections by participating regulatory
authorities or their representatives, reducing the overall number of audits or inspections. However, the auditing organization must inform regulatory
authorities directly when certain non-conformity thresholds are reached, enabling participating regulatory authorities to immediately undertake actions
appropriate for their jurisdictions.
In addition, we are required to implement and maintain stringent reporting, labelling and record keeping procedures and make our facilities
and operations subject to periodic inspections, both scheduled and unannounced, by the regulatory authorities. The medical device industry is also
subject to a myriad of complex laws and regulations governing reimbursement, which varies from jurisdiction to jurisdiction in the European Union and
which includes Medicare and Medicaid reimbursement in the United States as well as healthcare fraud and abuse laws, with these laws and regulations
being subject to interpretation. In many instances, the industry does not have the benefit of significant regulatory or judicial interpretation of these laws
and regulations. In certain public statements, governmental authorities have taken positions on issues for which little official interpretation was
previously available. Some of these positions appear to be inconsistent with common practices within the industry but that have not previously been
challenged.
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Various governmental agencies have become increasingly vigilant in recent years in their investigation of various business practices.
Governmental and regulatory actions against us can result in various actions that could adversely impact our medical operations, including:
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the recall or seizure of products;
the suspension or revocation of the authority necessary for the production or sale of a product;
the delay of our ability to introduce new products into the market;
the suspension of shipments from particular manufacturing facilities;
the issuance of warning letters or untitled letters;
the imposition of operating restrictions;
the imposition of injunctions, fines and penalties;
the exclusion of our products from being reimbursed by healthcare programs in the European Union or U.S. federal and state
healthcare programs (such as Medicare, Medicaid, Veterans Administration health programs and Civilian Health and Medical
Program of the Uniformed Services);
the delay or denial of customs clearance of our products for import in certain jurisdictions; and
other civil or criminal sanctions against us.
Failure to comply with applicable regulatory requirements could also result in civil actions against us and other unanticipated
expenditures. Any of these actions, in combination or alone, or even a public announcement that we are under investigation for possible violations of
these laws, could have a material adverse effect on our medical business, financial condition, results of operations and cash flows. If investigated, we
cannot assure that the costs of defending or resolving those investigations or proceedings would not have a material adverse effect on our financial
condition, results of operations and cash flows.
In many of the countries in which we market our medical products, we are subject to regulations affecting, among other things, clinical
efficacy, product standards, packaging requirements, labelling requirements, import/ export restrictions, tariff regulations, duties and tax requirements.
Many of the regulations applicable to our medical surgical guides, models, implants and software products in these countries are similar to those of the
European Commission and the FDA. In addition, in many countries the national health or social security organizations require our medical products to
be qualified before they can be marketed with the benefit of reimbursement eligibility. Failure to receive or delays in the receipt of relevant foreign
qualifications also could have a material adverse effect on our medical business, financial condition, results of operations and cash flows.
As the government regulators in the European Union, United States and elsewhere have become increasingly stringent, we may be subject
to more rigorous regulation by governmental authorities in the future.
Modifications to our medical products marketed in the United States may require new 510(k) clearances or premarket approvals, or may require us
to cease marketing or recall the modified products until clearances are obtained.
Any modification to a 510(k)-cleared device that could significantly affect its safety or efficacy, or that would constitute a major change in
its intended use, technology, materials, packaging and certain manufacturing processes, may require a new 510(k) clearance or, possibly, a premarket
approval, or PMA. The FDA requires every manufacturer to make the determination regarding the need for a new 510(k) clearance or PMA in the first
instance, but the FDA may (and often does) review the manufacturer’s decision. The FDA may not agree with a manufacturer’s decision regarding
whether a new clearance or approval is necessary for a modification, and may retroactively require the manufacturer to submit a premarket notification
requesting 510(k) clearance or an application for PMA. We have made modifications to our medical products in the past and may make additional
modifications in the future that we believe did not or will not require additional clearances or approvals. No assurance can be given that the FDA would
agree with any of our decisions not to seek 510(k) clearance or PMA. If the FDA requires us to cease marketing and recall the modified device until we
obtain a new 510(k) clearance or PMA, our medical business, financial condition, results of operations and future growth prospects could be materially
adversely affected. Further, our medical products could be subject to recall if the FDA determines, for any reason, that our products are not safe or
effective. Any recall or FDA requirement that we seek additional approvals or clearances could result in significant delays, fines, increased costs
associated with modification of a product, loss of revenue and potential operating restrictions imposed by the FDA.
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Healthcare policy changes, including legislation to reform the U.S. healthcare system, could adversely affect us.
From time to time, legislation is drafted and introduced that could significantly change the statutory provisions governing the clearance or
approval, manufacture and marketing of a medical device. In addition, regulations and guidance are often revised or reinterpreted in ways that may
significantly affect our medical business and our medical products. It is impossible to predict whether legislative changes will be enacted or regulations,
guidance or interpretations changed, and what the impact of such changes, if any, may be.
For instance, in 2010, the U.S. Patient Protection and Affordable Care Act, as amended by the U.S. Health Care and Education
Reconciliation Act of 2010, or collectively, the PPACA, was enacted, which included, among other things, the following measures: a Patient-Centered
Outcomes Research Institute to oversee, identify priorities in and conduct comparative clinical effectiveness research; reporting and disclosure
requirements on device manufacturers for any “transfer of value” made or distributed to prescribers and other healthcare providers, effective March 30,
2013 (referred to as the Physician Sunshine Payment Act); payment system reforms including a national pilot program on payment bundling to
encourage hospitals, physicians and other providers to improve the coordination, quality and efficiency of certain healthcare services through bundled
payment models, beginning on or before January 1, 2013; and an independent payment advisory board that will submit recommendations to reduce
Medicare spending if projected Medicare spending exceeds a specified growth rate. Some of the provisions of the PPACA have yet to be fully
implemented, while certain provisions have been subject to U.S. judicial and Congressional challenges. Efforts to repeal and replace the PPACA have
been ongoing since the 2016 election, but it is unclear if these efforts will be successful. Since January 2017, former President Trump signed Executive
Orders and other directives designed to delay, circumvent or loosen the implementation of certain provisions requirements mandated by the PPACA or
otherwise circumvent some of the requirements for health insurance mandated by the PPACA. In addition, as part of the December 2017 Tax Cuts and
Jobs Act, the “individual mandate,” which required individuals to purchase insurance, was repealed. Furthermore, in December 2018, a U.S. District
Court Judge in the Northern District of Texas ruled that the PPACA is unconstitutional in its entirety because such individual mandate was repealed,
although the U.S. District Court Judge and former President Trump, among others, had acknowledged the ruling would have no immediate effect
pending appeal. Thus, the full impact of the PPACA, any law repealing or replacing elements of it, and the political uncertainty surrounding any repeal
or replacement legislation on our business remains unclear.
We cannot predict what healthcare programs and regulations will be ultimately implemented at the U.S. federal or state level, or at the E.U.
level or within the implementing legislation of the individual E.U. Member States, or the effect of any future legislation or regulation. However, these
provisions as adopted could meaningfully change the way healthcare is delivered and financed, and may materially impact numerous aspects of our
medical business. In particular, any changes that lower reimbursements or reduce medical procedure volumes could adversely affect our medical
business and results of operations.
In addition, in the future there may continue to be additional proposals relating to the reform of the healthcare systems of the United
States, the European Union, any individual Member State of the European Union or any other jurisdiction where we may operate. For example, on
April 5, 2017, the Medical Devices Regulation (Regulation (EU) 2017/745) was adopted. Subject to any postponement of the implementation of the
Medical Devices Regulation by the European Council and European Parliament, the regulation will become effective on May 26, 2021. Once effective,
the new regulation will, among other things:
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strengthen the rules on placing devices on the market and reinforce surveillance once they are available;
establish explicit provisions on manufacturers’ responsibilities for the follow-up of the quality, performance and safety of devices
placed on the market;
improve the traceability of medical devices throughout the supply chain to the end-user or patient through a unique identification
number;
set up, as of 2022, a central database to provide patients, healthcare professionals and the public with comprehensive information on
products available in the European Union; and
strengthen rules for the assessment of certain high-risk devices, such as implants, which may have to undergo an additional check by
experts before they are placed on the market.
Transition from the regulation of our products under the current E.U. regulatory framework to regulation under the Medical Devices
Regulation may require a substantial transition effort by us. In addition, detail as to how certain aspects of the Medical Devices Regulation will be
applied remains unclear. Failure to update our quality system and regulatory documentation could delay our transition to compliance with the Medical
Devices Regulation and delay or prevent us from obtaining new CE Certificates of Conformity under the Regulation. As a result, transition from
compliance with the current E.U. regulatory framework to the Medical Devices Regulation could result in disruption to our business in the European
Economic Area, which could adversely affect our business, results of operation and financial condition.
Furthermore, initiatives sponsored by government agencies, legislative bodies and the private sector to limit the growth of healthcare costs,
including price regulation and competitive pricing, are ongoing in markets where we do business. We could experience a negative impact on our results
of operations due to increased pricing pressure in certain or all of the markets in which we operate. Governments, hospitals and other third party payors
could reduce the amount of approved reimbursements for our products. Reductions in reimbursement levels or coverage or other cost-containment
measures could unfavorably affect our future results of operations.
The use, including the misuse or off-label use, of our medical services and products may be deemed unauthorized use or improper promotion, which
could harm our image in the marketplace or result in injuries that lead to product liability suits and could be costly to our business or result in
regulatory sanctions.
Medical decisions may only be made and operations may only be executed by trained professionals who are authorized to do so in the
jurisdictions in which they operate.
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Our medical services and products are generally designed to support surgeons in the planning and performance of their operations. In our
medical software products set up, training and engineering support, we make it very clear that responsibility for medical decisions rests exclusively with
the responsible surgeon, who is responsible for carefully reviewing and explicitly approving the surgical plan and/or the design of the medical device
that is proposed by our software and engineers. Nonetheless, we cannot assure that patients, hospitals, surgeons or other parties will not try to hold us
responsible for all or a part of the medical decisions underlying the operations that we support, exposing us to potential litigation or civil and criminal
liability for unauthorized medical decision-making. Such actions or liability could lead governmental agencies to conclude that our products or services
are used improperly, all of which could significantly damage our reputation and could materially impair the continued adoption of our medical services
and product offering in the market.
In the markets in which we operate, our medical promotional materials and training methods must comply with numerous applicable laws
and regulations, including the prohibition on the promotion of a medical device for a use that has not been cleared or approved by the relevant regulator
or supervisory body. Use of a device outside of its cleared or approved indication is known as “off-label” use. If a relevant governmental authority
determines that our medical promotional materials or training constitute promotion of an off-label use, it could request that we modify our training or
promotional materials or subject us to regulatory or enforcement actions, including the issuance of an untitled letter, a warning letter, injunction, seizure,
civil fine and criminal penalties. In that event, our reputation could be damaged and adoption of our medical products would be impaired. Although we
train our sales force not to promote our medical products for off-label uses, and our instructions for use in all markets specify that our products are not
intended for use outside of those indications cleared for use, competent regulatory agency could conclude that we have engaged in off-label promotion.
In addition, there may be increased risk of injury if surgeons attempt to use our medical products off-label.
Surgeons also may misuse our medical products or use improper techniques if they are not adequately trained, potentially leading to injury
and an increased risk of product liability. Product liability claims are expensive to defend and could divert our management’s attention and result in
substantial damage awards against us. Any of these events could adversely affect our medical business, results of operations and reputation and our
ability to attract and retain customers for our products and services.
If our marketed medical devices are defective or otherwise pose safety risks, the relevant governmental authorities could require their recall, or we
may initiate a recall of our products voluntarily.
The relevant governmental authorities may require the recall of commercialized products in the event of material deficiencies or defects in
design or manufacture or in the event that a product poses an unacceptable risk to health. Manufacturers, on their own initiative, may recall a product if
any material deficiency in a device is found. A government mandated or voluntary recall could occur as a result of an unacceptable risk to health,
component failures, manufacturing errors, design or labelling defects or other deficiencies and issues. Recalls of any of our medical products would
divert managerial and financial resources and have an adverse effect on our financial condition and results of operations. Any recall could impair our
ability to produce our medical products in a cost-effective and timely manner in order to meet our customers’ demands. We also may be required to bear
other costs or take other actions that may have a negative impact on our future revenue and our ability to generate profits. We may initiate voluntary
recalls involving our medical products in the future that we determine do not require notification of the relevant regulatory body. If a governmental
agency disagrees with our determinations, they could require us to report those actions as recalls. A future recall announcement could harm our
reputation with customers and negatively affect our revenue. In addition, the relevant authority could take enforcement action for failing to report the
recalls when they were conducted.
Alternative medical solutions could outperform the solutions we offer, rendering our solutions obsolete.
Our Materialise Medical segment products and services compete with other innovative technologies that offer similar medical solutions. In
addition, many of our competitors are continuing to innovate in the subsegments of the market that we seek to address. For example, our 3D printed
surgical guides compete with robotics and navigational solutions, which offer alternative methods to guide a surgeon during an intervention. These
current and future alternative technological solutions could outperform the solutions we offer and render our solutions, obsolete.
If our Materialise Medical segment products cause or contribute to a death or a serious injury, or malfunction in certain ways, we will be subject to
medical device reporting regulations, which can result in voluntary corrective actions or agency enforcement actions.
Under the FDA medical device reporting regulations, or MDR, we are required to report to the FDA any incident in which our medical
product has malfunctioned and would be likely to cause or contribute to a death or serious injury if the malfunction happened again. If we fail to report
these events to the FDA within the required timeframes, or at all, the FDA could take enforcement action against us. Any adverse event involving our
medical products could result in future voluntary corrective actions, such as recalls or customer notifications, or agency action, such as inspection,
mandatory recall or other enforcement action. Any corrective action, whether voluntary or involuntary, as well as defending ourselves in a lawsuit, will
require the dedication of our time and capital, distract management from operating our business, and may harm our reputation and financial results.
In the EEA, we must comply with the E.U. Medical Device Vigilance System, the purpose of which is to improve the protection of health
and safety of patients, users and others by reducing the likelihood of reoccurrence of incidents related to the use of a medical device. Under this system,
incidents must be reported to the competent authorities of the Member States of the EEA. An incident is defined as any malfunction or deterioration in
the characteristics and/or performance of a device, as well as any inadequacy in the labelling or the instructions for use which, directly or indirectly,
might lead to or might have led to the death of a patient or user or of other persons or to a serious deterioration in their state of health. Incidents are
evaluated by the EEA competent authorities to whom they have been reported, and where appropriate, information is disseminated between them in the
form of National Competent Authority Reports. The E.U. Medical Device Vigilance System is further intended to
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facilitate a direct, early and harmonized implementation of Field Safety Corrective Actions, or FSCAs, across the Member States of the EEA where the
device is in use. An FSCA is an action taken by a manufacturer to reduce a risk of death or serious deterioration in the state of health associated with the
use of a medical device that is already placed on the market. An FSCA may include the recall, modification, exchange, destruction or retrofitting of the
device. FSCAs must be communicated by the manufacturer or its legal representative to its customers and/or to the end users of the device through Field
Safety Notices.
Our Materialise Medical segment’s 3D printing operations are required to operate within a quality management system that is compliant with the
regulations of various jurisdictions, including the requirements of ISO 13485, and the U.S. Quality System Regulation, which is costly and could
subject us to enforcement action.
We are subject to the regulations of various jurisdictions regarding the manufacturing process for our medical products, including the
requirements of ISO 13485. Within the United States, we are required to comply with the Quality System Regulation, which covers, among other things,
the methods of documentation of the design, testing, production, control, quality assurance, labelling, packaging, sterilization, storage and shipping of
our medical products. Compliance with these regulations is costly and time-consuming. In addition, the FDA enforces the Quality System Regulation
through periodic announced and unannounced inspections of manufacturing facilities. The failure by a manufacturer to comply with applicable statutes
and regulations administered by the FDA and other regulatory bodies, or the failure to timely and adequately respond to any adverse inspectional
observations or product safety issues, could result in, among other things, any of the following enforcement actions:
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untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties;
customer notifications or repair, replacement, refunds, recall, detention or seizure of our medical products;
operating restrictions or partial suspension or total shutdown of production;
refusing or delaying requests for 510(k) clearance or PMA of new products or modified products;
withdrawing 510(k) clearances or PMAs that have already been granted;
refusal to grant export approval for our medical products; or
criminal prosecution.
Any regulatory enforcement actions could impair our ability to produce our medical products in a cost-effective and timely manner in
order to meet our customers’ demands. We also may be required to bear other costs or take other actions that may have a negative impact on our future
revenue and our ability to generate profits. Furthermore, our key component suppliers may not currently be or may not continue to be in compliance
with all applicable regulatory requirements, which could result in our failure to produce our medical products on a timely basis and in the required
quantities, if at all.
We may be subject to or otherwise affected by U.S. federal and state, European or other healthcare laws, including fraud and abuse and health
information privacy and security laws, and could face substantial penalties if we are unable to fully comply with such laws.
Healthcare regulation by U.S. federal and state, European or other governments could significantly impact our medical business.
Healthcare fraud and abuse and health information privacy and security laws potentially applicable to our medical operations include:
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the U.S. federal Anti-Kickback Law, which constrains our marketing practices and those of our independent sales agencies,
educational programs, pricing, bundling and rebate policies, grants for physician-initiated trials and continuing medical education,
and other remunerative relationships with healthcare providers, by prohibiting, among other things, soliciting, receiving, offering or
providing remuneration, intended to induce the purchase or recommendation of an item or service reimbursable under a U.S. federal
healthcare program, such as the Medicare or Medicaid programs;
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U.S. federal false claims laws which prohibit, among other things, knowingly presenting, or causing to be presented, claims for
payment from Medicare, Medicaid, or other third party payors that are false or fraudulent;
HIPAA, and its implementing regulations, which created federal criminal laws that prohibit executing a scheme to defraud any
healthcare benefit program or making false statements relating to healthcare matters and which also imposes certain regulatory and
contractual requirements regarding the privacy, security and transmission of individually identifiable health information;
U.S. state laws analogous to each of the above federal laws, such as anti-kickback and false claims laws that may apply to items or
services reimbursed by any third party payor, including commercial insurers, and state laws governing the privacy and security of
certain health information, many of which differ from each other in significant ways and often are not pre-empted by HIPAA, thus
complicating compliance efforts; and
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similar foreign laws and regulations governing healthcare fraud and abuse, patient data privacy, interactions with healthcare
professionals and related laws and regulations that apply to us in the countries in which we operate.
If our past or present operations are found to be in violation of any of such laws or any other governmental regulations that may apply to
us, we may be subject to penalties, including civil and criminal penalties, damages, fines, exclusion from U.S. federal healthcare programs and the
curtailment or restructuring of our operations. Similarly, if the healthcare providers or entities with whom we do business are found to be non-compliant
with applicable laws, they may be subject to sanctions, which could also have a negative impact on us. Any penalties, damages, fines, curtailment or
restructuring of our operations could adversely affect our ability to operate our medical business and our financial results. The risk of our company
being found in violation of these laws is increased by the fact that many of them have not been fully interpreted by the regulatory authorities or the
courts, and their provisions are open to a variety of interpretations. Further, the PPACA, among other things, amends the intent requirement of the U.S.
federal anti-kickback and criminal health care fraud statutes. A person or entity no longer needs to have actual knowledge of this statute or specific
intent to violate it. In addition, the PPACA provides that the government may assert that a claim including items or services resulting from a violation of
the U.S. federal anti-kickback statute constitutes a false or fraudulent claim for purposes of the false claims statutes. Any action against us for violation
of these laws, even if we successfully defend against them, could cause us to incur significant legal expenses and divert our management’s attention
from the operation of our business.
Risks Related to Our Intellectual Property
If we are unable to obtain patent protection for our products or otherwise protect our intellectual property rights, our business could suffer.
We rely on a combination of patents, copyrights, trademarks, trade secrets, confidentiality and other contractual arrangements with our
employees, end-users and others to maintain our competitive position. Our success depends, in part, on our ability to obtain patent protection for or
maintain as trade secrets our proprietary products, technologies and inventions and to maintain the confidentiality of our trade secrets and know-how,
operate without infringing upon the proprietary rights of others and prevent others from infringing upon our business proprietary rights.
Despite our efforts to protect our proprietary rights, it is possible that competitors or other unauthorized third parties may obtain, copy, use
or disclose or otherwise circumvent our technologies, software, inventions, processes or improvements. We cannot assure investors that any of our
existing or future patents or other intellectual property rights will be enforceable, will not be challenged, invalidated or circumvented, or will otherwise
provide us with meaningful protection or any competitive advantage. In addition, our pending patent applications may not be granted, and we may not
be able to obtain foreign patents or elect to file applications corresponding to our U.S., European or other patents. We intend to expand our business to
certain countries that may not provide the same level of patent or other intellectual property protection as the United States and the European Union.
Even if we assert our patents or obtain additional patent or similar protection in such countries, effective enforcement of such patents or other rights may
not be available. If our patents do not adequately protect our technology, our competitors may be able to offer products or services similar to ours or
potential customers may gain illegal access to our proprietary technology. Our competitors may also be able to develop similar technology
independently or design around our patents, and we may not be able to detect the unauthorized use of our proprietary technology or take appropriate
steps to prevent such use. Any of the foregoing events would lead to increased competition and lower revenue or gross margins, which could adversely
affect our results of operations.
Moreover, ongoing changes to the U.S. patent laws may impact our ability to obtain and enforce our intellectual property rights. In recent
years, the courts have interpreted U.S. patent laws and regulations differently, and in particular the U.S. Supreme Court has decided a number of patent
cases and continues to actively review more patent cases than it has in the past. Some of these changes or potential changes may not be advantageous for
us, and may make it more difficult to obtain adequate patent protection or to enforce our patents against parties using them without a license or payment
of royalties. These changes could increase the costs and uncertainties surrounding the prosecution of our patent applications and the enforcement or
defense of our patent rights, all of which could have a material adverse effect on our business and financial condition.
We may not be able to protect our trade secrets and intellectual property.
While some of our technology is licensed under patents belonging to others or is covered by process patents which are owned or applied
for by us, much of our technology is not protected by patents. Furthermore, patents are jurisdictional in nature and therefore only protect us in certain
markets, rather than globally. We have devoted substantial resources to the development of our technology, trade secrets, know-how and other
unregistered proprietary rights. While we enter into confidentiality and invention assignment agreements intended to protect such rights, such
agreements can be difficult and costly to enforce or may not provide adequate remedies if violated. Such agreements may be breached and confidential
information may be willfully or unintentionally used or disclosed in violation of the agreements, or our competitors or other parties may learn of the
information in some other way. We cannot legally prevent one or more other companies from developing similar or identical technology to our
unpatented technology and accordingly, it is likely that, over time, one or more other companies may be able to replicate our technology, thereby
reducing our technological advantages. If we do not protect our technology or are unable to develop new technology that can be protected by patents or
as trade secrets, we may face increased competition from other companies, which may adversely affect our results of operations.
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We may incur substantial costs enforcing or acquiring intellectual property rights and defending against third party claims as a result of litigation or
other proceedings.
In connection with the enforcement of our intellectual property rights, opposing third parties from obtaining patent rights or disputes
related to the validity or alleged infringement of our or third party intellectual property rights, including patent rights, we have been and may in the
future be subject or party, directly or indirectly, to claims, negotiations or complex, protracted litigation or arbitration proceedings.
While we strive to avoid infringing the intellectual property rights of third parties, we cannot provide any assurances that we will be able
to avoid any claims, directed against us directly or against our collaboration partners or our other customers, that our products and technology, including
the technology that we license from others, infringe the intellectual property rights of third parties. Patent applications in the United States and most
other countries are confidential for a period of time until they are published, and the publication of discoveries in scientific or patent literature typically
lags actual discoveries by several months or more. As a result, the nature of claims contained in unpublished patent filings around the world is unknown
to us, and we cannot be certain that we were the first to conceive inventions covered by our patents or patent applications or that we were the first to file
patent applications covering such inventions. Furthermore, it is not possible to know in which countries patent holders may choose to extend their filings
under the Patent Cooperation Treaty or other mechanisms. Moreover, the patent landscape in the different fields in which we operate is heavily occupied
and freedom to operate examinations are costly and time-consuming. We have not obtained extensive freedom to operate reports in the past for each and
all of our products and services, nor do we intend to install on a general basis freedom to operate examinations for our future products and services. In
addition, we may be subject to intellectual property infringement claims from individuals, vendors and other companies, including those that are in the
business of asserting patents, but are not commercializing products or services in the different fields in which we operate, or our collaboration partners
or our other customers may seek to invoke indemnification obligations to involve us in such intellectual property infringement claims. Furthermore,
although we maintain certain procedures to help to ensure that the items we 3D print on behalf of customers do not infringe upon the intellectual
property rights of others, we cannot be certain that our procedures will be effective in preventing any such infringement.
Intellectual property disputes, litigation and arbitration, regardless of the merit or resolution, could cause us to incur significant costs in
enforcing, or responding to, defending and resolving such claims. In addition, such claims can be costly and disruptive to our business operations by
diverting attention and energies of management and key technical personnel, by prohibiting or otherwise impairing our ability to commercialize new or
existing products or services and by increasing our costs of doing business. We may not prevail in any such dispute or litigation, and an adverse decision
in any legal action involving intellectual property rights, including any such action commenced by us, could limit the scope of our intellectual property
rights and the value of the related technology. Third party claims of intellectual property infringement successfully asserted against us may require us to
redesign infringing technology or enter into costly settlement or license agreements on terms that are unfavorable to us, prevent us from manufacturing
or licensing certain of our products, subject us to injunctions restricting our sale of products and use of infringing technology, cause severe disruptions to
our operations or the markets in which we compete, impose costly damage awards or require indemnification of our sales agents and end-users. In
addition, as a consequence of such claims, we may incur significant costs in acquiring the necessary third party intellectual property rights for use in our
products and services or developing non-infringing substitute technology. Any of the foregoing developments may have a material adverse effect on our
business, financial condition and results of operations.
We cannot predict the outcome of an arbitration proceeding in which we are involved.
On November 15, 2021, we received a written notice from counsel for Zimmer Biomet, informing us of Zimmer Biomet’s decision to file
a request for arbitration with the Belgian Centre for Arbitration and Mediation. Zimmer Biomet believes that we have a contractual obligation pursuant
to the terms of our collaboration to indemnify Zimmer Biomet for the expenses it incurred as a result of its settlement with Conformis, Inc. of a patent
dispute related to certain joint replacement devices. We believe there are meritorious defenses to Zimmer Biomet’s claim and intend to contest it
vigorously. However, an adverse resolution of this arbitration could have an adverse effect on our business, financial condition, results of operations and
cash flows in the period in which the arbitration is resolved. No amounts have been accrued for this loss contingency.
Obtaining and maintaining our patent protection depends on compliance with various procedural, documentary, fee payment and other
requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these
requirements.
Periodic maintenance fees on any issued patent are due to be paid to governmental patent agencies, including the U.S. Patent and
Trademark Office, or USPTO, in several stages over the lifetime of the patent. The USPTO and various foreign governmental patent agencies require
compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. While an
inadvertent lapse can in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in
which noncompliance can result in lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant
jurisdiction. Non-compliance events that could result in lapse of a patent or patent application include, but are not limited to, failure to respond to
official actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents. If we or our licensors
fail to maintain the patents and patent applications covering our products and processes, our competitive position could be adversely affected.
We may be subject to claims that our employees have wrongfully used or disclosed alleged trade secrets.
Certain of our past and present employees were previously employed at other companies, including our competitors or potential
competitors. Some of these employees executed proprietary rights, non-disclosure and non-competition agreements in connection with such previous
employment. Although we try to ensure that our employees do not use the proprietary information or know-how of others in their work for us, we may
be subject to claims that we or these employees have used or disclosed intellectual property, including trade secrets or other proprietary information, of
any such employee’s former employer.
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We are not aware of any threatened or pending claims related to these matters, but in the future litigation may be necessary to defend
against such claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable personnel or intellectual
property rights. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to
management.
If disputes arise, we could lose rights that are important to our business or be subject to restrictions on the conduct of our business.
We have license agreements with respect to certain intellectual property that is important to our business and that may include exclusivity
and non-competition undertakings. Disputes may arise between the counterparties to these agreements and us that could result in termination of these
agreements. If we fail to comply with our obligations under our intellectual property-related agreements, or misconstrue the scope of the rights granted
to us or restrictions imposed on us under these agreements, the counterparties may have the right to terminate these agreements or sue us for damages or
equitable remedies, including injunctive relief. Termination of these agreements, the reduction or elimination of our rights under these agreements, or
the imposition of restrictions under these agreements that we have not anticipated may result in our having to negotiate new or reinstated licenses with
less favorable terms, or to cease commercialization of licensed technology and products. This could materially adversely affect our business.
Certain technologies and patents have been developed with collaboration partners and we may face restrictions on this jointly developed intellectual
property.
We have entered into collaborations with a number of industrial and medical device companies and academic institutions, including
Zimmer-Biomet, DJO Surgical, DePuy Synthes, Lima, Mathys, Siemens, BASF 3D Printing Solutions GmbH, FluidDa NV, or FluidDa, the University
of Michigan, and HOYA. We have, in some cases individually and in other cases along with our collaboration partners, filed for patent protection for a
number of technologies developed under these agreements and may in the future file for further intellectual property protection and/or seek to
commercialize such technologies. Under some of these agreements, certain intellectual property developed by us and the relevant partner may be subject
to joint ownership by us and the partner and our commercial use of such intellectual property may be restricted, or may require written consent from, or
a separate agreement with, the partner. In other cases, we may not have any rights to use intellectual property solely developed and owned by the
partner. If we cannot obtain commercial use rights for such jointly-owned intellectual property or partner-owned intellectual property, our future product
development and commercialization plans may be adversely affected. For additional information, see “Item 4. Information on the Company—B.
Business Overview—Intellectual Property.”
Our use of open source software may expose us to additional risks and harm our intellectual property.
Some of our proprietary software, including some of our 3D printing software, may use or incorporate open source software. Some open
source software licenses require users who distribute open source software as part of their own software product to publicly disclose all or part of the
source code to such software product or make available any derivative works of the open source code on unfavorable terms or at no cost. We monitor, on
an ongoing basis, whether our proprietary software, including that in our 3D printing software, would make use of any open source software that could
require us to disclose our proprietary source code, which could adversely affect our business.
Risks Related to the ADSs
The ADSs may experience price and volume fluctuations.
The stock market generally has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to
the operating performance of listed companies. Broad market and industry factors may negatively affect the market price of the ADSs, regardless of our
actual operating performance. The market price and liquidity of the market for the ADSs may be higher or lower than the price you paid and may be
significantly affected by numerous factors, some of which are beyond our control. These factors include:
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significant volatility in the market price and trading volume of securities of companies in our sector, which is not necessarily related
to the operating performance of these companies;
the mix of products that we sell, and related services that we provide, during any period;
delays between our expenditures to develop and market new products and the generation of sales from those products;
changes in the amount that we spend to develop, acquire or license new products, technologies or businesses;
changes in our expenditures to promote our products and services;
success or failure of research and development projects of us or our competitors;
announcements of acquisitions by us or one of our competitors;
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the general tendency towards volatility in the market prices of shares of companies that rely on technology and innovation;
changes in regulatory policies or tax guidelines;
changes or perceived changes in earnings or variations in operating results;
any shortfall in revenue or net income from levels expected by investors or securities analysts; and
general economic trends and other external factors and events, such as the armed conflict in Ukraine, recessions, interest rates,
international currency fluctuations, corruption, political instability and acts of war or terrorism.
Any of these could result in a material decline in the price of the ADSs.
Members of our board of directors and senior management own a significant percentage of our ordinary shares and are able to exert significant
influence over matters subject to shareholder approval.
Members of our board of directors and senior management beneficially owned approximately 55.9% of our outstanding ordinary shares
(including ordinary shares represented by ADSs), as of April 22, 2022. These shareholders have significant influence over the election of members of
our board of directors and the outcome of corporate actions requiring shareholder approval, including dividend policy, mergers, share capital increases,
amendments of our restated articles of association and other extraordinary transactions. For example, these shareholders may be able to influence the
outcome of elections of members of our board of directors, amendments of our organizational documents, or approval of any merger, sale of assets, or
other major corporate transactions. In addition, our restated articles of association provide that, as long as Wilfried Vancraen, our founder and Chief
Executive Officer, Hilde Ingelaere, an Executive Vice President of our company who is also Mr. Vancraen’s spouse, and their three children, Linde,
Sander and Jeroen Vancraen, or collectively the Family Shareholders, control, directly or indirectly, in the aggregate at least 20% of the voting rights
attached to our ordinary shares, a majority of our directors must be appointed by our shareholders from a list of candidates proposed by the Family
Shareholders. This concentration of ownership within this group of shareholders and the rights of the Family Shareholders prevent or discourage
unsolicited acquisition proposals or offers for our ordinary shares or ADSs that you may feel are in your best interest as one of our shareholders. The
interests of these existing shareholders or the Family Shareholders may not always coincide with your interests or the interests of other shareholders, and
they may act in a manner that advances their best interests and not necessarily those of other shareholders, including seeking a premium value for their
ordinary shares, which might affect the prevailing market price for the ADSs.
The dilutive effect of our warrants could have an adverse effect on the future market price of the ADSs or otherwise adversely affect the interests of
our shareholders.
Based on outstanding granted warrants, as of December 31, 2021, there were outstanding granted warrants to subscribe for an aggregate of
82,954 ordinary shares at a weighted average exercise price of €8.31 per share. The warrants likely will be exercised if the market price of the ADSs
equals or exceeds the applicable exercise price. To the extent such securities are exercised, additional ordinary shares will be issued, which would dilute
the ownership of existing shareholders.
You may not have the same voting rights as the holders of our ordinary shares and may not receive voting materials in time to be able to exercise
your right to vote.
Except as described in the deposit agreement related to the ADSs, holders of ADSs are not able to exercise voting rights attaching to the
ordinary shares evidenced by the ADSs on an individual basis. Under the terms of the deposit agreement, holders of ADSs may instruct the depositary to
vote the ordinary shares underlying their ADSs, but only if we ask the depositary to ask for their instructions. Otherwise, holders of ADSs are not able to
exercise their right to vote, unless they withdraw our ordinary shares underlying the ADSs they hold to vote them in person or by proxy. However,
holders of ADSs may not know about the meeting far enough in advance to withdraw those ordinary shares. If we ask for the instructions of holders of
ADSs, the depositary, upon timely notice from us, will notify holders of ADSs of the upcoming vote and arrange to deliver our voting materials to them.
Upon our request, the depositary will mail to holders of ADSs a shareholder meeting notice which contains, among other things, a statement as to the
manner in which voting instructions may be given, including an express indication that such instructions may be given or deemed given to the
depositary to give a discretionary proxy to a person designated by us if no instructions are received by the depositary from holders of ADSs on or before
the response date established by the depositary. However, no voting instruction shall be deemed given and no such discretionary proxy shall be given
with respect to any matter as to which we inform the depositary that (i) substantial opposition exists, or (ii) such matter materially and adversely affects
the rights of shareholders. We cannot guarantee that holders of ADSs will receive the voting materials in time to ensure that they can instruct the
depositary to vote their shares. In addition, the depositary’s liability to holders of ADSs for failing to execute voting instructions or for the manner of
executing voting instructions is limited by the deposit agreement. As a result, holders of ADSs may not be able to exercise their right to give voting
instructions or to vote in person or by proxy and they may not have any recourse against the depositary or our company if their shares are not voted as
they have requested or if their shares cannot be voted.
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You may not receive distributions on our ordinary shares represented by the ADSs or any value for them if it is illegal or impractical to make them
available to holders of ADSs.
Under the terms of the deposit agreement, the depositary for the ADSs has agreed to pay to you the cash dividends or other distributions it
or the custodian receives on our ordinary shares or other deposited securities after deducting its fees and expenses. You will receive these distributions in
proportion to the number of our ordinary shares your ADSs represent. However, in accordance with the limitations set forth in the deposit agreement, it
may be unlawful or impractical to make a distribution available to holders of ADSs. We have no obligation to take any other action to permit the
distribution of the ADSs, ordinary shares, rights or anything else to holders of ADSs. This means that you may not receive the distributions we make on
our ordinary shares or any value from them if it is unlawful or impractical to make them available to you. These restrictions may have a material adverse
effect on the value of your ADSs.
We have no present intention to pay dividends on our ordinary shares in the foreseeable future and, consequently, your only opportunity to achieve a
return on your investment during that time is if the price of the ADSs appreciates.
We have no present intention to pay dividends on our ordinary shares in the foreseeable future. Any recommendation by our board of
directors to pay dividends will depend on many factors, including our financial condition, results of operations, legal requirements and other factors.
Furthermore, pursuant to Belgian law, the calculation of amounts available for distribution to shareholders, as dividends or otherwise, must be
determined on the basis of our non-consolidated statutory financial statements prepared under generally accepted accounting principles in Belgium, or
Belgian GAAP. In addition, in accordance with Belgian law and our restated articles of association, we must allocate each year an amount of at least 5%
of our annual net profit under our statutory non-consolidated accounts (prepared in accordance with Belgian GAAP) to a legal reserve until the reserve
equals 10% of our share capital. Our legal reserve currently does not meet this requirement. As a consequence of these facts, there can be no assurance
as to whether dividends or other distributions will be paid out in the future or, if they are paid, their amount.
As a foreign private issuer, we are exempt from a number of rules under the U.S. securities laws and are permitted to file less information with the
SEC than U.S. domestic issuers. This may limit the information available to holders of ADSs.
We are a “foreign private issuer,” as defined in the rules and regulations of the SEC and, consequently, we are not subject to all of the
disclosure requirements applicable to U.S. domestic issuers. For example, we are exempt from certain rules under the Exchange Act that regulate
disclosure obligations and procedural requirements related to the solicitation of proxies, consents or authorizations applicable to a security registered
under the Exchange Act. In addition, our officers, directors and principal shareholders are exempt from the reporting and “short-swing” profit recovery
provisions of Section 16 of the Exchange Act and related rules with respect to their purchases and sales of our securities. Moreover, we are not required
to file periodic reports and consolidated financial statements with the SEC as frequently or as promptly as U.S. domestic issuers. Accordingly, there may
be less publicly available information concerning our company than there is for U.S. public companies. As a foreign private issuer, we file an annual
report on Form 20-F within four months of the close of each year ended December 31 and furnish reports on Form 6-K relating to certain material
events promptly after we publicly announce these events. However, although we intend to continue to issue quarterly financial information, because of
the above exemptions for foreign private issuers, we are not required to do so, and, therefore, our shareholders will not be afforded the same protections
or information generally available to investors holding shares in public companies organized in the United States.
We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses.
As a foreign private issuer, we are not required to comply with all the periodic disclosure and current reporting requirements of the
Exchange Act and related rules and regulations. The determination of foreign private issuer status is made annually on the last business day of an
issuer’s most recently completed second fiscal quarter. Accordingly, we will next make a determination with respect to our foreign private issuer status
on June 30, 2022. There is a risk that we will lose our foreign private issuer status in the future.
We would lose our foreign private issuer status if, for example, more than 50% of our assets are located in the United States and more than
50% of our outstanding ordinary shares are held of record by U.S. residents. As of December 31, 2021, 1.7% of our assets were located in the United
States. The regulatory and compliance costs to us under U.S. securities laws as a U.S. domestic issuer may be significantly greater than the costs we
incur as a foreign private issuer. If we are not a foreign private issuer, we will be required to file periodic reports and registration statements on U.S.
domestic issuer forms with the SEC, which are more detailed and extensive in certain respects than the forms available to a foreign private issuer. We
would be required under current SEC rules to prepare our consolidated financial statements in accordance with U.S. GAAP and modify certain of our
policies to comply with corporate governance practices associated with U.S. domestic issuers. Such conversion and modifications would involve
significant additional costs. In addition, we may lose our ability to rely upon exemptions from certain corporate governance requirements on U.S. stock
exchanges that are available to foreign private issuers such as the ones described above and exemptions from procedural requirements related to the
solicitation of proxies.
We have identified a material weakness in our internal controls over financial reporting and if we fail to establish and maintain an effective system
of internal control over financial reporting, we may not be able to accurately report our financial condition, results of operations or cash flows,
which may adversely affect investor confidence in us.
The Sarbanes-Oxley Act requires, among other things, that we maintain effective internal control over financial reporting and disclosure
controls and procedures. In particular, we are required, under Section 404 of the Sarbanes-Oxley Act, to perform system and process evaluations and
testing of our internal controls over financial reporting to allow management and our independent registered public accounting firm to report on the
effectiveness of our internal control over financial reporting. This assessment must include disclosure of any material weaknesses in our internal control
over financial reporting identified by our management or our independent registered public accounting firm. A material weakness is a control deficiency,
or combination of control deficiencies, in internal control over financial reporting that results in more than a reasonable possibility that a
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material misstatement of annual or interim consolidated financial statements will not be prevented or detected on a timely basis. Section 404 of the
Sarbanes-Oxley Act also generally requires an attestation from our independent registered public accounting firm on the effectiveness of our internal
control over financial reporting. Our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with
the level at which our controls are documented, designed or operating. Our remediation efforts may not enable us to avoid a material weakness in the
future.
Although we have implemented an internal control system and devoted significant resources to internal audit, accounting, IT and other functions
to improve our internal control system, our compliance with Section 404 will require that we incur further substantial accounting expenses and continue
to expend significant management efforts to further implement and maintain our internal control system. We may not be able to further implement or
maintain an effective internal control system or complete our evaluation, testing and any required remediation in a timely fashion. In connection with the
preparation of this annual report, during the evaluation and testing process, we identified a material weakness in our internal control over financial
reporting, and concluded that our internal control over financial reporting was not effective as of December 31, 2021 (see “Item 15. Controls and
Procedures.”). We cannot assure you that we will be able to remedy the material weakness in a timely fashion or at all, or that there will not be material
weaknesses or significant deficiencies in our internal control over financial reporting in the future. Any failure to maintain internal control over financial
reporting could severely inhibit our ability to accurately report our financial condition, results of operations or cash flows. If we are unable to remedy
the material weakness and conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm
determines we have a material weakness or significant deficiency in our internal control over financial reporting, we could lose investor confidence in
the accuracy and completeness of our financial reports, the market price of the ADSs could decline, and we could be subject to sanctions or
investigations by the Nasdaq Stock Market, the SEC or other regulatory authorities. Failure to remedy any material weakness in our internal control over
financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the
capital markets.
We have incurred and will incur significant increased costs as a result of operating as a company whose ADSs are publicly traded in the United
States, and our management is required to devote substantial time to new compliance initiatives.
As a company whose ADSs are publicly traded in the United States, we have incurred and will incur significant legal, accounting,
insurance and other expenses that we did not incur prior to our initial public offering. In addition, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street
Reform and Consumer Protection Act and related rules implemented by the SEC and the Nasdaq Stock Market have imposed various requirements on
public companies, including requiring establishment and maintenance of effective disclosure and financial controls. These costs have increased now that
we are no longer an emerging growth company eligible to rely on exemptions under the JOBS Act from certain disclosure and governance requirements.
Our management and other personnel need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations
increase our legal and financial compliance costs and make some activities more time-consuming and costly. These laws and regulations could also
make it more difficult and expensive for us to attract and retain qualified persons to serve on our board of directors or its committees. Furthermore, if we
are unable to satisfy our obligations as a public company, we could be subject to delisting of the ADSs, fines, sanctions and other regulatory action and
potentially civil litigation.
In order to satisfy our obligations as a U.S. public company, we may need to hire or engage additional qualified accounting and financial personnel
and consultants with appropriate experience.
As a U.S. public company, we are required to establish and maintain effective internal controls over financial reporting and disclosure
controls and procedures. In order to establish and maintain this control environment, we have hired accounting and financial personnel and engaged
consultants with experience and technical accounting knowledge, but we may need to hire or engage additional personnel and consultants to further our
efforts. It is difficult to recruit and retain qualified personnel and consultants, and our operating expenses and operations have been and may continue to
be impacted by the costs of their employment or engagement. Further, these efforts may divert management’s attention from their day-to-day
responsibilities.
You may be subject to limitations on the transfer of your ADSs.
Your ADSs are transferable on the books of the depositary. However, the depositary may close its books at any time or from time to time
when it deems doing so expedient in connection with the performance of its duties. The depositary may close its books from time to time for a number
of reasons, including in connection with corporate events such as a rights offering, during which time the depositary needs to maintain an exact number
of ADS holders on its books for a specified period. The depositary may also close its books in emergencies, and on weekends and public holidays. The
depositary may refuse to deliver, transfer or register transfers of the ADSs generally when our share register or the books of the depositary are closed, or
at any time if we or the depositary thinks that it is advisable to do so because of any requirement of law or of any government or governmental body, or
under any provision of the deposit agreement, or for any other reason in accordance with the terms of the deposit agreement. As a result, you may be
unable to transfer your ADSs when you wish to.
If securities or industry analysts do not publish research or reports about our business, or if they adversely change their recommendations regarding
the ADSs, the market price for the ADSs and trading volume could decline.
The trading market for the ADSs is influenced by research or reports that industry or securities analysts publish about our business. If one
or more analysts who cover us downgrade the ADSs, the market price for the ADSs would likely decline. If one or more of these analysts cease to cover
us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which, in turn, could cause the market price or trading
volume for the ADSs to decline.
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It may be difficult for investors outside Belgium to serve process on or enforce foreign judgments against us or our directors and senior
management.
We are a Belgian limited liability company. None of the members of our board of directors and senior management is a resident of the
United States. All or a substantial portion of the assets of such non-resident persons and most of our assets are located outside the United States. As a
result, it may not be possible for investors to effect service of process upon such persons or on us or to enforce against them or us a judgment obtained in
U.S. courts. Original actions or actions for the enforcement of judgments of U.S. courts relating to the civil liability provisions of the federal or state
securities laws of the United States are not directly enforceable in Belgium. The United States and Belgium do not currently have a multilateral or
bilateral treaty providing for reciprocal recognition and enforcement of judgments, other than arbitral awards, in civil and commercial matters. In order
for a final judgment for the payment of money rendered by U.S. courts based on civil liability to produce any effect on Belgian soil, it is accordingly
required that this judgment be recognized or be declared enforceable by a Belgian court in accordance with Articles 22 to 25 of the 2004 Belgian Code
of Private International Law. Recognition or enforcement does not imply a review of the merits of the case and is irrespective of any reciprocity
requirement. A U.S. judgment will, however, not be recognized or declared enforceable in Belgium if it infringes upon one or more of the grounds for
refusal which are exhaustively listed in Article 25 of the Belgian Code of Private International Law. These grounds mainly require that the recognition
or enforcement of the foreign judgment should not be a manifest violation of public policy, that the foreign courts must have respected the rights of the
defense, that the foreign judgment should be final, and that the assumption of jurisdiction by the foreign court may not have breached certain principles
of Belgian law. In addition to recognition or enforcement, a judgment by a federal or state court in the United States against us may also serve as
evidence in a similar action in a Belgian court if it meets the conditions required for the authenticity of judgments according to the law of the state where
it was rendered. The findings of a federal or state court in the United States will not, however, be taken into account to the extent they appear
incompatible with Belgian public policy.
Holders of ADSs are not treated as shareholders of our company.
Holders of ADSs with underlying shares in a Belgian limited liability company are not treated as shareholders of our company, unless they
withdraw our ordinary shares underlying the ADSs that they hold. The depository is the holder of the ordinary shares underlying the ADSs. Holders of
ADSs therefore do not have any rights as shareholders of our company, other than the rights that they have pursuant to the deposit agreement.
We are a Belgian limited liability company but are not a listed company in Belgium, and shareholders of our company may have different and in
some cases more limited shareholder rights than shareholders of a listed company in Belgium or of a U.S. listed corporation.
We are organized as a limited liability company (naamloze vennootschap / société anonyme) under the laws of Belgium. Our corporate
affairs are governed by Belgian corporate law. From a Belgian corporate law point of view, we do not qualify as a listed company (genoteerde
vennootschap / société cotée) because none of our securities are listed on any regulated market in the EEA. The Belgian corporate law provisions that
are applicable to Belgian listed companies do therefore not apply to us. Furthermore, we are not subject to most of the disclosure obligations applicable
to Belgian listed companies. As a result, shareholders of our company may not enjoy certain of the rights and protection generally afforded to
shareholders of a Belgian listed company. You should also be aware that the rights provided to our shareholders under Belgian corporate law and our
restated articles of association differ in certain respects from the rights that you would typically enjoy as a shareholder of a U.S. corporation under
applicable U.S. federal and state laws.
Under Belgian corporate law, except in certain limited circumstances, our shareholders may not ask for an inspection of our corporate
records, while under Delaware corporate law any shareholder, irrespective of the size of his or her shareholdings, may do so. Shareholders of a Belgian
corporation are also unable to initiate a derivative action, a remedy typically available to shareholders of U.S. companies, in order to enforce a right of
our company, in case we fail to enforce such right ourselves, other than in certain cases of director liability under limited circumstances. In addition, a
majority of our shareholders may release a director from any claim of liability we may have, including if he or she has acted in bad faith or has breached
his or her duty of loyalty, provided, in some cases, that the relevant acts were specifically mentioned in the convening notice to the shareholders’
meeting deliberating on the discharge. In contrast, most U.S. federal and state laws prohibit a company or its shareholders from releasing a director from
liability altogether if he or she has acted in bad faith or has breached his or her duty of loyalty to the company. Finally, Belgian corporate law does not
provide any form of appraisal rights in the case of a business combination. For additional information on these and other aspects of Belgian corporate
law and our restated articles of association, see “Item 10. Additional Information—B. Memorandum and Articles of Association.” As a result of these
differences between Belgian corporate law and our restated articles of association, on the one hand, and U.S. federal and state laws, on the other hand, in
certain instances, you could receive less protection as a shareholder of our company than you would as a shareholder of a U.S. corporation.
As a foreign private issuer, we are not subject to certain Nasdaq Stock Market corporate governance rules applicable to U.S. listed companies.
We rely on provisions in the Listing Rules of the Nasdaq Stock Market that permit us to follow our home country corporate governance
practices with regard to certain aspects of corporate governance. This allows us to follow Belgian corporate law and the Belgian Code of Companies and
Associations, which differ in significant respects from the corporate governance requirements applicable to U.S. companies listed on the Nasdaq Global
Select Market. See “Item 16G. Corporate Governance.”
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Holders of ADSs or ordinary shares have limited rights to call shareholders’ meetings or to submit shareholder proposals, which could adversely
affect their ability to participate in the governance of our company.
Except under limited circumstances, only the board of directors may call a shareholders’ meeting. Shareholders who collectively own at
least 10% of the ordinary shares of our company may require the board of directors or the statutory auditor to convene a special or an extraordinary
general meeting of shareholders. As a result, the ability of individual holders of the ADSs or ordinary shares to influence the governance of our
company is limited.
Holders of the ADSs have limited recourse if we or the depositary fail to meet our respective obligations under the deposit agreement or if
they wish to involve us or the depositary in a legal proceeding.
The deposit agreement expressly limits the obligations and liability of us and the depositary. Neither we nor the depositary will be liable to
the extent that liability results from the fact that we:
•
•
•
•
•
are prevented or hindered in performing any obligation by circumstances beyond their control;
exercise or fail to exercise discretion under the deposit agreement;
perform our obligations without negligence or bad faith;
take any action based upon advice of or information from legal counsel, accountants, any person presenting shares for deposit, any
holder of the ADSs or any other qualified person; or
rely on any documents we believe in good faith to be genuine and properly executed.
In addition, neither we nor the depositary has any obligation to participate in any action, suit or other proceeding in respect of the ADSs
which may involve it in expense or liability unless it is indemnified to its satisfaction. These provisions of the deposit agreement will limit the ability of
holders of the ADSs to obtain recourse if we or the depositary fails to meet our respective obligations under the deposit agreement or if they wish to
involve us or the depositary in a legal proceeding.
Investors may not be able to participate in equity offerings, and ADS holders may not receive any value for rights that we may grant.
In accordance with Belgian corporate law, our restated articles of association provide for preferential subscription rights to be granted to
our existing shareholders to subscribe on a pro rata basis for any issue for cash of new shares, convertible bonds or warrants that are exercisable for
cash, unless such rights are cancelled or limited by resolution of our shareholders’ meeting or the board of directors. Our shareholders’ meeting or board
of directors may cancel or restrict such rights in future equity offerings. In addition, certain shareholders (including those in the United States, Australia,
Canada or Japan) may not be entitled to exercise such rights even if they are not cancelled unless the rights and related shares are registered or qualified
for sale under the relevant legislation or regulatory framework. As a result, there is the risk that investors may suffer dilution of their shareholding
should they not be permitted to participate in preference right equity or other offerings that we may conduct in the future.
If rights are granted to our shareholders, as the case may be, but if by the terms of such rights offering or for any other reason, the
depositary may not either make such rights available to any ADS holders or dispose of such rights and make the net proceeds available to such ADS
holders, then the depositary may allow the rights to lapse, in which case ADS holders will receive no value for such rights.
Shareholders in jurisdictions with currencies other than the euro face additional investment risk from currency exchange rate fluctuations in
connection with their holding of our shares.
Any future payments of dividends on shares will be denominated in euro. The U.S. dollar—or other currency—equivalent of any
dividends paid on our shares or received in connection with any sale of our shares could be adversely affected by the depreciation of the euro against
these other currencies.
We do not expect to be a passive foreign investment company for U.S. federal income tax purposes; however, there is a risk that we may be classified
as a passive foreign investment company, which could result in materially adverse U.S. federal income tax consequences to U.S. investors.
We do not expect to be a passive foreign investment company, or a PFIC. However, the relevant rules are not entirely clear and certain
aspects of the tests will be outside our control; therefore, no assurance can be given that we will not be classified as a PFIC for any taxable year. If you
are a U.S. taxpayer and we are determined to be a PFIC at any time during your holding period, you may be subject to materially adverse consequences,
including additional tax liability and tax filing obligations. See “Item 10. Additional Information—E. Taxation—U.S. Taxation—Passive Foreign
Investment Company.”
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Changes in our United States federal income tax classification, or that of our subsidiaries, could result in adverse tax consequences to our 10% or
greater U.S. shareholders.
We do not believe that we, or any of our non-U.S. subsidiaries, are controlled foreign corporations (“CFCs”) based upon the ADSs or
shares owned directly by U.S. shareholders. However, we or certain of our non-U.S. subsidiaries may be classified as CFCs depending on the U.S.
holdings of certain of our non-U.S. shareholders. This classification could cause significant and adverse U.S. tax consequences for our U.S. shareholders
that own, or are considered to own, as a result of the attribution rules, 10% or more of the voting power or value of the stock of us or
our non-U.S. subsidiaries (a “10% U.S. shareholder”) or any person who becomes a 10% U.S. shareholder under the U.S. Federal income tax law
applicable to owners of CFCs. Therefore, we would advise our 10% U.S. shareholders (if any) and persons considering becoming 10% U.S.
shareholders to consult their tax advisors regarding the U.S. Federal income tax law applicable to owners of CFCs.
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ITEM 4.
INFORMATION ON THE COMPANY
A. History and Development of the Company
Materialise NV was incorporated in Belgium on June 28, 1990 as a limited liability company under Belgian company law.
On April 9, 2021, we acquired an option to buy Link3D Inc., which we exercised on November 15, 2021. We closed the acquisition on
January 4, 2022. This acquisition was effectuated through our U.S. subsidiary, Materialise USA, LLC. As a result of this transaction, Materialise USA
has become the sole shareholder of Link3D. Link3D is an additive workflow and digital manufacturing software company. The acquisition of Link3D is
intended to strengthen and accelerate the creation of the Materialise software platform.
On June 22, 2021, together with Zhenyuan (Tianjin) Medical Appliances Technology Co., Ltd., we incorporated a Chinese joint venture
with the name Tianjin Zhenyuan Materialise Medical Technology Limited Company. We hold 51% of the shares of this joint venture.
On October 8, 2021, we acquired the remaining 16.66% of the shares in Rapidfit NV, making us Rapidfit’s sole shareholder.
On January 2022, we filed a voluntary application to strike Materialise UK off the UK company register. A notice in this respect was
published in The London Gazzette on February 8, 2022. As a result, Materialise UK has been struck off the register and was dissolved on April 26,
2022.
Our principal executive and registered offices are located at Technologielaan 15, 3001 Leuven, Belgium. Our telephone number is +32
(16) 39 66 11. We are registered with the Register of Legal Entities of Leuven under the number 0441.131.254. Our agent for service of process in the
United States is Materialise USA, LLC, located at 44650 Helm Ct., Plymouth, Michigan 48170, telephone number (734) 259-6445. Our internet website
is www.materialise.com. The information contained on, or accessible through, our website is not incorporated by reference into this annual report and
should not be considered a part of this annual report.
The SEC maintains an internet website that contains reports, proxy and information statements, and other information regarding issuers
that file electronically with the SEC at www.sec.gov.
Capital Expenditures (Property Plant and Equipment and Intangible Assets)
Our capital expenditures amounted to €11.7 million €17.7 million and €15.7 million for the years ended December 31, 2021, 2020, and
2019, respectively. In 2021, our main capital expenditures were € 1.7 million for our internal digital transformation program, € 1.0 million for the
transformation of our platform architecture, € 0.8 million for patents, € 1.6 million for a new building in Germany, € 0.5 million for a new metal factory
in the United States and € 2.7 million for new machinery and installations in Belgium, Germany, Poland and the United States. In 2020, our main capital
expenditures were €2.8 million for office software, €2.2 million for our internal digital transformation program, €0.7 million for medical projects,
€4.9 million for the new building in Germany and €7.1 million for new machinery and installations in Belgium, Germany, Poland, Brazil and the United
States.
B. Business Overview
Our Mission
Our mission is to innovate product development that results in a better and healthier world, through our software and hardware
infrastructure, and an in-depth knowledge of additive manufacturing.
Our Company
We are a leading provider of additive manufacturing and medical software and of sophisticated 3D printing services. With our knowledge,
products and services, we empower our customers’ use of additive manufacturing technology, in general, and we enable certain specific and significant
applications of additive manufacturing, in particular. In both instances, we seek to empower the choice for sustainability through the use of additive
manufacturing.
The customers of our general software tools and 3D printing services are active in a wide variety of industries, including healthcare,
automotive, aerospace, art and design and consumer products. The significant additive manufacturing applications that we are more deeply and more
directly involved in currently include applications for cranio maxillo facial, eyewear, footwear and measurement fixtures.
As of December 31, 2021, our team consisted of 2,332 full-time equivalent employees, or FTEs, and fully dedicated consultants. Our
portfolio of intellectual property featured 385 patents and 143 pending patent applications as of December 31, 2021. For the year ended December 31,
2021, we generated € 205.5 million of revenue, representing a 21% decrease over the prior year, a net profit of € 13.1 million and Adjusted EBITDA of
€ 32 million. For a description of Adjusted EBITDA and a reconciliation of our net profit to our Adjusted EBITDA, see “Item 5. Operating and
Financial Review and Prospects—A. Operating Results—Other Financial Information.”
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Our Core Competencies
Our established and proven business model integrates our three research-based core competencies: (i) software development, (ii) 3D
printing, and (iii) engineering for 3D printing, which act as complementary incubators for our new products and function as integrated support centers
for our existing products. The interaction and synergies among our software development, 3D printing and engineering teams position us well to
continuously develop and support innovative applications of 3D printing that often integrate all three core competencies.
Software Development (Software). Our expertise in developing 3D printing software originated from our efforts to enable 3D printing applications and
to continually improve processes within our own additive manufacturing operations. As a result of our continued deployment over the course of 30 years
of human, intellectual and economic capital to software development, a number of our products, including Magics and Mimics, have evolved into
industry-leading flagship products. We have an established quality management system for the development of our software products that is ISO
9001:2015 certified. We are also ISO 13485:2016 certified for our medical applications and our medical applications comply with the regulatory
requirements of several jurisdictions, including Europe and the United States.
3D Printing (Hardware). As a pioneer in the additive manufacturing industry, we have an extensive history of 3D printing millions of parts utilizing a
broad array of technologies, often in highly regulated environments, for thousands of commercial, industrial and medical customers. We operate some of
the most sophisticated printing machines currently available on the market, as well as our own proprietary stereolithography-based technology,
Mammoth, to provide a very broad range of technologies, sizes, materials and finishing degrees and to address the needs of customers across a large
number of potential markets. Production is organized in multiple production lines that are dedicated to the Medical and the Industrial Production
segments that we serve. Our 3D printing group, which operates in an ISO 9001:2015-certified quality management system, in an ISO 13485:2016-
certified system for the production of medical devices, and in an EN9100:2016 as well as EASA Part 21G POA certified system for the production of
plastic aerospace parts, has its own maintenance and research team that utilizes an in-house laboratory facility where products can be tested. The wide
variety of products that are processed by our multiple production lines are logistically streamlined through our proprietary database systems that manage
the entire process from order intake to 3D printing to final shipment.
Engineering (Mindware). Our engineering expertise is integral to our entire business, as it enhances our software development and 3D printing
expertise. Our engineers work in teams that support customers in different market segments. These teams work directly with our customers to identify
new, and customize and refine existing, 3D printing applications and to increase productivity, efficiency and ease of use across all aspects of the
solutions we provide. Our engineering teams have particular expertise in industrial and medical applications, including patient-specific surgical guides,
models and implants with the applicable market clearances. Our teams are highly specialized, especially in the medical field, and include quality
controllers, development researchers for new hardware concepts and trainers who bring new engineers to the required level of expertise. Our engineers
operate within the framework of a certified quality management system. Our engineering teams make extensive use of our proprietary software tools and
have direct access to our 3D printing center where developments can be tested in an actual production environment.
Our Market Segments
The product and service offerings developed by our three core competencies are offered through a market oriented organization that
is active across three principal market segments: (i) Materialise Software, (ii) Materialise Medical, and (iii) Materialise Manufacturing. We believe that
our customers benefit significantly from the synergistic interplay between our core competencies and the three market segments on which we focus and
which provide constant end-user feedback to the product development and support teams within our core competencies.
Our discussion below of the growth opportunities for each of our market segments is based on our medium- and long-term expectations for
these segments. In the short term, we expect both the 3D printing industry and our business will be impacted by the ongoing COVID-19 pandemic,
although we cannot predict with certainty the impact the pandemic will have. For more information, see “Item 5. Operating and Financial Review and
Prospects—D. Trend Information” below.
Our Materialise Software Segment
In our Materialise Software segment, we offer proprietary software worldwide through programs and platforms that enable companies to set up
efficient, reliable and sustainable 3D printing production. Our software supports 3D printing service bureaus both large and small that are producing a
variety of parts for their customers and addresses the needs of large corporations producing at volume, either through significant serial manufacturing or
mass customization. In all of these environments, we believe our software enables both operational excellence and flexibility. We work directly with
many 3D printing machine manufacturers to enable and enhance the functionality of 3D printers and of 3D printing operations. We have developed
software that interfaces between almost all types of industrial 3D printers, and various software applications and capturing technologies, including
CAD/CAM packages and 3D scanners, by enabling data preparation and process planning and execution. Our programs interface with machines
manufactured by leading original equipment manufacturers, or OEMs, such as Sindoh Co. Ltd., EOS GmbH, Essentium Inc., HP Inc., The ExOne
Company, Renishaw PLC, SLM Solutions Group AG, Stratasys Ltd., Trumpf GmbH & Co. KG, Uniontech Corporation, Desktop Metal and Voxeljet
AG. In addition, we have entered into partnership agreements with leading CAD, CAM and product lifecycle management, or PLM, companies such as
Siemens, HCL Technologies Ltd., or HCL, and PTC, for the integration of our additive manufacturing technology into Siemens’ NX software, HCL’s
CAMworks, and PTC’s Creo software. This enables the streamlining of the design to manufacturing process for products being produced using additive
manufacturing. We offer software that enables our customers to more efficiently organize the entire workflow of a 3D printing operation with multiple
3D printing machines, many operators and complex data flow and logistical requirements. We believe that the capabilities of our software products and
their unique compatibility with many 3D printing systems continue to set standards in the professional 3D printing software market. Customers
operating machines from multiple OEMs and customers running large 3D printing operations are among those who can benefit the most from our
software packages and we believe that in many cases those customers demand compatibility with our software from the systems of OEMs.
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As of December 31, 2021, our Materialise Software segment had a team of approximately 281 FTEs and fully dedicated consultants, with
approximately 37.4% based at our headquarters in Belgium and the remaining employees distributed throughout our local field offices in China,
Germany, Japan, Malaysia, Ukraine, the United Kingdom and the United States.
On January 4, 2022, we completed the acquisition of Link3D and began the integration of Link3D into our Materialise Software segment. The
completion of this integration will allow us to expedite the realization of our plans for a cloud-based platform.
Business Model. We generate revenue in our Materialise Software segment from our software licenses, maintenance contracts, hardware controller sales
for our Materialise Controllers and custom software development services. Additionally, we offer consultancy and training services. We license our
software products to our customers on either a time-based or perpetual basis, in which case we offer annual maintenance contracts that provide for
software updates and support. In addition, we also announced a number of cloud-based solutions that were released in 2021 or are scheduled to be
released in 2022. Making use of, among others, the cloud-based platform that has been developed by Link3D, we are significantly accelerating the
migration of our software solutions to the cloud, which we intend to offer along with our license-based solutions. We charge our custom software
development services either on a time and material or on a fixed-cost basis. For the years ended December 31, 2021, 2020 and 2019, our Materialise
Software segment generated revenue of € 42.9 million, € 39.1 million, € 41.7 million, respectively 20.9%, 22.9%, 21.2% of our total revenue.
Software Products. We have a diversified portfolio comprised of software applications addressing different 3D printing market opportunities. Our
decades of experience in the additive manufacturing industry are reflected in the sophisticated 3D printing software and business management tools we
provide for our customers. We believe that each of our software applications is, or has the potential of becoming, one of the leading technologies in its
domain. We believe that our neutral platform approach positions our software to drive greater innovation and choice across the 3D printer software
ecosystem, and provides 3D printer users with more powerful and flexible printing capabilities.
In particular, we offer the following software applications:
•
Magics. Magics enables customers to import a wide variety of CAD formats and to export standard tessellation language, or STL,
files ready for additive manufacturing. Magics’ applications include repairing and optimizing 3D models; analyzing parts; making
process-related design changes on customers’ STL files; designing support structures; documenting customer projects; nesting
multiple parts in a single print run; and process planning.
Our Magics platform is enhanced with modules that further expand functionality and utility for our customers. For instance, the Magics Import
Module plays an important role in efficiently moving CAD designs through to manufactured products by importing nearly all standard CAD
formats into Magics. The Magics Structures Module was designed to help customers to reduce weight and material usage in their designs. We also
have developed logistical modules such as the Magics SG Module, which offers tools for support structure design during the 3D printing process,
and the Magics Sintermodule, which offers solutions for automated part nesting, protecting small and fragile parts and locating them after
building. The Magics Simulation Module enables our users to simulate the build process virtually, and optimizes the build preparation based on
the results of such simulation, thus reducing build failures and improving the results.
In addition to offering state-of-the-art data preparation functionality to our users, our Magics platform also focuses on automation and other
productivity improvements and brings interconnectivity to machines and enterprise software platforms.
Further, we recently won the 2021 3DPrinting Industry’s “Software Tool or Company of the Year” award for our Magics software.
Specific versions of the Magics application were also brought to the market by us, including Magics Essentials (an entry-level package offering
premium data preparation functionality), Magics Print (combining the most important build preparation tools and straightforward build file
generation technology) and MiniMagics/MiniMagicsPro (providing viewing, communication and quoting solutions for our customers working in
data preparation, or in quoting and quality control teams). Users of Magics Essentials and Magics Print can upgrade to our expert Materialise
Magics platform if they want the full data and build preparation functionality at their disposal in one package.
•
Link3D. Link3D is an additive workflow and digital manufacturing software platform that supports customers in major
manufacturing industries to scale and integrate their additive manufacturing operations across complex supply chains and IT
environments. The Link3D platform provides a suite of applications that are instrumental to organizations scaling their additive
manufacturing capability. These solutions enable organizations to plan, manage, and optimize their operations. The platform includes
centralized order management, quoting & costing, production planning, production scheduling, postproduction management, quality
management and manufacturing analytics.
•
Streamics. Complementary with Magics is our Streamics product, which is a central additive manufacturing logistics and control
system that links operators, 3D printers (including those from various OEMs and based on different technologies), processes,
materials and shipment flows together to improve customer service and save time and money. Streamics provides a user-friendly,
server-based system, which centralizes our customers’ project data and makes it easier to collaborate among team members and
communicate with customers. The configurable modules are designed to facilitate communication, support the organization and
execution of data preparation, plan machine capacity, and guide post-processing steps, allowing additive manufacturing teams to
quickly adapt to business and market changes. Gradually, Streamics functionality will be migrated to the Link3D platform, and as
this happens, a transition plan will be set up to migrate existing Streamics customers to the Link3D platform over the coming years.
In the meantime, we will continue to maintain and support Streamics and its customers.
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•
3-maticSTL. 3-maticSTL is a versatile application that permits, among other things, design modification, design simplification, 3D
texturing, re-meshing and forward engineering directly to standard additive manufacturing STL files. Using Materialise consultancy
services, targeted design automation solutions can be created for specific workflows.
•
Build Processors. We work in close collaboration with a wide variety of 3D printer OEMs to develop customized and integrated
solutions for their additive manufacturing machines. Our build processors automatically translate the 3D model data into layer data
to provide sliced geometry and can link the latter with the appropriate build parameters to feed the machine control software.
Another key benefit of our build processors is that they allow for a two-way communication between Magics and 3D printers. We
also develop the metal build processors in Materialise Bremen and as a consequence we are able to cover a wide range of metal 3D
printers. Furthermore, licensing and integrating our build processor framework, companies such as Siemens and PTC can also
leverage the extensive ecosystem of build processors we have developed together with OEMs. Over the past years, we have
transformed the architecture of our build processor to a cloud-native solution. Next to the standard build flows, the architecture also
allows for custom fit-for-purpose build pipelines to be scripted, enabling companies and 3D printer machine vendors alike to adapt
and optimize the behavior and output of the build processor. We believe this is very valuable in the context of volume production.
•
e-Stage. e-Stage is a software solution that increases additive manufacturing productivity by automating STL support generation,
optimizing the STL build process, and reducing the time our customers spend on finishing work such as build support removal and
sanding. e-Stage is designed to allow our customers to use less material, to be able to 3D nest and to minimize failed builds. e-Stage
for plastic has been commercially available since September 2007, and in the fall of 2017, we released e-Stage for metal. In 2018,
we won the TCT SOFTWARE AWARD 2018 for e-Stage for metal.
•
Materialise Controller. Materialise Controller controls and steers additive manufacturing machines using embedded Materialise
software, and is fully integrated into the Materialise 3D printing software platform. It is engineered towards research and
development applications, machine manufacturers and those who want to control or adapt the production process to their specific
needs.
•
Materialise Storefront. A new cloud-based e-commerce solution, to be launched early 2022, which automates the intake and sales
process of 3D printing factories and facilitates communication with customers. Storefront supports automatic and manual price
calculation and quoting, AM data preparation, order management and integration with payment and shipment providers.
•
Materialise Process Tuner. an intuitive online platform that helps manufacturing companies, service bureaus and machine builders
speed up the process tuning that is required for mass-manufacturing 3D printed parts. The Materialise Process Tuner can be accessed
via a web-browser as well as through an API, making it the company’s first cloud-native Magics application. Companies can also
choose to deploy and run the application on site.
•
Materialise Workflow Automation. This solution enables the user to leverage the full power of the Materialise Software technology
(as also available through Materialise Magics) in creating specific end-to-end workflows, which can be executed automatically and
autonomously, or can be called from other software solutions like Magics. Workflow Automation provides the possibility to script
simple workflows or to create complex business process workflows using a graphical user interface. The workflows can be executed
in the cloud, on premise or on the user’s workstation.
Sales and Marketing. We market and distribute our software directly through our sales force as well as through our own website and third party
distributors. Our Belgian team oversees our global marketing strategy and sales processes. Our local field office employees manage sales for particular
markets and provide pre- and post-sales technical support to our customers. We also utilize a growing network of distributors and resellers to bring our
solutions to specific regions or market segments. In addition, machine manufacturers and their local dealers often distribute our software products
together with their 3D printers, with our software enhancing the printers’ value proposition and broadening the suite of applications available to the
machines.
Customers. The customers for our Materialise Software segment include 3D printing machine manufacturers as well as production companies and
contract manufacturers in a variety of industries, such as the automotive, aerospace, consumer goods and hearing aid industries, and external 3D printing
service bureaus. Our Materialise Software segment customer base is spread across Asia, Europe and the Americas.
Competition. In our Materialise Software segment, we face indirect competition from the software developed by 3D printing OEMs, which are often
more “closed ecosystem”-oriented (i.e., only focused on their own machines), and from companies that offer software that addresses one or more
specific functional areas covered by our software solutions, such as providers of traditional CAD solutions. We compete directly with other providers of
additive manufacturing management and machine control software, including open source software providers.
Growth Opportunities. We believe that 3D printing will be increasingly used for the manufacturing of complex or customized end parts, and expect that
the number of 3D printer manufacturers will increase accordingly, with certain new players initially focusing more on the hardware than on the software
component of their 3D printers. Hence, we anticipate that the demand for highly performing industrial 3D printing software platforms will grow
accordingly. The new products that we have developed and are developing, including the products of Link3D, Process Tuner, Workflow Automation and
fit-for-purpose build processors specifically address what we believe will be the needs of this growing end part manufacturing market.
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We believe that we can continue to expand our market penetration through expanding relationships with customers and OEMs, and
through the continued innovation of our software products to adapt to and meet market demands. In order to be able to do so, we intend to bring our
teams closer to our customer base worldwide, which will require continued investments in the expansion of our marketing and sales presence. In order
to be able to meet the demands of new entrants on the market and to better address the needs of the end parts market, we also intend to continue to invest
significantly in the development of our software tools and solutions, including furthering their compatibility with as many 3D printers on the market as
possible.
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Our Materialise Medical Segment
In our Materialise Medical segment, our product and services offering addresses what we believe to be long-term trends in the medical
industry towards personalized, functional and evidence-based medicine.
As of December 31, 2021, our Materialise Medical segment consisted of approximately 861 FTEs and fully dedicated consultants, with
approximately 24.7% based at our headquarters in Belgium and the remaining employees distributed throughout our local offices in Australia, Brazil,
China, Colombia, France, Germany, Japan, Malaysia, Ukraine, the United Kingdom and the United States.
Business Model. We generate revenue in our Materialise Medical segment through the sale of medical software and personalized medical devices. We
sell licenses to our medical software packages and software maintenance contracts and sell medical devices that we customize and print for our
customers. We also provide custom software development and engineering services, for which we charge either on a time and material or fixed-cost
basis. The majority of the medical devices that we printed in 2020 were surgical guides (and related bone models) that were distributed to surgeons
through our collaboration partners such as DePuy Synthes, Smith & Nephew, Stryker and Zimmer Biomet. We also print patient-specific implants that
we sell directly to hospitals or distribute through partners such as DePuy Synthes. The customer base for our medical software products includes
academic institutions, medical device companies and hospitals.
For the years ended December 31, 2021, 2020 and 2019, our Materialise Medical segment generated revenue of € 73.4 million, € 61.7 million and
€60.8 million, respectively, representing 35.7%, 36.2% and 30.9% of our total revenue, respectively.
Medical Software. Our software allows medical-image based analysis, planning and engineering as well as patient-specific design and printing of
surgical devices and implants. Our customers include leading research institutes, renowned hospitals and major medical device companies. Our medical
software packages often serve as an introduction to our capabilities and in certain cases lead to custom software developments and clinical services
opportunities. Our medical software packages are:
•
Materialise Mimics Innovation Suite. The Materialise Mimics Innovation Suite is a complete set of tools developed for biomedical
professionals that allows them to perform a multitude of engineering operations based on medical imaging data. The suite consists of
several complementary products and services, including Materialise Mimics, Materialise 3-matic, engineering services and medical
models, as well as consultancy and custom software development.
•
Materialise Mimics. Materialise Mimics is software addressing medical professionals specifically developed for medical image
processing that can be used to segment accurate 3D models from medical imaging data (for example, from CT or MRI) to measure
accurately in 2D and 3D and to export 3D models for additive manufacturing or to Materialise 3-matic.
•
Materialise 3-matic. Materialise 3-matic focuses on anatomical design and is able to combine CAD tools with pre-processing
capabilities directly on the anatomical data coming from Materialise Mimics. It enables our customers to conduct thorough 3D
measurements and analysis, design a patient-specific implant, a surgical guide, or a benchtop model, and to prepare the anatomical
data and/or resulting implants for simulation.
•
Materialise OrthoView. Materialise OrthoView is a 2D digital pre-operative planning and templating solution for orthopedic
surgeons. The software imports a digital X-ray image from a Picture Archiving and Communication System, or PACS, and positions
the templates of suitable prostheses on the X-ray image at the correct scale. Materialise OrthoView currently serves more than
15,000 orthopedic surgeons in 60 countries globally, focusing primarily on joint replacements. We acquired OrthoView Holdings
Limited in October 2014, and have included the OrthoView solution in our portfolio of pre-operative planning solutions.
•
•
Materialise Mimics inPrint. With Materialise Mimics inPrint, clinicians can easily create files for 3D printing and use anatomically
accurate models to help simulate or evaluate options for patient-specific surgical treatment.
Materialise ProPlan CMF. Materialise ProPlan CMF is a software package developed for oral, maxillofacial, nose, throat and plastic
surgeons. The software allows surgeons to pre-operatively plan their surgeries in 3D based on (CB)CT or MRI images using a set of
tools to analyze, measure and reconstruct the patient’s anatomy. With the software the surgeon can also plan the movements
(translations and rotations) of the mandible or maxilla and preplan the reconstruction of defects.
•
Materialise Mimics Enlight. Materialise Mimics Enlight is a workflow-based planning software that enables companies, clinicians
and hospitals to scale 3D planning for procedures. Mimics Enlight is based on the strengths of Materialise’s Mimics Innovation Suite
and can be applied in various clinical fields such as structural heart or lung surgery.
•
Materialise Surgicase. Materialise Surgicase is an online case management platform that enables medical device companies and
hospitals to manage ordering and processing of personalized services and devices.
Clinical Services and Personalized Medical Devices. Using our FDA-cleared and CE compliant medical software, we analyze 3D medical images of
patients and provide doctors with virtual surgical planning services for their review and approval. In most cases, we also design and 3D print surgical
guides that uniquely fit a specific patient and allow the surgeon to conduct the operation in accordance with the approved surgical plan. In certain
circumstances, we deliver 3D printed customized patient-specific medical implants.
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In our 3D printing centers in Belgium, Japan, Brazil, and the United States, we have separate production lines for our Materialise Medical
segment.
We believe that our medical image-based simulation and planning software and 3D printing technology can assist hospitals and clinicians
in providing personalized care to patients which can contribute to increased quality of life.
In many cases, surgeons using our clinical services work together with our clinical engineers to turn their patients’ medical image data into
virtual surgical plans, and patient-specific 3D printed precise surgical and customized anatomical models to optimize intervention planning. For
indications such as shoulder surgery, we have optimized and automated our 3D planning capabilities to provide surgical plans within a short timeframe
and at a high quality that does not require an anatomical model to be provided. Utilizing our SurgiCase tool, surgeons upload CT or MRI medical image
data and submit their cases to us, track their cases and review them as interactive virtual 3D models. In the framework of our collaborations with certain
leading medical device companies, our SurgiCase tool is rebranded and adapted to the specific product offering and needs of our collaboration partners.
In many cases surgeons use personalized surgical guides or implants to translate the surgical plan into the operating room. Our 3D printed
surgical guides include joint replacement guides for knee, shoulder and hip replacement surgeries, osteotomy guides and CMF guides, and our 3D
printed implants include hip-revision implants, shoulder and CMF implants. The surgical guides and implants we print for U.S. based patients
are FDA-cleared, and to the extent required by law, our medical devices for EEA-based patients bear the appropriate CE labels.
We address large surgical markets in orthopedics and CMF through collaboration agreements with leading medical device companies,
including DePuy Synthes, Zimmer-Biomet, DJO Surgical, and Smith & Nephew. Pursuant to these agreements, we print joint replacement and/or CMF
guides that our collaboration partners distribute under their own brands, together with their own implants, in the United States, Canada, South Africa,
Latin America, Europe, China, Japan and Australia. We leverage our collaboration partners’ distribution capabilities to extend our reach into these large
markets, and our collaboration partners utilize our 3D printing-related expertise to provide surgical planning and customized devices to surgeons.
We also address certain high value-added, specialty applications by providing the full solution ourselves, including the delivery of
implants and guides directly to the hospital or surgeon. Such applications include customized CMF implants and guides, hip revision and shoulder
implants in a patented porous matrix configuration and osteotomy guides. Through Engimplan, we distribute implants and instruments in Brazil,
offering both traditional and 3D printed CMF products as well as a broader portfolio that includes product lines for trauma and sport medicine.
We also work with customers to print anatomical models that may be used for a wide range of applications such as sizing of medical
devices, clinical trials, training, patient communications and marketing.
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Sales and Marketing. We distribute our medical software through our direct sales force, our website and PACS partners (some of which
partners also include our OrthoView solutions in their product offering to hospitals) and sell our medical devices through our agreements with
collaboration partners such as Zimmer Biomet and Depuy Synthes. In specialty markets, we market and distribute our 3D printed medical devices and
other clinical services through our experienced engineers who develop a close collaboration with key opinion leaders in each of these market segments.
All our activities in our Materialise Medical segment are coordinated and supervised from our headquarters in Belgium, which supervises
product management and sales of our medical devices and software products.
Customers. The customers for our Materialise Medical segment mainly include medical device companies, hospitals, universities, research institutes and
industrial companies. For the year ended December 31, 2021, partner sales to medical companies collectively represented 53% and total software
revenue represented 31% of our total Materialise Medical segment revenue. Our direct medical device sales represented 16% of our total Materialise
Medical segment revenue. Most of our other clinical service sales to customers are executed on the basis of single transaction contracts or purchase
orders.
Collaboration Partners. We collaborate with leading medical device companies and academic institutions for the development and distribution of our
surgical planning software, services, and products, such as Zimmer Biomet and DePuy Synthes, as well as DJO Surgical, Integra, Lima, Mathys,
Medtronic, Abbott, Corin and the University of Michigan. Pursuant to these arrangements, we develop and license software and sell surgical planning,
guides and implants, including for use in the fields of knee and shoulder replacement, CMF and thoracic procedures that our collaboration partners may
then distribute under their own brands, together with their own implants, mainly in the United States, Europe, Japan and Australia. In addition, we grant
licenses to collaboration partners to use, market and distribute such software or surgical guides and implants. Some of the licenses we have granted to
our products and software provide for exclusive rights, including with respect to a particular field of medicine or to the software or product developed
during the collaboration, and certain collaboration partners may have rights of first refusal with respect to related products or collaborations. The
compensation structures under these arrangements vary and may include an upfront fee, royalties, milestone payments linked to certain targets, and fees
for the service, maintenance and training we provide in connection with our software and products.
Competition. In our Materialise Medical segment, we compete with a number of companies that provide image based software, 3D printed surgical
models or medical devices, such as 3DSystems, Stratasys, Simpleware, Pie Medical, Within Lab as well as with medical device companies that develop
and commercialize 3D printed medical devices and related software services.
Growth Opportunities. The Materialise Medical segment is the market where we believe we can most directly realize our mission statement and
contribute to a healthier world. We believe that personalized surgical approaches, because they offer the potential of higher predictability and accuracy,
lead to improved patient outcomes, fewer complications and increased long-term survival rates. Personalization also drives operational efficiencies by
replacing a broad range of instrumentation with tailored versions. This makes surgery more efficient, but also lowers the cost of operational steps like
sterilization. Personalized surgical approaches have benefits not only in complex interventions and we believe that personalized solutions will therefore
see an increased adoption in the future.
As a result, we are currently investing significantly in the development of new product offerings and the optimization of existing
offerings in terms of cost and lead times, as well as in the expansion of our distribution channel in the various sub-segments of our Materialise Medical
segment and in new territories.
As a result of the trend that we see in the medical community towards more patient-specific devices and treatments, as well as
towards more advanced planning, a growing number of academic, clinical and commercial researchers are focusing on personalized medical treatments.
Because these new products and treatments can only be brought to the market in compliance with very strict regulatory requirements, we believe there is
an opportunity for safe and stable medical software tools, such as our Mimics Innovation Suite, that can pass significant regulatory scrutiny. We also
believe that increasing regulatory requirements provide opportunities for our clinical services as we can leverage our significant medical sector
experience and strong quality management systems.
A growing number of hospitals have adopted personalized solutions and built 3D printing facilities on site for point-of-care printing
of these personalized solutions. We believe that there is a growing opportunity to provide our clinical services as well as our software solutions and
experience in establishing operations to design personalized solutions in compliance with regulatory requirements.
planning tools for the cardiovascular markets in the shorter term and the pneumology markets in the longer term.
We are investing significantly in the development of new solutions of sub-markets other than orthopedics and CMF, including
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Our Materialise Manufacturing Segment
In our Materialise Manufacturing segment, we primarily offer 3D printing services to industrial and commercial customers, the majority of which
are located in Europe. In addition, we have identified, and provide 3D printing services to certain specialty growth markets in both the industrial and
consumer marketplaces.
Many of the parts we print require functionality that cannot be delivered using other production processes. We believe that our industrial
customers value the high quality, accuracy, complexity, durability, functionality and diversity in terms of size, scale and materials of the 3D printing
services that we can offer. We deliver products to highly regulated industries, such as the aerospace, healthcare, machine manufacturing, quality control
equipment and consumer goods industries, where our applications, technology and hardware capabilities enable us to adhere to high quality standards in
a certified production environment.
As of December 31, 2021, our Materialise Manufacturing segment consisted of 752 FTEs and fully dedicated consultants, with 29.3% based at our
headquarters in Belgium and in Materialise Motion and Rapid Fit. The remaining employees distributed throughout our local field offices in Austria, the
Czech Republic, France, Germany, India, Italy, Poland, Spain, Ukraine, the United States and the United Kingdom.
Business Model. We generate a majority of our revenue in our Materialise Manufacturing segment through the sale of parts that we print for our
customers. We generate a smaller portion of our revenue by the sale of scanners (e.g. foot scan plates for Materialise Motion) and software solutions in
our eyewear and footwear business.
For the years ended December 31, 2021, 2020 and 2019, our Materialise Manufacturing segment generated revenue of € 89.2 million, € 69.6 million and
€94.2 million, respectively, representing 43.4%, 40.9% and 47.9% of our total revenue.
Business-to-Business Services. We offer the following services in our Materialise Manufacturing segment:
Additive Manufacturing Solutions. We provide design and engineering services, rapid prototyping and additive manufacturing of production parts
to customers serving the automotive, consumer goods industrial goods, semiconductor, art and architecture and aerospace markets. Our service centers
offer a variety of 3D printing technologies including stereolithography, laser sintering, FDM (also known as Filament Fusion), PolyJet, Multi Jet Fusion,
selective laser melting (or SLM) and vacuum casting. We have a dedicated production line for making aerospace-certified components using a number
of technologies and materials.
Specialty Industrial Solutions. We have developed additive manufacturing solutions that serve certain specialty industrial applications.
Our RapidFit+ business utilizes additive manufacturing to provide customers active in the automotive market with customized, highly precise and,
in certain cases, patent protected measurement and fixturing tools. Using additive manufacturing technology, we believe that RapidFit+ fixtures provide
more functionality and flexibility than the traditional fixtures that are currently widely used in the automotive industry. We also offer production tooling
that we believe has substantially better ergonomics and improved functionality compared to traditional fixtures.
ACTech provides specialized solutions mainly for the automotive industry. In particular ACTech supplies prototyping of highly complex metal
components through casting techniques that result in products that have a production grade performance. The casting is done using state-of-the-art 3D
printed sand molds, while the final functionality of the components is achieved by a fully integrated post processing of the components in our CNC
workshop.
Wearables initiatives in consumer industry. We have developed two wearables verticals for the consumer market. We believe 3D printing and
design automation has great potential to help both consumers and healthcare professionals improve comfort, health and performance through
personalized eyewear or footwear.
In our eyewear vertical, we offer a complete end-to-end solution for 3D-printed, often custom, eyewear frames. Based on a scan, patented
technology identifies the critical parameters to automatically design eyewear that is customized to a person’s face. The resulting file can be printed in
our eyewear production line, and we provide the necessary finishing, assembly steps and packaging.
Through Materialise Motion, we offer a full suite of solutions for footcare professionals. We offer digital measurement tools and personalized
solutions to footcare professionals treating foot or gait problems. By means of our foot scan plates, we can capture a dynamic scan of a person’s foot
sole and combined with our software tools, we create custom insoles based on this scan. The insoles are 3D printed, finished and assembled in a
dedicated production line. Our research and product development teams aim to build a growing suite of solutions for patients with different types of
motion problems.
Sales and Marketing. We market our services to our additive manufacturing solutions business customers using our sales force and through our website.
Our more complex product offerings are addressed directly by our specialized sales teams who are located throughout Europe near our larger accounts
and who align our customers’ needs with the wide range of 3D printing technologies or market-specific solutions that we offer. More straightforward
products can be ordered directly by our customers through our “Materialise OnSite” or i.materialise web portals, a proprietary automated system that
takes orders, provides quotes and manages the printing process from start to finish, and allows customers to track the manufacturing and shipment
process of their product online. Within our larger sales teams, specialized sales managers focus either on rapid prototyping, which is our traditional and
well-established market, or the additive manufacturing of end-use production parts, which is the market where we see opportunities for significant
growth. Our marketing team in Belgium oversees our global marketing strategy. In addition, employees at our Belgian headquarters and in our local
field offices manage sales for particular markets and accounts and provide back office and production management support to our customers.
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For our specialty markets and wearables initiatives we have separate sales teams that offer our customers the necessary expertise in their domain. Our
sales teams have a direct approach to the market but in some cases we also work with partners or distributors locally to address specific market
segments, such as the large segments of eyewear opticians or footcare professionals.
Customers. The customers for our Materialise Manufacturing segment are from a wide variety of industries, including the automotive, aerospace,
healthcare, semiconductor, industrial goods, art and design and consumer products industries. For these customers, we offer a complete set of services
ranging from consultancy and co-creation, to design and engineering, rapid prototyping, and certified manufacturing of end-use parts.
Through our consultancy offering, which we brand as Materialise Mindware, we work together with customers to solve complex design
challenges and to discuss how the introduction of 3D printing can affect product development, manufacturing workflow, business models and customer
experiences. For example, a co-creation with HOYA, in collaboration with Hoet Design Studio, saw the launch of the world’s first vision-centric,
3D-tailored eyewear solution, Yuniku. Yuniku enables individualized lens and frame design through a sophisticated end-to-end digital supply chain,
which includes a custom 3D scanner and software platform, co-created by us and HOYA, directly linked to our eyewear manufacturing factory.
Through our design and engineering service, we also service those customers looking for support in their initial concept design or with
maximizing a design for 3D printing. Our design and engineering team, which is comprised of highly specialized designers and CAD engineers, offers
dedicated design and software support for additive manufacturing, including remodeling and file preparation, as well as 3D scanning and measuring.
Our team also offers trainings to engineering professionals active in various markets to accelerate the adoption of design for additive manufacturing.
The customers of both our Materialise OnSite and i.materialise platforms order through our website. Materialise OnSite customers tend to
be industrial customers looking to rapid prototype parts quickly and reliably, often taking advantage of fast-lane machines to ensure short lead times for
time-critical projects. For i.materialise, while there is a potential to address the wide consumer market with this platform, we prefer to describe our
current customers as “home professionals.” Our i.materialise client base includes independent designers and CAD hobbyists that often sell their
creations or their services to others, including, in certain instances, through the i.materialise gallery. Through i.materialise’s APIs, companies can also
partner with i.materialise to give their own customers a cloud-based, 3D-printing solution on their website, streamlining the ordering, manufacturing and
shipping processes through a direct link to our factory for 3D printing. Since 2016, Microsoft has been using the i.materialise API to offer a cloud-based
3D print solution for Windows 10 users, and PTC did the same for Creo 4.0 software users.
Most of our straightforward additive manufacturing and rapid prototyping solutions are executed on the basis of single transaction
contracts or purchase orders with the customer. These contracts and purchase orders lay out the pricing, delivery and other terms of the order. For our
Additive Manufacturing service of end-use parts, an entirely new approach to ensure parts are made according to agreed standards is required, for which
we have set processes to onboard new customers. An example of this is our dedicated aerospace manufacturing line, backed by certifications EN9100
and EASA Part 21G, through which we are currently manufacturing plastic parts for, among others, Airbus’s A350 XWB. We expect that as demand for
our Certified Additive Manufacturing service grows, more long-term agreements may be entered into.
For the automotive manufacturers and their suppliers that use our RapidFit+ service, the fixtures are custom engineered by dedicated teams. Our
RapidFit+ customers, which include their quality departments, expect that fixtures meet high accuracy standards. Several automotive OEMs in Europe
are currently considering our innovative solution as a potential new standard, while a solid base of automotive Tier 1 suppliers in Europe has embraced
RapidFit+ as one of their fixture solutions.
Competition. In our additive manufacturing solutions business, we compete with a number of companies that provide industrial 3D printing services,
including Cresilas, Prototal, Protolabs and Quickparts. In addition, larger accounts tend to move their 3D printing production in-house once their orders
have reached certain volumes, which not only creates opportunities for our Materialise Software segment but also for our Materialise Manufacturing
segment in terms of capacity balancing services.
In the measurement and quality control fixture market addressed by RapidFit+, we are not aware of any direct competition coming from
3D printing companies. We do have competition, however, from a large group of smaller companies that are active in the more traditional tooling
manufacturing.
While there are multiple start-up companies seeking to address the home 3D printing services market, we believe that Shapeways and
Sculpteo are the most prominent direct competitors of i.materialise based on their global reach. i.materialise focuses on standing out as a brand in terms
of service and reliability.
Growth Opportunities. We believe that there is particular potential to grow our presence in the markets for additive manufacturing of complex and/or
unique end products, including in particular certain parts for the aviation industry and eyewear and footwear products. In recent years, more companies
have been using additive manufacturing for production across a broad range of industrial sectors, including aerospace, orthopedic implants, surgical
guides, dental copings and hearing devices. For industrial end-use parts, we intend to continue to selectively invest in the expansion and creation of
certified 3D manufacturing environments that meet the high standards of the specialized segments of the industrial production market that we focus on.
In addition, we believe that our local sales teams, which are near our customers, as well as our engineering teams, which can bring in additional
expertise where required, are important and rather unique assets in this market that are worthwhile to continue to invest in.
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Manufacture and Supply. We produce our 3D printed products at our service centers in Belgium, Brazil, the Czech Republic, Germany, Poland, Japan
and the United States. We print substantially all of products in-house using a variety of technologies, including stereolithography, laser sintering, FDM
(also known as Filament Fusion), PolyJet, powder binding, Multi Jet Fusion, Powder Bed Fusion and vacuum casting, and only subcontract the
manufacture of products if certain other technologies (such as CNC machined components) are required or for capacity balancing purposes. As of
December 31, 2021, we operated a total of 201 3D printers and six vacuum casting machines at these service centers, which include distinct areas
dedicated to the machinery, quality control, cleaning and labelling of our products. The table below provides selected information about our 3D printers
and vacuum casting machines:
Technology
Stereolithography
DLP
PolyJet
FDM
Laser Sintering
Multi Jet Fusion
Powder Binding
Vacuum Casting
Direct Metal Laser Sintering
Size
Manufacturer
Number
Small/Medium Size
Medium Size
Mammoth
3D Systems Corporation / Other
Materialise / Stratasys
Materialise(1)
Small Size
Connex
Small Size(2)
Medium Size(3)
Large Size(4)
Small Size
Medium Size
Large Size
Medium Size
Large Size
Small Size
Medium Size
Medium Size
Large Size
Medium Size
Large Size
Asiga
Stratasys Ltd.
Stratasys Ltd.
Stratasys Ltd.
Stratasys Ltd.
EOS GmbH
3D Systems Corporation/ EOS GmbH /
Other
EOS GmbH / Ricoh / Sindoh
HP
ExOne
MCP HEK GmbH
MCP HEK GmbH
SCHUHL
MCP HEK GmbH
EoS GmbH / GE Additive / Renishaw /
SLM Solutions
SLM Solutions
39
3
15
8
4
2
18
16
12
27
24
11
3
1
2
1
2
16
3
(1) We have proprietary stereolithography machines based on our patented curtain coat technologies. The original curtain coat machines had a
medium sized build volume. These medium sized machines have subsequently been adapted to become the extra-large sized Mammoth machines.
Small size machines are machines with a build volume of less than 250×250×250 mm.
(2)
(3) Medium size machines have a build volume of less than 500×500×500 mm.
(4)
Large size machines have a build volume of more than 500×500×500 mm.
As of December 31, 2021, 48 printers produced parts exclusively for our Materialise Medical segment, while the other 153 printers and six
vacuum casting machines produced parts for our Materialise Manufacturing segment.
As of December 31, 2021, all of our 3D printers and vacuum casting machines were either owned or held under a lease contract. At the
end of the lease agreements (which are typically for a period of five years), we have an option to purchase the machines for a value of approximately
1.0% of their original value. We are responsible for the maintenance of such leased equipment.
We devote significant time and attention to the quality control of our products during the printing process by maintaining a comprehensive
quality control program, which, among other things, includes the control and documentation of all material specifications, operating procedures,
equipment maintenance and quality control methods. In addition, we inspect all of our raw materials to be used in our products throughout the printing
process. We control our production orders through the use of labels or visual references on our internal database, bar-codes, controlled prints and routers,
which enables us to trace our products during the printing process. Upon completion of the production process, we package and label our products.
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The raw materials used in the printing of our products are mainly aluminum, titanium alloy and stainless steel powders, epoxy based
photocurable resins, PA12 and thermoplastic polyurethane, or TPU, based powders and a suite of thermoplastic filaments like ABS, PC and Ultem and
quartz sand and furanic resin binder.
With the exception of FDM and PolyJet -materials, we believe that none of our other raw material requirements is limited to any
significant extent by critical supply or price volatility. We continuously look for second sourcing of our raw materials in order not to be dependent on a
single supplier in case a supply issue was to occur. We monitor the costs of our raw materials in order to optimize the cost/performance whilst not
jeopardizing the expectations of our customers and the safe use of the materials in critical applications. With our strategic partnership with BASF 3D
Printing Solutions GmbH, we are working towards offering to the market open solutions in terms of materials and software through which the user of
additive manufacturing equipment can choose functionalities that best suit the user.
Our 3D printing operations for our patient-specific surgical guides, models and implants are subject to extensive regulation. We operate a
certified quality management system in line with the U.S. Quality System Regulation, good manufacturing practice regulations and ISO 13485. We are
registered with regulatory authorities in the United States, Europe, Canada, Australia and other jurisdictions. We CE mark our products where required.
Our service centers are subject to periodic and sometimes unannounced inspections by regulatory authorities, including inspections by the FDA.
Research and Development
We have an ongoing research and development program to improve and expand the capabilities of our existing technology portfolio, which
reflects our continued investments in a range of disciplines, including software development, industrial, mechanical and biomedical engineering, physics
and chemistry.
We have a long history of research and development through collaborations, which augment our internal development efforts. As of
December 2021, we were active in over 20 government funded research projects and we also employed multiple researchers with a publicly funded
scholarship. With our platform technologies and strong track record in successful commercialization of scientific innovations, we receive many requests
for participation in new development projects. While we strongly protect our intellectual property in our core competencies, many of our products
require collaborations in order to create healthy ecosystems for their successful implementation.
As of December 31, 2021, we had approximately 70 active research and development projects in various stages of completion and
approximately 444 FTEs and fully dedicated consultants working on research and development in our facilities in Belgium, France, Germany, the United
Kingdom, the United States, Ukraine, China and Malaysia.
1.
2.
3.
4.
5.
6.
7.
Our research and development projects include (but are not limited to) the following:
various software development projects including projects related to engineering and design for 3D printing, and improving existing
technological challenges (for example, the handling of large amounts of data and advanced image segmentation), which are expected to
benefit both our Materialise Software and Materialise Medical segments;
research projects to understand and develop cutting-edge software tools for industrially relevant additive manufacturing technologies
(powder bed fusion for plastics (laser sintering) and metal (laser melting and electron beam), stereolithography, FDM (also known as
Filament Fusion), binder jetting power bed fusion, DLP-based printing and inkjet based technologies);
research projects in our Materialise Medical segment to develop patient specific surgical planning tools or surgical guides or implants for
orthopedic, CMF and cardiovascular surgeries;
research projects on the use of virtual and augmented reality by our Materialise Medical segment;
research and development projects on smart digital technologies for the large-scale personalization of wearables;
various research projects on the use of artificial intelligence and (deep) machine learning in the fields of image processing and additive
manufacturing; and
several research projects related to improving the maturity, reliability and quality of the additive manufacturing process, which are
expected to benefit each of our three segments.
In addition, our strategic partnership with BASF New Business GmbH focuses on collaboration for research and development activities in
multiple areas, primarily focusing on the introduction of new plastic materials in additive processes.
We also regularly apply for research and development grants and subsidies under European, Belgian, British, French and German, grant
rules. The majority of these grants and subsidies are non-refundable. We have received grants and subsidies from different authorities, including the
Flemish government (VLAIO, or Vlaams Agentschap Innoveren en Ondernemen), the European Union (FP7 and H2020 framework programs) and
BMBF, the German Federal Ministry of Education and Research.
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We expect to continue to invest significantly in research and development in the future.
Intellectual Property
We regard our intellectual property rights as valuable to our business and protect our technology portfolio through a combination of patent,
copyright, trademark, trade secret and other intellectual property laws, confidentiality and other contractual provisions and other measures. The nature
and extent of legal protection associated with each such intellectual property right depends on, among other things, the type of intellectual property right
and the given jurisdiction in which such right arises.
As of December 31, 2021, our portfolio of intellectual property featured 385 issued patents and an additional 143 pending patent
applications primarily in the United States, the European Union and Japan. Of these, our issued patents expire between approximately 2020 and 2035,
while our currently pending patent applications will generally remain in effect for 20 years from the date of the initial applications. We believe that,
while our patents provide us with a competitive advantage, our success depends primarily on our business development, applications know-how and
ongoing research and development efforts. Accordingly, we believe that the expiration of any single patent, or the failure of any single patent application
to result in an issued patent, would not be material to our business or financial position.
As is the case in the 3D printing industry generally, the development of our products, processes and materials has required considerable
experience, manufacturing and processing know-how and research and development activities. We protect our proprietary products, processes and
materials as trade secrets through nondisclosure and confidentiality agreements with our employees, consultants and customers.
In addition, we own the trademark registrations for “Materialise” and “ACTech” and trademark registrations and pending applications for
many of our services and software solutions in those territories where we have substantial sales, including “Streamics”,
“Mimics”, “3-matic”, “Inspector”, “Magics”, “RapidFit+”, “MGX by Materialise”, “Heartprint”, “ADaM”, “Engineering on Anatomy”, “Surgicase”,
“Enlight”, “Mindware” and “Phits”, among others.
We are party to various licenses and other arrangements that allow us to practice and improve our technology under a broad range of
patents, patent applications and other intellectual property, including agreements with our collaboration partners, Zimmer Biomet, DJO Surgical, DePuy
Synthes, Lima, Mathys, Stryker, Corin, Siemens, FluidDa, HOYA, the University of Michigan and PTC.
There can be no assurance that the steps we take to protect our proprietary rights will be adequate or that third parties will not infringe or
misappropriate such rights. We have been subject to claims and expect to be subject to legal proceedings and claims from time to time in the ordinary
course of our business. In particular, we may face claims from third parties that we have infringed their patents, trademarks or other intellectual property
rights. Such claims, even if not meritorious, could result in the expenditure of significant financial and managerial resources. Any unauthorized
disclosure or use of our intellectual property could make it more expensive to do business and harm our operating results.
Seasonality
End markets such as healthcare, automotive, aerospace and consumer products may experience some seasonality.. Historically, the revenue
of our Materialise Software segment has been greater in the fourth quarter, as compared to the revenue of each of the other quarters. A number of our
customers make their initial software purchase in the fourth quarter prior to the end of their annual budget cycle and tend to renew, extend or broaden the
scope of their licenses on the anniversary date of their first purchase. In addition, we have in the past often brought new releases on the market in the
third quarter of the calendar year, which may also have an impact on sales in the subsequent quarter.
Regulatory / Environmental Matters
Environmental Matters
Our facilities and operations are subject to extensive U.S. federal, state and local, European and other applicable foreign environmental
and occupational health and safety laws and regulations. These laws and regulations govern, among other things, air emissions; wastewater discharges;
the generation, storage, handling, use and transportation of hazardous materials; the handling and disposal of hazardous wastes; the clean-up of
contamination; and the health and safety of our employees. Under such laws and regulations, we are required to obtain permits from governmental
authorities for some of our operations. If we violate or fail to comply with these laws, regulations or permits, we could be fined or otherwise sanctioned
by regulators. We could also be held responsible for costs and damages arising from any contamination at our past or present facilities or at third party
waste disposal sites.
Our headquarters in Belgium, our manufacturing site in Poland, and ACTech’s headquarters in Germany, follow the ISO 14001:2015
criteria for an effective environmental management system. These sites are ISO 14001:2015 certified.
Compliance with laws and regulations relating to the discharge of materials into the environment or otherwise relating to the protection of
the environment has not had a material impact on capital expenditures, earnings or the competitive position of our subsidiaries and us. We are not the
subject of any legal or administrative proceedings relating to the environmental laws of Belgium or any country in which we have facilities. We have not
received any notices of any violations of any such environmental laws.
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Healthcare Regulatory Matters
In our Materialise Medical segment, we are subject to extensive and complex U.S. federal, state and local, European and other applicable
foreign healthcare and medical devices laws and regulations.
Both before and after approval or clearance our medical products and product candidates are subject to extensive regulation. In the United
States, the FDA under the Federal Food, Drug and Cosmetic Act primarily regulates us. In Europe and in other foreign jurisdictions in which we sell our
medical products, many of the regulations applicable to our medical devices and products in these countries are similar to those of the FDA. Together,
these regulations govern, among other things and where applicable, the following activities in which we are involved:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
product development;
product testing;
product clinical trial compliance;
product manufacturing;
product labelling and instructions for use;
product safety, product safety reporting, recalls and field corrective actions;
product packaging and storage;
product registration, market clearance or approval;
product modifications;
product marketing, advertising and promotion;
product import and export, restrictions, tariff regulations, duties and tax requirements;
product sales and distribution;
post-market surveillance, including reporting of deaths or serious deterioration in the state of health and malfunctions that, if they
were to recur, could lead to death or serious deterioration in the state of health;
record keeping procedures;
registration for reimbursement; and
necessity of testing performed in country by distributors for licenses.
Failure to comply with the Federal Food, Drug and Cosmetic Act could result in, among other things, warning letters, civil penalties,
delays in approving or refusal to approve a medical device candidate, product recall, product seizure, interruption of production, operating restrictions,
suspension or withdrawal of product approval, injunctions or criminal prosecution. Outside the United States, failure to comply with applicable laws and
regulations could result in similar actions, and in the suspension or withdrawal of Quality Management System certification which may be a prerequisite
to market medical devices.
The time required to obtain clearance required by foreign countries may be longer or shorter than that required for FDA clearance, and
requirements for licensing a product in a foreign country may differ significantly from FDA requirements.
Moreover, these laws and regulations are subject to change. For example, on May 26, 2021, the Medical Devices Regulation will become
fully applicable in the European Union, which is requiring us to adopt certain measures in anticipation of its effectiveness. For more information, see
“Item 3. Key Information—D. Risk Factors—Risks Related to Our Materialise Medical Segment and Regulatory Environment—Healthcare policy
changes, including legislation to reform the U.S. healthcare system, could adversely affect us.”
We have obtained MDSAP certification. This program allows an MDSAP-recognized auditing organization to conduct a single regulatory
audit of a medical device manufacturer that satisfies the relevant requirements of the regulatory authorities participating in the program. To the extent
that we do business in the participating jurisdictions, certain major non-conformities identified under this program may be escalated to
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the regulatory authorities of the United States, Canada, Japan, Australia and Brazil. The Canadian regulatory authority, Health Canada, has made
participation in MDSAP a mandatory requirement for medical device manufacturers importing products to Canada. Failure to maintain certification
under MDSAP may impact our capability to do business in Canada. In addition, failure to address escalated issues reported to the participating
authorities may impact our capability to do business in the respective jurisdictions.
C. Organizational Structure
The following illustrates our corporate structure as of the date of this annual report:
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D. Property, Plants and Equipment
Our corporate headquarters and our largest 3D printing service center are located in Leuven, Belgium. We currently own office and service
spaces in Belgium as well as in the Czech Republic, France, Germany, Poland and the United States. We also lease other service centers and sales
offices, which are located in Austria, Belgium, Brazil, China, France, Germany, India, Japan, Malaysia, Ukraine, the United Kingdom, the United States,
Poland, Colombia, Australia, Italy and South Korea. The aggregate annual lease payments for our facilities in 2021, 2020 and 2019 were €2.1 million,
€1.8 million and €2.1 million, respectively. The table below provides selected information regarding our facilities.
Location
Leuven, Belgium
Leuven, Belgium
Gentbrugge, Belgium
Beringen, Belgium
Plymouth, Michigan, United
States
Owned
Leased
Leased
Leased
Owned
Leased
Ann Arbor, Michigan, United
States
Owned
Saint Marcel les Valence, France
Leased
Yokohama, Japan
Kawasaki, Japan
Leased
Ústí nad Labem, Czech Republic Owned
Leased
Vienna, Austria
Gilching, Germany
Bremen, Germany
Petaling Jaya, Malaysia
Paris, France
Kyiv, Ukraine
Kyiv, Ukraine
Leased
Owned
Leased
Leased
Leased
Leased
Leased
Sheffield, United Kingdom
Southampton, United Kingdom Leased
Leased
Shanghai, China
Leased
Medellin, Colombia
Leased
Leased
Owned
Leased
Leased
Wroclaw, Poland
Gold Coast, Australia
Milan, Italy
Ownership
Use
Approximate Area
Lease Expiration
Corporate
headquarters;
production
Warehouse
Office
Office; production
Office;
production;
parking
Office; production
Office
Office
Production
Office; production
Office
Office
Office
Office
Office
Office
Office
Office
Office
Office
Office
Office
Office
Office; production
Office
Office
47
50,614.35 sq. m.
N/A
165 sq. m.
39 sq. m.
2,848.25 sq. m.
3.89 acres
March 31, 2022
No fixed end date
October 31, 2030
N/A
2,771 sq. ft.
October 31, 2023
1,100 sq. m.
515.58 sq. m.
205 sq. m.
16,013 sq. m.
44 sq. m.
399 sq. m.
6,724 sq. m.
13,935 sq. ft.
564.40 sq. m.
3,384.8 sq. m.
171 sq. m.
1,575 sq. ft.
3,340 sq. ft.
1,200 sq. m.
248 sq. m.
64 sq. m.
190 sq. m.
2.3975 hectare
N/A
55 sq. m.
N/A
March 31, 2022
May 19, 2024
N/A
December 31, 2021
(renewal negotiations
ongoing)
December 31, 2024
N/A
May 31, 2024
May 31, 2028
June 29, 2028
December 31, 2021
(renewal negotiations
ongoing)
No fixed end date
April 22, 2023
June 8, 2022
May 31, 2022
January 31, 2023
December 1, 2023
N/A
January 22, 2024
December 31, 2023
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Freiberg, Germany
Freiberg, Germany
Ann Arbor, Michigan, United
States
Bangalore, India
Rio Claro, Brazil
Seoul, South Korea
Tianjin, China
Owned
Owned
Leased
Leased
Leased
Leased
Leased
Office, Production,
Parking (Land)
Office, warehouse,
production, parking
(Land)
Office
Office
Corporate Offices,
R&D Laboratory,
Production
Shared workspace
Office
26,277 sq. ft.
7,996 sq. m.
N/A
N/A
1,987 sq. ft.
December 31, 2023
2,000 sq. ft.
4,092.27 sq. m.
March 31, 2022
August 5, 2029
N/A
183 sq. m.
July 31, 2022
October 31, 2022
See also “—B. Business Overview—Manufacture and Supply” for information about the printers we operate, “—Regulatory / Environmental Matters—
Environmental Matters” for information about environmental matters and “Item 5. Operating and Financial Review and Prospects—B. Liquidity and
Capital Resources—Indebtedness” for information about indebtedness secured by mortgages.
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ITEM 4A.
UNRESOLVED STAFF COMMENTS
Not applicable.
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ITEM 5.
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following discussion and analysis should be read in conjunction with the information set forth in “Item 3. Key Information—A.
Selected Financial Data,” and our consolidated financial statements and accompanying notes included elsewhere herein.
This section contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those
contained in forward-looking statements. Factors that could cause or contribute to such differences include, without limitation, those discussed in the
sections entitled “Item 3. Key Information—D. Risk Factors,” “Special Note Regarding Forward-Looking Information” and “Item 4. Information on
the Company—B. Business Overview” and elsewhere in this annual report.
A. Operating Results
Overview
Company Overview
We are a leading provider of additive manufacturing and medical software and of sophisticated 3D printing services. With our knowledge,
products and services, we empower our customers to use additive manufacturing technology more effectively, in general, and we enable certain specific
and significant applications of additive manufacturing, in particular. In both instances, we seek to empower the choice for sustainability through the use
of additive manufacturing.
The customers of our general software tools and 3D printing services are active in a wide variety of industries, including healthcare,
automotive, aerospace, art and design and consumer products. The significant additive manufacturing applications that we are more deeply and more
directly involved in currently include applications for cranio maxillo facial, eyewear, footwear and measurement fixtures.
As of December 31, 2021, our team consisted of 2,332 FTEs, and fully dedicated consultants. Our portfolio of intellectual property
featured 385 issued patents and 143 pending patent applications as of December 31, 2021. For the year ended December 31, 2021, we generated
€ 205.5 million of revenue, representing 21% decrease over the prior year, a net profit of € 13.1 million and Adjusted EBITDA of € 32.5 million. For a
description of Adjusted EBITDA and a reconciliation of our net profit to our Adjusted EBITDA, see “—Other Financial Information” below.
Public Offering
On July 6, 2021, we closed a follow-on public offering of a total of 4,600,000 ADSs at a public offering price of $24.00 per ADS for gross
proceeds of $ 110.4 million.
We raised approximately $ 105.0 million (or € 92.7 million, based on the exchange rate as of December 31, 2021) in aggregate net
proceeds from such follow-on offering.
Acquisition of Majority Interest in Engimplan
On August 6, 2019, we acquired 40% of the shares and voting interest of Engimplan and subsequently increased our shareholding in
Engimplan to 75% with a capital increase in Engimplan. In December 2020, we acquired the remaining 25% interest in Engimplan, making us
Engimplan’s sole shareholder (through our Brazilian subsidiary).
Acquisition of Remainder of Shares in Materialise Motion and Acquisition of Substantially All of the Assets of RS Scan
On November 9, 2020, we acquired the remaining 50% of the shares and voting interests in Materialise Motion (formerly known as RS
Print), making us Materialies Motion’s sole shareholder. In addition, we acquired substantially all of the assets of RS Scan.
Materialise Motion is a custom footwear technology company, using scientific movement analysis to produce 3D printed footwear
solutions. Materialise Motion operates within our Materialise Manufacturing segment.
Link3D Acquisition
On April 9, 2021, we acquired an option to buy Link3D Inc., which we exercised on November 15, 2021. We closed the acquisition on
January 4, 2022. This acquisition was effectuated through our U.S. subsidiary, Materialise USA, LLC. As a result of this transaction, Materialise USA
has become the sole shareholder of Link3D. Link3D is an additive workflow and digital manufacturing software company. The acquisition of Link3D is
intended to strengthen and accelerate the creation of the Materialise software platform.
Growth Strategy
In general, our strategy is built on the development and sale of two different sets of product portfolios: our horizontal and our vertical
solutions.
•
Each of our segments has what we call a horizontal product offering that addresses a broad set of needs of customers that make use
of additive manufacturing: our market leading Magics Software Platform in our Materialise Software segment, the Mimics
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Innovation Suite in our Materialise Medical segment and the additive manufacturing services that we offer through our Materialise
Manufacturing segment. We believe that each of these horizontal platforms has the potential of continuing to grow as the adoption of
additive manufacturing by our customers in each of our segments grows.
•
Second, leveraging on the technological and market knowledge that we gain as we bring our horizontal offerings to the market, we
have built a select number of what we call vertical applications of 3D printing. These vertical applications, which address the
specific needs of a particular subset of customers in a much more specific manner, include our surgical knee guides and personalized
CMF guides and implants in our Materialise Medical segment and our measurement fixtures and personalized foot and eyewear
products in our Materialise Manufacturing segment. We believe that this more focused presence in a few applications of 3D printing
has the potential to significantly boost our growth.
Within the horizontal and vertical frameworks, each of our segments develops its own shorter term strategy.In our Materialise Software
segment, we intend to accelerate the market penetration of our software platform (i) by expanding our product portfolio with innovative solutions that
focus on volume production, including manufacturing execution systems, or MES, automated workflows for additive manufacturing and solutions such
as Process Tuner assisting production companies in creating optimized processes (and as such expediting the new product introduction stage within
production companies) and (ii) by offering our customers cloud-based access to our integrated software platform. We believe that the integration of
Link3D can be instrumental to support and accelerate that initiative. Our development of a cloud-based software platform may affect our revenue levels
in the near term, but we believe it will ensure the continued strength of our business model going forward. Further, in order to be able to meet the
demands that are associated with volume production, including mass customization, and to accelerate the development and roll out of our cloud-based
software platform, where software as a service (SaaS), big data technologies, and machine learning will be key drivers, we intend to continue to invest
significantly in both research and development.In our Materialise Medical segment, we believe that the growing trend of personalized patient care will
boost the demand for digital planning tools as well as for personalized medical devices. In response to that trend, we intend to continue to increase the
penetration of our existing software products in the hospital market and to expand our portfolio of planning tools into new areas such as cardiovascular
and pulmonology. We also intend to continue to develop and grow the sales of our personalized medical device portfolio, both directly and indirectly
and in existing as well as in new markets, including in particular in the CMF market.
In our Materialise Manufacturing segment, we believe that there is significant growth potential in the markets for additive manufacturing
of end-use products. We therefore intend to continue to invest in the expansion and creation of certified 3D manufacturing environments that meet the
high standards of the specialized segments of the industrial market, including the aerospace market. More particularly, we believe that our growth
initiatives in the wearables market that have been incubated within Materialise Manufacturing may drive growth in the coming years. In the eyewear
market, we are investing in back-end production facilities for the production of 3D printed eyewear, including customized frames and also invest in in
the introduction of advanced front-end digital technologies, such as virtual try-on and fitting solutions (including in collaboration with Hoya and
Acuitis), In the footwear market, we will continue to invest in the development and commercial roll out of the pressure plate technology and related
applications that we acquired from RS Scan and in the worldwide commercialization of our Phits customized 3D printed insoles, in collaboration with
our former joint venture partner, Superfeet.
Importantly, our applications and solutions focus on empowering our customers’ and partners’ choice for sustainability. In the applications
that we support, additive manufacturing has the potential to not only replace traditional manufacturing technologies, but also enable the digitization of
customer journeys and supply chains, to localize manufacturing, to reduce inventories and the use of raw materials and to make end customers’ solutions
more durable through personalization. We believe that this focus on the choice for sustainability will position us for long term sustainable growth, even
if this may imply that we forego short term growth opportunities that do not fit this vision.
Our growth strategies for both our existing and new businesses and for each of our three market segments are based on our medium and
long term expectations for these businesses and segments. In the short term, we expect both the 3D printing industry in general and our business will
continue to be impacted by the ongoing COVID-19 pandemic. For more information, see “—Trend Information” below.
Recent Developments
See Note 27 to our audited consolidated financial statements for disclosure of significant transactions and significant changes in our
financial condition or results of operations that occurred subsequent to December 31, 2021. In addition, see “—Trend Information” below.
Key Income Statement Items
Revenue
Revenue is generated primarily by the sale of our software and 3D printed and complex manufactured products and services.
In our Materialise Software segment, we generate revenues from software licenses, maintenance contracts and custom software
development services and sales of Materialise Controller.
In our Materialise Medical segment, we generate revenue through the sale of medical devices that we print or manufacture for our
customers and from the sale of licenses on our medical software packages, software maintenance contracts and custom software development and
engineering services.
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In our Materialise Manufacturing segment, we generate most of our revenue through the sale of parts that we print or produce for our
customers.
Software. Software revenue is comprised of perpetual and time-based licenses, maintenance revenue and software development service
fees. Our software products are mainly licensed pursuant to one of two payment structures: (i) perpetual licenses, for which the customer pays an initial
fee for a perpetual license and subsequently pays fees for maintenance under separate maintenance contracts, generally on an annual basis, or (ii) time-
based licenses (generally annual licenses), for which the customer pays equal periodic fees to keep the license active. Perpetual licenses require the
payment of fees for maintenance, technical support and product updates. Time-based licenses entitle the customer to corrective maintenance and product
updates without additional charge. We generally recognize revenue from our time-based licenses and our maintenance revenue on a straight-line basis
over the term of the applicable license or maintenance contracts. Our software revenue depends upon both incremental sales of software licenses to both
new and existing customers and renewals of existing time-based licenses and maintenance contracts. Sales and renewals are also driven by our
customers’ usage and budget cycle. Software development services are typically charged either on a time and materials basis or on a fixed fee basis.
3D printed products and services. 3D printed products revenue is derived from our network of 3D printing service centers. Our service
centers not only utilize our 3D printing technology to print products but are also full-service operations that provide support and services such as
pre-production collaboration prior to printing the product. Revenue from 3D printed products depends upon the volume of products that we print for our
customers. Sales of these products are linked to the number of our 3D printing machines that are installed and active worldwide. We have dedicated
teams and production lines for industrial applications and medical applications. All medical products require a highly regulated production environment.
Whereas both segments use the same 3D printing technologies, the complex combination of our engineering and software solutions in connection with
medical applications results in higher margins for our medical applications.
Production of limited runs of highly complex casted metal parts. Casted products revenue is derived from ACTech’s network, with its
production unit in Freiberg, Germany. ACTech is utilizing casting technology, including 3D printing technology for mold making, and offers full-service
project operations, including project and pre-production collaboration, and high-end complex finishing services.
Cost of Sales
Our cost of sales includes raw materials, external subcontracting services, labor costs, manufacturing overhead expenses, amortization and
depreciation and reserves for inventory obsolescence. Our manufacturing overhead expenses include quality assurance, manufacturing engineering,
material procurement, inventory control, facilities, equipment and information technology and operations supervision and management.
Research and Development Expenses
Our research and development activities primarily consist of engineering and research programs associated with our products under
development as well as research and development activities associated with our core technologies and processes. Research and development expenses
are primarily related to employee compensation, including salary, fringe benefits, share-based compensation and temporary employee expenses. We also
incur expenses for software and materials, supplies, costs for facilities and equipment, depreciation, and outside design and outside research support.
Development expenditures on an individual project are recognized as an intangible asset when we can demonstrate:
•
•
•
•
•
the technical feasibility of completing the intangible asset so that the asset will be available for use or sale;
the intention to complete and the ability to use or sell the asset;
how the asset will generate future economic benefits;
the availability of resources to complete the asset; and
the ability to measure reliably the expenditure during development.
We have determined that the conditions for recognizing internally generated intangible assets from proprietary software, guides and other
product development activities are not met until shortly before the products are available for sale, unless either (i) we have strong evidence that the
above criteria are met and a detailed business plan is available showing the asset will on a reasonable basis generate future economic benefits or (ii) the
development is done based upon specific request of the customer, we have the intention to market the product to parties other than the customer, the
development is subject to an agreement and the substance of the agreement is that the customer reimburses us for a significant portion of the
development expenses incurred. As such, development expenditures not satisfying the above criteria and expenditures on the research phase of internal
projects are recognized in the consolidated income statement as incurred.
Sales and Marketing Expenses
Our sales and marketing expenses primarily consist of employee compensation, including salary, fringe benefits and share-based
compensation for our marketing, sales and business development functions. Other significant expenses include travel, depreciation, product
demonstration samples, brochures, websites and trade show expenses.
General and Administrative Expenses
Our general and administrative expenses primarily consist of employee compensation, including salary, fringe benefits and share-based
compensation for our executive, financial, human resources, information technology support and regulatory affairs and administrative functions. Other
significant expenses include outside legal counsel, independent auditors and other outside consultants, insurance, facilities, depreciation and information
technologies expenses.
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Net Other Operating Income
Net other operating income consists primarily of withholding tax exemptions for qualifying researchers, development and government
grants, partial funding of research and development projects, currency exchange results on purchase and sales transactions the amortization of intangible
assets from business combinations, write-off of trade receivables, impairment of goodwill and intangible assets, and revaluation income or costs from
participations.
Government grants are recognized when there is reasonable assurance that the grant will be received and all attached conditions will be
complied with. When the grant relates to development costs or another expense, it is recognized as income over the grant period necessary to match the
income on a systematic basis to the costs that it is intended to compensate. When the grant relates to the construction of buildings, it is recognized as
income over the depreciation period of the related building.
Such grants have been received from the federal and regional governments and from the European Union in the forms of grants linked to
certain of its research and development programs, reduced payroll taxes and the financing of the construction of an office building in Leuven, Belgium
and in Freiberg, Germany.
Where retention of a government grant is related to assets or to income and dependent on the Company satisfying certain criteria, it is
initially recognized as deferred income. When the criteria for retention have been satisfied, the deferred income balance is released to other operating
income in the consolidated income statement on a systematic basis over the periods in which the entity recognizes as expenses the related costs for
which the grants are intended to compensate.
Government grants are recognized when there is reasonable assurance that the grant will be received and all attached conditions will be
complied with.
Financial Expenses
Our financial expenses primarily include costs associated with currency exchange differences and with interest payments on our debt.
Critical Accounting Policies and Accounting Estimates
The preparation of our consolidated financial statements requires management to make judgments, estimates and assumptions that affect
the reported amounts of revenue, expenses, assets and liabilities, and the accompanying disclosures. Uncertainty about these assumptions and estimates
could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities for future periods.
On an ongoing basis, we evaluate our estimates, assumptions and judgments, including those related to revenue recognition, development
expenses, share-based payment transactions, income taxes, impairment of goodwill, intangible assets and property, plant & equipment and business
combinations.
We based our assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing
circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond our control.
Such changes are reflected in the assumptions when they occur.
Revenue Recognition
Our revenue recognition policies require management to make significant estimates. Management analyzes various factors, including a review of
specific transactions, historical experience, creditworthiness of customers and current market and economic conditions. Changes in judgments based
upon these factors could impact the timing and amount of revenue and cost recognized and thus affects our results of operations and financial condition.
The significant estimates and judgments relate to:
•
•
•
•
Assessing whether a performance obligation is distinct in a bundled sale(s) transaction;
Estimation of the variable considerations and the assessment of the revenue constraint limitation;
Estimation of the stand-alone selling prices for each distinct performance obligation; and
The stage of completion of our custom development of software components for customers when revenues are satisfied over time.
We make significant judgments when performing the assessment of whether a performance obligation is distinct from the other performance obligations
in a contract, i.e., whether the good or service has a benefit to the customer on its own or together with readily available resources and/or
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whether the good or service is highly interrelated or constitutes a significant input with another good or service provided, or whether it significantly
modifies or tailors another good or service. Relevant judgments include the following:
•
•
Whether the software license is distinct from the 3D printed guides – in most cases with contracts with collaborative partners in the
Materialise Medical segment, the software license is combined with the manufacturing of the 3D printed guides as the software
license has no benefit to the customer without the manufacturing services. We have also implemented a new “Plan Only” feature
where the collaboration partners can benefit from a virtual plan produced with the software license without the manufacturing of any
physical product. Such Plan Only features are recognized in revenue as a separate performance obligation based on the usage by the
collaboration partner.
Whether the development services are distinct from other performance obligations – in most cases, these performance obligations are
distinct however for one contract with a collaboration partner in the Materialise Medical segment, the software license is combined
with the license and the 3D printed guides as one “distinct” performance obligation
For the stand-alone selling prices, we use prices from price list or historical prices for similar transactions. However, in certain cases, such
information is not readily available, and in those cases, we estimate the stand-alone selling price based on a cost-plus mark-up or other estimate. If the
stand-alone selling price of one or more goods or services in arrangements with multiple performance obligations is highly variable or uncertain, we
estimate the stand-alone selling price with reference to the total transaction price less the sum of the observable stand-alone selling prices of other goods
or services promised in the contract. In addition, for certain performance obligations such as development services, the stand-alone selling prices also
require an estimate of the time required to complete the development.
Certain contracts include estimates of variable considerations within the transaction price and assessing the revenue constraint, such as:
•
•
•
•
Quantities/volume sold at fixed prices related to, but not limited to, the manufacturing of 3D printed products, software licenses sold
and maintenance renewals;
Contractual prices may vary based on volume purchased during a given period;
FTE expenses for development or other services billed on a time & material basis; and
Volume discounts.
The method used to estimate the variable consideration depends on the number of possible scenarios and the probability of each scenario.
If there are many possible scenarios with a high probability probabilities (each less than 50%), we will use the expected value method, while the most
likely method is used when there is a scenario with a higher probability (more than 50%).
Variable consideration is not a constraint when, based on historical experience, a high reliable business forecast and/or the timeframe of
the estimates, we determine that there is a high probability that it will not result in a future reversal of revenue.
We determine the stage of completion for development contracts satisfied over time by comparing the labor hours incurred to date with the
estimated total labor hours required to complete the project. We consider labor hours to be the most reliable, available measure of progress on these
projects. Adjustments to estimates to complete are made in the periods when facts that give rise to a change become known. When the estimate indicates
that a loss will be incurred, the loss is recorded in the relevant period. Significant judgments and estimates are involved in determining the percentage
completion for each contract. Different assumptions can produce materially different results.
Development Expenses
Under International Accounting Standards 38, or IAS 38, internally generated intangible assets from the development phase are recognized
if certain conditions are met. These conditions include the technical feasibility, the intention to complete, the ability to use or sell the asset under
development, the availability of technical, financial and other resources to complete the asset, and the demonstration of how the asset will generate
probable future economic benefits. The cost of a recognized internally generated intangible asset comprises all directly attributable cost necessary to
make the asset capable of being used as intended by management. In contrast, all expenditures arising from the research phase are expensed as incurred.
Determining whether internally generated intangible assets from development are to be recognized as intangible assets requires significant
judgment, particularly in determining whether the activities are considered research activities or development activities, whether the product
enhancement is substantial, whether the completion of the asset is technically feasible considering a company-specific approach and the likelihood of
future economic benefits from the sale or use.
We have determined that the conditions for recognizing internally generated intangible assets from proprietary software, guide and other
product development activities are not met until shortly before the products are available for sale, unless either (i) we have strong evidence that the
above criteria are met and a detailed business plan is available showing that the asset will generate future economic benefits on a reasonable basis or
(ii) the development is done based upon specific request of the customer, we have the intention to market the product also to other parties than the
customer, the development is subject to an agreement and the substance of the agreement is that the customer reimburses us for a significant portion of
the development expenses incurred. As such, development expenditures not satisfying the above criteria and expenditures on the research phase of
internal projects are recognized in the consolidated income statement as incurred. This assessment is monitored on a regular basis.
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We have determined that the criteria for internally generated intangible assets were met for two projects in 2018: (1) the software
development of a new planner for hospitals within the cardiovascular field and (2) the process to obtain FDA and E.U. approval for a 3D printed
tracheal splint within the Materialise Medical segment. The first project was successfully completed in 2019. In 2021, we recognized an impairment of
€ 0.2 million as the business case no longer showed a positive result over the next 5 years. The main reason was a delay in revenue due to the
COVID-19 pandemic. From 2017 through September 2020, the total amount capitalized for the U.S. market component of the tracheal splint
development project had accumulated to €2.1 million, based on a positive assessment of all recognition criteria. In September 2020, the FDA
disapproved the Investigational Device Exemption, or IDE, submission, and in December 2020, the FDA disapproved an amended IDE submission. Our
management believes that the technical feasibility of the project (the IDE approval, successful outcome of the clinical trial and obtaining the FDA’s
premarket approval, or PMA) remains positive. However, the FDA regulatory process has resulted in a delay of two years compared to our previous
assumptions regarding obtaining the PMA and commencing commercialization. As a result, the headroom (defined as the difference between the
development expenses capitalized and to be incurred until the PMA is obtained, and the present value of the expected cash flows until 2030 (the year
after which the patent would expire)) has become negative. Accordingly, in 2020 we have concluded that a full impairment of the capitalized
expenditures is appropriate for the total amount of €2.1 million. We continued this R&D program during 2021, and aim to obtain the IDE approval from
the FDA during the second half of 2022. Because the present value of the expected cash flows until 2030 remains negative we continue to report the
R&D expenses related to this program in our income statement.
In the year ended December 31, 2020 we have determined that the criteria for internally generated intangible assets were met for certain
subprojects related to our internal digital transformation program. With this program, we are investing in our IT landscape and upgrading and/or
standardizing part of our digital core business. We have invested, and will continue to invest in this program in 2022 and 2023 in state of the art
technology that is available on the market to upgrade our CRM, ERP and license management software. Together with this implementation, we will also
upgrade and further develop those internal software programs that are closely related to 3D printing and the specific needs that arise from 3D printing.
The integration of both standard and internal systems in the digital chain of Materialise is crucial and requires deep analysis, development and technical
validation. We expect that it will not only streamline our processes internally and help us reduce costs in maintenance in the short term, but it also will
allow us to learn from this and commercialize this knowledge by making our software even easier to integrate with standard systems. This competitive
advantage should become important in the coming years where 3D printing will be more and more integrated on the traditional manufacturing floor. As
of December 31, 2020 we had capitalized K€2,185 in respect of these projects. As of December 31, 2021 we carried in total K€3,871 as assets under
construction in respect of these projects.
In the year ended December 31, 2021 we have determined that the criteria for internally generated intangible assets were met for our
project on the transformation of the platform architecture to enable our software products to make the transition from desktop to (hybrid) cloud. As of
December 31, 2021 we had capitalized K€975 in respect of this project.
Share-Based Payment Transactions
We measure the cost of equity-settled transactions with employees based on the fair value of the equity instruments at the date at which
they are granted and measures the cost of cash-settled transactions based on the fair value of the equity instrument at the date of reporting. We have
applied the Black-Scholes valuation model to estimate fair value. The use of this model requires management to make assumptions regarding the
volatility and expected life of the equity instruments. The assumptions used to determine fair value for share-based payment transactions are disclosed in
Note 14 to our consolidated financial statements and are estimated as follows:
•
•
•
•
The dividend return is estimated by reference to the historical dividend payment. Currently, this is estimated to be zero as no
dividends have been paid since inception;
Expected volatility is determined based on the average annualized volatility of our shares (until September 2016: of a number of
quoted peers in the 3D printing industry and the volatility of our shares);
Estimated life of the warrant is determined to be until the first exercise period which is typically the month after vesting; and
Fair value of the shares is determined based on the share price of our ADSs on Nasdaq at the date of valuation. For the grants prior to
the initial public offering, the fair value of the shares was estimated based on a discounted cash flow model with three-year cash flow
projections and a multiple of EBITDA determined based on a number of quoted peers in the 3D printing industry.
Income Taxes
Deferred tax assets are recognized only to the extent that it is probable that taxable profit will be available against which the deductible
temporary difference can be utilized. Significant management judgment is required to determine the amount of deferred tax assets that may be
recognized, based on the probable timing and level of future taxable profits, together with future tax planning strategies. As of December 31, 2021, we
had current and non-current receivables related to tax credits for an amount of € 5 million (2020: € 5 million; 2019: € 4 million)
As of December 31, 2021, we had € 58 million (2020: € 51 million; 2019: € 37 million) of tax losses carried forward and unused
Innovation Income Deductions, of which € 36 million related to Materialise NV (2020: € 28 million; 2019: € 25 million). These losses related to
Materialise NV and subsidiaries that have a history of losses, in countries where these losses do not expire and may not be used to offset taxable income
elsewhere in our consolidated group.
With respect to the unused tax losses of Materialise NV, no deferred tax assets have been recognized in 2021, 2020 and 2019, given that in
view of the Belgian Patent Income Deduction and Innovation Income Deduction there is an uncertainty to which extent these tax losses will be used in
future years. As from July 1, 2016, the new Innovation Income Deduction replaces the former Patent Income Deduction. Under the grandfathering rule
the Patent Income Deduction system can still be applied until June 30, 2021. The Belgian Patent Income Deduction allows companies to deduct 80% of
the qualifying gross patent income from the taxable basis. Under the Innovation Income Deduction system, companies can deduct up to 85% of their net
innovation income from the taxable basis. Based on our analysis and according to our policy we have assessed that in 2021 no deferred tax asset should
be accounted for with respect to our unused tax losses in Belgium.
With respect to the unused tax losses of the other entities, no deferred tax assets have been recognized in 2021, 2020 nor 2019 except for
our tax unity in Germany where we recorded a deferred tax asset of € 0.3 million related to 2020 losses and Materialise Motion where we recorded a
deferred tax asset of € 1.8 million against a deferred tax liability of € 2.0 million. We have not recognized deferred tax assets on unused tax losses and
Innovation Income Deduction totaling € 12 million in 2021 (2020: € 23 million; 2019: € 11 million) given that it is not probable that sufficient positive
taxable base will be available in the foreseeable future against which these tax losses and Innovation Income Deduction can be utilized.
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If all deferred tax assets related to tax losses carried forward and unused Innovation Income Deduction would meet the criteria for
recognition, net result for the year would have improved by €12 million in 2021 through a deferred tax gain. This would represent the planned recovery
of €49 million carried forward tax losses and Innovation Income Deduction in future periods. Further details on taxes are disclosed in Note 22.10 to our
consolidated financial statements.
Impairment of Goodwill, Intangible Assets and Property, Plant & Equipment
We have goodwill for a total amount of € 18.7 million as of December 31, 2021 (2020: € 18.6 million; 2019: € 19.6 million) which has
been subject to an impairment test. Goodwill is tested for impairment based on a discounted cash flow model with cash flows for the next five years
derived from the budget, and a residual value considering a perpetual growth rate. The value in use is sensitive to the discount rate used for the
discounted cash flow model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. The key assumptions used
to determine the value in use for the different cash generating units, or CGUs, are disclosed and further explained in Note 5 to our consolidated financial
statements
In 2020 an impairment was recognized on the Engimplan CGU. It was concluded that the value in use was lower than the carrying value of
the CGU of € 9.3 million which resulted in a full impairment of the goodwill for an amount of € 1.4 million as well as a partial impairment on intangible
assets of customer lists and trade marks for respectively € 0.9 million and € 0.2 million. The key events that led to the impairment loss for the
Engimplan CGU were a loss of business resulting from the COVID-19 pandemic and a slower recovery from the pandemic than expected, and a slower
than expected benefit from the anticipated synergies of the Engimplan acquisition. The 2021 impairment exercise showed no further impairment on
intangible assets, nor a reversal of impairment.
In 2021 we recorded a goodwill impairment of € 0.2 million on the CGU Metal in Belgium, formerly the company Aldema BV. We
acquired all shares and voting rights of Aldema BV in 2015 for € 0.1 million. With the creation of the Materialise Metal Competence Center in Bremen,
Germany, the recoverable amount of this asset decreased to 0.
When events or changes in circumstances indicate that the carrying amount of the intangible assets and property, plant & equipment may
not be recoverable, we estimate the value in use for the individual assets, or when not possible, at the level of CGUs to which the individual assets
belong. Total impairment charges recorded during 2021 were € 0.1 million (€ 4.6 million in 2021 and € 0 in 2020).
Business Combinations
We determine and allocate the purchase price of an acquired business to the assets acquired and liabilities assumed as of the business
combination date. The purchase price allocation process requires us to use significant estimates and assumptions, including:
•
•
•
estimated fair value of the acquired intangible assets;
estimated fair value of property, plant and equipment; and
estimated fair value of the contingent consideration.
The contingent consideration as included in the financial statements is recorded at fair value at the date of acquisition and is reviewed on a
regular basis, at least annually. The fair value of the contingent consideration is based on risk-adjusted future cash flows of different scenarios
discounted using appropriate interest rates. The structure of the possible scenarios and the probability assigned to each one of them is reassessed by
management at every reporting period and requires judgement from management about the outcome and probability of the different scenarios as well as
the evolution of the variables.
While we are using our best estimates and assumptions as part of the purchase price allocation process to accurately value assets acquired
and liabilities assumed at the date of acquisition, our estimates and assumptions are inherently uncertain and subject to refinement. Examples of critical
estimates in valuing certain of the intangible assets we have acquired or may acquire in the future, include but are not limited to:
•
•
•
•
•
future expected cash flows from customer contracts and relationships, software license sales and maintenance agreements;
the fair value of the plant and equipment;
the fair value of the deferred revenue;
discount rates; and
the technology royalty rate
Provision for Expected Credit Losses, or ECLs, of Trade Receivables and Contract Assets
We use a provision matrix to calculate ECLs for trade receivables and contract assets. The provision rates are based on days past due for
groupings of various customer segments that have similar loss patterns (i.e., by legal entity).
The provision matrix is initially based on our historical observed default rates. The matrix is calibrated to adjust the historical credit loss
experience with forward-looking information. For example, if economic conditions (i.e., gross domestic product) are expected to deteriorate over the
next year which can lead to an increased number of defaults, the historical default rates are adjusted. At each reporting date, the historical observed
default rates are updated and changes in the forward-looking estimates are analyzed.
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The assessment of the correlation between historical observed default rates, expectations of economic conditions and ECLs is a significant
estimate. The amount of ECLs is sensitive to changes in circumstances and of forecast economic conditions. Our historical credit loss experience and
expectations of economic conditions may also not be representative of a customer’s actual default in the future. Information about the ECLs on our trade
receivables and contract assets is disclosed in Note 25 to our consolidated financial statements.
Convertible Loans Granted to FluidDa & Ditto
We account for the convertible loan granted to FluidDa in January 2019, with a notional amount of € 2.5 million, at fair value. The
carrying value of the convertible loan amounts to € 3.6 million at December 31, 2021. FluidDa is a private start-up company which offers turnkey
contract research services for drug development and medical device development. FluidDa is currently loss-making. In determining the fair value of the
convertible loan, we consider different contractual parameters such as the repayment and conversion scenarios and dates. In addition, we must make
significant estimates such as (i) the discount rate, (ii) the probability and timing of each repayment and conversion scenario, and (iii) the amount of a
qualified capital increase that will determine the conversion factor. The convertible loan has a duration of seven years with a 10% annual interest rate
which is capitalized. We have applied a discount factor of 12.87% that is based on the estimated weighted average cost of capital of FluidDa, reflecting
the uncertainty in relation to FluidDa’s ability to be successful and the applied estimates by our consolidated group.
At December 31, 2021 the carrying value of the convertible loan amounted to € 3.6 million which included a fair value adjustment of
€ 0.3 million recorded in financial income during 2020. Changes in significant assumptions may lead to a significant increase or decrease in the fair
value of the convertible loan.
The convertible loan that was granted at fair value to Ditto Technologies Inc. in August 2020 amounted to € 3 million and was fully repaid
in August 2021, subsequent to the acquisition of Ditto by 1-800 Contacts.
Changes in useful life for certain assets
We review the useful life for the intangible assets and property, plant and equipment on an annual basis considering the current facts and
circumstances available. This review has not resulted in 2021 in a re-assessment of the useful life for certain specific assets in the categories buildings,
fixtures, vehicles and machinery. We refer to Note 7 to our audited consolidated financial statements for the impact of the change in useful lives during
the year 2021.
Leases IFRS 16 – Estimating the Discount Rate and Probability of Exercising Extension Options/Termination Options and Purchase Options
As we cannot always determine the interest rate implicit in lease contracts, we must estimate the incremental borrowing rate to measure
certain lease liabilities such as buildings. For buildings, we use the property yield as a reference to determine the incremental borrowing rate. For other
assets, we generally use the interest rate implicit in the lease contract or apply the incremental borrowing rate for a portfolio of similar assets. The
incremental borrowing rate reflects what we “would have to pay”, which requires estimation when no observable rates are available or when they need
to be adjusted to reflect the terms and conditions of the lease.
In addition, certain lease contracts may have extension options, termination options (in the case of property leases) and/or purchase options
(in the case of leases). We estimate whether it is reasonably certain that such options will be exercised, which impacts the lease term in the case of
extension options and termination options and the period over which the lease assets are depreciated in the case of purchase options.
Recent Accounting Pronouncements
The standards and interpretations that are issued, but not yet effective, up to the date of issuance of our financial statements are disclosed in our
financial statements included elsewhere in this annual report. Of those standards that are not yet effective, none are expected to have a material impact
on our financial statements in the period of initial application.
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Other Financial Information
We believe EBITDA and Adjusted EBITDA are meaningful measures to our investors to enhance their understanding of our financial
performance. Although EBITDA and Adjusted EBITDA are not necessarily a measure of our ability to fund our cash needs, we understand that it is
frequently used by securities analysts, investors and other interested parties as a measure of financial performance and to compare our performance with
the performance of other companies that report EBITDA or Adjusted EBITDA. Management believes these non-IFRS measures to be important
measures as they exclude the effects of items which primarily reflect the impact of long-term investment and financing decisions, rather than the
performance of our day-to-day operations. As compared to net profit, these measures are limited in that they do not reflect the periodic costs of certain
capitalized tangible and intangible assets used in generating revenues in our business, or the charges associated with impairments. Management
evaluates such items through other financial measures such as capital expenditures and cash flow provided by operating activities. We believe that these
measurements are useful to measure a company’s ability to grow or as a valuation measurement. Our calculation of EBITDA and Adjusted EBITDA
may not be comparable to similarly titled measures reported by other companies.
We calculate EBITDA as net profit (loss) plus income tax expense (benefit), financial expenses (less financial income), depreciation and
amortization, and share in loss of joint venture. We calculate Adjusted EBITDA by adding share-based compensation expenses, acquisition-related
expenses of business combinations, impairments and re-valuation of fair value due to business combinations to EBITDA.
Disclosure in this annual report of EBITDA and Adjusted EBITDA, which are non-IFRS financial measures, is intended as a supplemental
measure of our performance that is not required by, or presented in accordance with, IFRS. EBITDA and Adjusted EBITDA should not be considered as
alternatives to net profit or any other performance measure derived in accordance with IFRS. Our presentation of EBITDA and Adjusted EBITDA
should not be construed to imply that our future results will be unaffected by unusual or non-recurring items.
Reconciliation of Net Profit to Adjusted EBITDA (unaudited) on a Consolidated Basis
in 000€
Net profit (loss)
Income tax expense / (benefit)
Financial expenses
Financial income
Depreciation and amortization
Share in loss of joint venture
EBITDA (unaudited)
Share-based compensation expenses(1)
Acquisition-related expenses of business combinations(2)
Impairments(3)
Re-valuation of 50% Materialise Motion interest (4)
Adjusted EBITDA (unaudited)
For the year ended December 31,
2019
2020*
2021
13,145 (7,192) 1,644
591 (1,028) 2,595
4,101 5,995 3,682
(5,620) (2,452) (1,377)
20,516 19,775 19,278
392
—
32,733 15,137 26,214
302
(833) 1,344
413
140
63
177 4,606 —
—
(770) —
32,490 20,380 26,656
39
Share-based compensation expenses represent the cost of equity-settled and cash-settled share-based payments to employees.
(1)
(2) Acquisition-related expenses of business combinations represent fees and costs in connection with the acquisition of Engimplan in 2019,the
(3)
acquisition of Materialise Motion in 2020 and the acquisition of Link3D on January 4, 2022
Impairments represents the impairment of capitalized expenditures related to our tracheal splint development project (€2.1 million) and the
impairment of goodwill and intangible assets of Engimplan (€2.5 million) in 2020 and related to the impairment of goodwill of Aldema BV (€0.2
million) in 2021
(4) Represents a positive revaluation of our initial 50% interest in Materialise Motion after our acquisition of the remaining interest in the joint
venture.
The year 2020 has been adjusted retrospectively to reflect the final accounting of the business combination with Materialise Motion.
*
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Results of Operations
Comparison of Years Ended December 31, 2021 and 2020
in 000€, except percentages
Revenue
Cost of sales
Gross profit
Research and development expenses
Sales and marketing expenses
General and administrative expenses
Net other operating income
Operating profit
Financial expenses
Financial income
Share in loss of joint venture
Profit before taxes
Income taxes
Net profit
2021
2020*
For the year ended December 31,
%
Change
20.5%
14.2%
25.7%
-0.8%
10.1%
13.6%
39.7%
205,450
(87,278)
118,172
(26,891)
(49,151)
(33,315)
3,402
12,217
(4,101)
5,620
—
13,736
(591)
13,145
170,449
(76,446)
94,003
(27,104)
(44,636)
(29,337)
2,436
(4,638)
(5,995)
2,452
(39)
(8,220)
1,028
(7,192)
*
The year 2020 has been adjusted retrospectively to reflect the final accounting of the business combination with Materialise Motion.
Comparison of Years Ended December 31, 2021 and 2020 by Segment
in 000€
For the year ended December 31, 2021
Revenues
Segment Adjusted EBITDA
Segment Adjusted EBITDA %
For the year ended December 31, 2020
Revenues
Segment Adjusted EBITDA
Segment Adjusted EBITDA %
Materialise
Software
Materialise
Medical
Materialise
Manufacturing
Total
segments
Unallocated
Consolidated
42,902
15,705
73,368
20,669
89,180
6,275
205,450
42,649
36.6%
28.2%
7.0%
20.8%
39,054
13,383
61,729
13,915
69,635
2,548
170,418
29,846
34.3%
22.5%
3.7%
17.5%
—
(10,159)
—
31
(9,468)
—
205,450
32,490
15.8%
170,449
20,378
12.0%
(1) Unallocated Segment Adjusted EBITDA consists of corporate research and development, corporate headquarter costs and other operating income
(expense) and the added share-based compensation expenses, acquisition related expenses of business combinations, impairment and fair value of
business combinations that are included in Adjusted EBITDA when not attributable to a segment.
Revenue. Revenue was € 205.5 million in the year ended December 31, 2021 compared to € 170.4 million in the year ended December 31, 2020,
an increase of €35 million, or 21%. Compared to € 196.7 million in the year ended December 31, 2019, our 2021 revenue increased by 4%.
As discussed below under “—Trend Information” below, in 2020, the vast majority of the businesses addressed by our segments were adversely
affected by the effects of the COVID-19 pandemic, which had a negative impact on our results of operations. These effects diminished in 2021, although
we continued to experience a negative impact from the pandemic in certain business lines that have not yet recovered in full. In particular, during the
first half of 2021, order intake levels from automotive, aerospace, and certain industrial clients in our Materialise Software and Materialise
Manufacturing segments remained below pre-pandemic 2019 levels.
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Revenue by geographical area is presented as follows:
in 000€
Americas
Europe & Africa
Asia-Pacific
Total
For the year ended
December 31,
2021
2020
75,437 52,562
110,477 100,371
19,536 17,516
205,450 170,449
Revenue generated in Europe increased by € 10.1 million , or 10.1 %, in the year ended December 31, 2021 compared to the year ended
December 31, 2020, mainly due to higher revenue from our Materialise Manufacturing segment and to a lesser extent due to higher revenue from our
Materialise Software segment. Revenue from the Materialise Medical segment remained consistent between the year ended December 31, 2021
compared to the year ended December 31, 2020. Revenue generated throughout the Americas increased by € 22.9 million, or 43.5%, in the year ended
December 31, 2021 compared to the year ended December 31, 2020. In the Americas, revenue for the Materialise Manufacturing segment and for the
Materialise Medical segment increased and revenue for the Materialise Software segment remained consistent. Revenue generated in Asia-Pacific
increased by € 2.0 million, or 11.5% in the year ended December 31, 2021 compared to the year ended December 31, 2020, as revenue increased across
all three Materialise segments.
During 2021, we had increased revenue in all three of our segments compared to 2020.
Revenue from our Materialise Software segment increased € 3.8 million, or 9.9%, from € 39.1 million in the year ended December 31,
2020 to € 42.9 million in the year ended December 31, 2021. Recurrent revenue, consisting of limited license fees and maintenance fees, decreased by
1.9%. Non-recurrent revenue, mainly consisting of perpetual fees and services, grew by 27.6%. Deferred revenue from license and maintenance fees
increased with € 1.9 million in the year ended December 31, 2021.
Revenue from our Materialise Medical segment increased € 11.6 million, or 18.9%, from € 61.7 million in the year ended December 31,
2020 to € 73.4 million in the year ended December 31, 2021. Within our medical software department recurrent revenue from annual and renewed
licenses and maintenance fees increased by 23.1%, reflecting the implementation of our continued strategy focused on products with defined contractual
periods. These recurrent revenues represented 83.0% of all medical software revenues in the year ended December 31, 2021, compared to 77.0% in the
year ended December 31, 2020. Our non-recurrent revenue from perpetual licenses and services decreased by 16.3%. Revenues from medical devices
and services grew 21.2% in the year ended December 31, 2021, driven by our CMF business line. As of December 31, 2021, our Materialise Medical
segment operated 48 3D printers, as compared to 41 as of December 31, 2020.
Revenue from our Materialise Manufacturing segment increased € 19.6 million, or 28.2%, from € 69.6 million in the year ended
December 31, 2020 to € 89.2 million in the year ended December 31, 2021. Although the automotive, aerospace and certain other industrial business
lines continued to be negatively impacted by the ongoing COVID-19 pandemic (in 2021, particularly during the first half of 2021), all business lines
recovered strongly in the second half of 2021 despite remaining below pre-pandemic 2019 levels. However, revenue from the Materialise Motion
business line increased € 5.5 million to € 6.3 million in the year ended December 31, 2021, compared to € 0.8 million for the year ended December 31,
2020. Materialise Manufacturing operated 153 3D printers and 6 vacuum casting machines as of December 31, 2021, compared to 147 and 6 as of
December 31, 2020, respectively.
Cost of sales. Cost of sales was € 87.3 million in the year ended December 31, 2021, compared to € 76.4 million in the year ended
December 31, 2020, representing an increase of € 10.9 million, or 14.2%. This increase in cost of sales was mainly related to increased sales volumes.
Gross profit. Gross profit increased € 24.2 million from € 94.0 million in the year ended December 31, 2020, to € 118.2 million in the year
ended December 31, 2021, mainly driven by increased revenue in all three Materialise segments, and improved production capacity levels and
efficiencies. The overall gross profit margin (gross profit divided by our revenue) amounted to 57.5% in the year ended December 31, 2021, compared
to 55.2% in the year ended December 31, 2020.
Research and development, or R&D, sales and marketing, or S&M, and general and administrative, or G&A, expenses. R&D, S&M and
G&A expenses increased, in the aggregate, to € 109.4 million in the year ended December 31, 2021, compared to € 101.1 million in the year ended
December 31, 2020. R&D expenses decreased from € 27.1 million to € 26.9 million. Excluding the € 2.1 million impairment charge on our tracheal
splint program incurred in 2020, R&D expenses increased 7.5% in 2021. S&M expenses increased from € 44.6 million to € 49.2 million, driven by our
Materialise Manufacturing segment, including our eyewear and Materialise Motion business lines. In the aggregate, S&M expenses were € 3.8 million
below the pre-pandemic levels of the year ended December 31, 2019, because of continued lower travel expenses and cost containment in general. G&A
expenses increased from € 29.3 million to € 33.3 million. The increase in G&A expenses was mainly due to the roll-out of our ongoing internal digital
transformation program.
Net other operating income. Net other operating income increased to € 3.4 million in the year ended December 31, 2021, compared to
€ 2.4 million in the year ended December 31, 2020. The 2020 result included the € 2.5 million impairment of goodwill and intangibles related to the
Engimplan acquisition of 2019, as a result of the COVID-19 pandemic in Brazil that delayed the roll out of our business plan in that region, including
the introduction of 3D printed devices. The 2020 result also included a positive € 0.8 million revaluation of our initial 50% interest in Materialise
Motion. The 2021 Net other operating income includes the cost of € 0.2 million impairment of goodwill from the acquisition of Aldema (Metal
Belgium) in 2015.
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Net financial income (financial income and financial expense). Net financial income was € 1.5 million in the year ended December 31, 2021,
compared to a net expense of € 3.5 million in the year ended December 31, 2020. This difference of € 5.0 million included a realized exchange gain of
€ 3.7 million, mainly from positive exchange differences from our USD proceeds on the follow-on offering in June and July of 2021, and € 0.7 million
of interest income.
Income taxes. Income taxes in the year ended December 31, 2021 resulted in a cost of € 0.6 million, which was a combination of deferred tax
income amounting to € 0.7 million and current income tax expenses of € 1.3 million. This income tax cost was mainly due to the growth in revenue, as
well as the fact that mark-ups and margins applied under our consolidated group’s transfer pricing arrangements returned to pre-pandemic levels as from
July 1, 2021.
Net profit. As a result of the elements described above, net profit amounted to € 13.1 million in the year ended December 31, 2021
compared to a net loss of € 7.2 million in the year ended December 31, 2020, or an increase of € 20.3 million.
EBITDA. As a result of the factors described above, our consolidated EBITDA increased from € 15.1 million* in the year ended
December 31, 2020 to € 32.7 million in the year ended December 31, 2021, an increase of € 17.6 million, or 117%. Our 2021 EBITDA included
expenses of € 0.2 million from the Aldema BV goodwill impairment. Our 2020 EBITDA included expenses of €2.5 million from Engimplan’s
impairment and €2.1 million from the tracheal splint development project impairment, and income for €0.8 million from the revaluation of our initial
50% interest in Materialise Motion. These expenses and income were, among others, not reflected in our Adjusted EBITDA. Our Adjusted EBITDA
increased from € 20.4 million in the year ended December 31, 2020 to € 32.5 million in the year ended December 31, 2021, an increase of
€ 12.1 million, or 59%. Our total segment Adjusted EBITDA increased from € 29.8 million in the year ended December 31, 2020 to € 42.7 million in
the year ended December 31, 2021, an increase of € 12.9 million, or 43%.
Our Materialise Software segment’s Adjusted EBITDA increased from € 13.4 million in the year ended December 31, 2020 to
€ 15.8 million in the year ended December 31, 2021, an increase of € 2.4 million, or 17.9%. This segment’s Adjusted EBITDA margin (the segment’s
Adjusted EBITDA divided by the segment’s revenue) increased from 34.3% for the year ended December 31, 2020 to 36.8% in the year ended
December 31, 2021. The increase in the Adjusted EBITDA margin was a result of the 9.9% growth in revenue, while S&M, R&D and G&A
expenditures in the aggregate increased by 5.5% .
Our Materialise Medical segment’s Adjusted EBITDA increased from € 13.9 million in the year ended December 31, 2020 to
€ 20.7 million in the year ended December 31, 2021. The segment’s Adjusted EBITDA margin increased from 22.5% in the year ended December 31,
2020 to 28.2% in the year ended December 31, 2021. The increase in the segment’s Adjusted EBITDA margin was due to the 18.9% growth in revenue,
and improved production capacity levels and efficiencies, while S&M, R&D, and G&A expenditures in the aggregate increased 6.1%. The year ended
December 31, 2020 included a € 2.1 million impairment charge on our tracheal splint development project.
Our Materialise Manufacturing segment’s Adjusted EBITDA increased from € 2.5 million in the year ended December 31, 2020 to
€ 6.3 million in the year ended December 31, 2021. The Adjusted EBITDA margin of this segment increased from 3.7% in the year ended December 31,
2020 to 7.0% in the year ended December 31, 2021, as a result of the 28% revenue growth, and improved production capacity levels and efficiencies.
Reconciliation of Net Profit to Segment Adjusted EBITDA
in 000€
Net profit
Income tax expense / (benefit)
Finance costs
Finance income
Share in loss of joint venture
Operating profit / loss
Depreciation and amortization
Corporate research and development
Corporate headquarters costs
Net other operating (income) expense
Impairments
Re-valuation of 50% Materialise Motion interest
Segment adjusted EBITDA (unaudited)
For the year ended
December 31,
2021
2020*
13,145 (7,192)
591 (1,028)
4,101 5,995
(5,620) (2,452)
—
39
12,217 (4,638)
20,516 19,775
2,948 2,824
10,317 11,719
(3,527) (3,668)
177 4,606
—
(770)
42,648 29,848
*
The year 2020 has been adjusted retrospectively to reflect the final accounting of the business combination with Materialise Motion.
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Comparison of Years Ended December 31, 2020 and 2019
in 000€, except percentages
Revenue
Cost of sales
Gross profit
Research and development expenses
Sales and marketing expenses
General and administrative expenses
Net other operating income (expenses)
Operating profit
Financial expenses
Financial income
Share in loss of joint venture
Profit (loss) before taxes
Income tax expense / (benefit)
Net profit (loss)
For the year ended December 31,
2019
% Change
2020*
170,449
(76,446)
94,003
(27,104)
(44,636)
(29,337)
2,436
(4,638)
(5,995)
2,452
(39)
(8,220)
1,028
(7,193)
196,679
(87,052)
109,627
(23,348)
(52,989)
(31,786)
5,432
6,936
(3,682)
1,377
(392)
4,239
(2,595)
1,644
-13.3%
-12.2%
-14.3%
16.1%
-15.8%
-7.7%
-55.2%
-166.9%
62.8%
78.1%
-90.1%
-293.9%
-139.6%
-537.5%
*
The year 2020 has been adjusted retrospectively to reflect the final accounting of the business combination with Materialise Motion.
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Comparison of the Years Ended December 31, 2020 and 2019 by Segment
in 000€
For the year ended December 31, 2020
Revenues
Segment Adjusted EBITDA
Segment Adjusted EBITDA %
For the year ended December 31, 2019
Revenues
Segment Adjusted EBITDA
Segment Adjusted EBITDA %
Materialise
Software
Materialise
Medical
Materialise
Manufacturing
Total
segments
Unallocated
(1)
Consolidated
39,054
13,383
61,729
13,914
69,635
2,546
170,418
29,843
34.3%
22.5%
3.7%
17.5%
31
(9,465)
—
170,449
20,378
12.0%
41,654
13,812
60,808
10,774
94,156
12,154
196,618
36,740
61
(10,084)
196,679
26,656
33.2%
17.7%
12.9%
18.7%
0.0%
13.6%
(1) Unallocated Segment Adjusted EBITDA consists of corporate research and development, corporate headquarter costs and other operating income
(expense) and the added share-based compensation expenses, acquisition related expenses of business combinations, impairment and fair value of
business combinations that are included in Adjusted EBITDA when not attributable to a segment.
Revenue. Revenue was € 170.4 million in the year ended December 31, 2020 compared to € 196.7 million in the year ended December 31,
2019, a decrease of € 26.2 million, or 13.3%.
Revenue by geographical area is presented as follows:
in 000€
Americas
Europe & Africa
Asia-Pacific
Total
For the year ended
December 31
2020
2019
52,562 59,630
100,371 117,784
17,516 19,265
170,449 196,679
Revenue generated in Europe decreased by € 17.4 million, or 14.8%, in the year ended December 31, 2020 compared to the year ended
December 31, 2019, mainly due to lower revenue from our Materialise Manufacturing segment, and to a lesser extent due to lower revenue from our
Materialise Software and Materialise Medical segments. Revenue generated throughout the Americas decreased by € 7.1 million, or 11.9%, in the year
ended December 31, 2020 compared to the year ended December 31, 2019. In the Americas, revenue from the Materialise Manufacturing segment
decreased, revenue from the Materialise Medical segment increased and revenue from the Materialise Software segment was essentially flat. Revenue
generated in Asia-Pacific decreased by € 1.7 million , or 9.1%, in the year ended December 31, 2020 compared to the year ended December 31, 2019.
The main decreases in this region occurred in the Materialise Software and the Materialise Manufacturing segments.
Revenue from our Materialise Software segment decreased 6.2% from € 41.7 million in the year ended December 31, 2019 to
€ 39.1 million in the year ended December 31, 2020. Recurrent revenue, consisting of limited license fees and maintenance fees, grew 14.9%.
Non-recurrent revenue, mainly consisting of perpetual fees, decreased 26.7%. Deferred revenue from license and maintenance fees was flat, compared
to an increase of €3.1 million in the year ended December 31, 2019.
Revenue from our Materialise Medical segment increased € 0.9 million, or 1.5%, from € 60.8 million in the year ended December 31,
2019 to € 61.7 million in the year ended December 31, 2020. Medical software revenue grew by 3.3% from 2019 to 2020. Within our medical software
department recurrent revenue from annual and renewed licenses and maintenance fees increased by 2.4%, reflecting the implementation of our
continued strategy focused on products with defined contractual periods. These recurrent revenues represented 77.0% of all medical software revenues
in the year ended December 31, 2020, compared to 77.7% in the year ended December 31, 2019. Our non-recurrent revenue from perpetual licenses and
services increased also 6.3%. Revenues from medical devices and services grew 0.7% in the year ended December 31, 2020. As of December 31, 2020,
our Materialise Medical segment operated 41 3D printers, as compared to 32 as of December 31, 2019.
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Revenue from our Materialise Manufacturing segment decreased from € 94.2 million in the year ended December 31, 2019 to
€ 69.6 million in the year ended December 31, 2020, representing a decrease of €24.5 million. During 2020, the revenue of our ACTech business
decreased by € 18.2 million. The sales decrease was driven by the global economic impact of the COVID-19 pandemic, which affected our
manufacturing market segments in general, and the automotive and aerospace market in particular. As of December 31, 2020, Materialise Manufacturing
operated 147 3D printers, six vacuum casting machines and 20 CNC machines, as compared to 149, six and 20 as of December 31, 2019, respectively.
The total number of 3D printers decreased from the year ended December 31, 2019 to the year ended December 31, 2020, by 2 printers.
Cost of sales. Cost of sales was € 76.4 million in the year ended December 31, 2020, compared to € 87.1 million in the year ended
December 31, 2019, representing a decrease of €10.5 million, or 12.1%. This decrease in cost of sales was mainly related to decreases in sales volumes.
Gross profit. Gross profit decreased € 15.7 million from € 109.7 million in the year ended December 31, 2019, to € 94.0 million in the year
ended December 31, 2020, mainly driven by the decreased revenue in the Materialise Manufacturing segment. The overall gross profit margin (gross
profit divided by our revenue) amounted to 55.2% in the year ended December 31, 2020, compared to 55.8% in the year ended December 31, 2019. The
slight deterioration of the margin was mainly driven by the decrease in sales volume in the Materialise Manufacturing segment. The corresponding
decrease in revenue was not fully matched by the reductions in certain fixed costs, mainly salary costs, from efficiency programs that were implemented
during the year ended December 31, 2020.
Research and development, or R&D, sales and marketing, or S&M, and general and administrative, or G&A, expenses. R&D, S&M and
G&A expenses decreased, in the aggregate, to €101.1 million in the year ended December 31, 2020, compared to €108.1 million in the year ended
December 31, 2019. R&D expenses increased from € 23.3 million to € 27.1 million, S&M expenses decreased from € 53.0 million to € 44.6 million and
G&A expenses decreased from € 31.8 million to € 29.3 million. The R&D cost increase included an impairment charge on the tracheal splint
development project of € 2.1 million. However, even without this cost, the R&D expenses increased 7.1% from € 23.3 million to € 25.0 million. In total,
the intangible assets related to the internal development projects amounted to € 1.1 million on our balance sheet at December 31, 2020.
Net other operating income. Net other operating income decreased to € 2.4 million in the year ended December 31, 2020, compared to
€ 5.4 million in the year ended December 31, 2019. The 2020 result included the € 2.5 million impairment of goodwill and intangibles related to the
Engimplan acquisition of 2019, as a result of the COVID-19 pandemic in Brazil that delayed the roll out of our business plan in that region, including
the introduction of 3D printed devices. The 2020 result also included a positive € 0.8 million revaluation of our initial 50% interest in Materialise
Motion.
Net financial expense (financial expenses and financial income). In each of 2019 and 2020, the net financial expense mainly related to the
net interest expense from loans and deposits of financial institutions. The net financial result (financial expenses and financial income) increased from
€ 2.3 million in the year ended December 31, 2019 to € 3.5 million in the year ended December 31, 2020. This increase was mainly due to an increase of
(un)realized exchange losses of € 1.5 million, partly offset by the fair value adjustment of the FluidDa convertible loan for € 0.3 million.
Income taxes. Income taxes in the year ended December 31, 2020 resulted in a benefit of € 1.0 million, which was a combination of
deferred tax benefit of € 1.0 million and current income taxes of € 0.0 million. This tax benefit was mainly due to the new German tax law enabling tax
carry-back on 2019 taxes. Income tax expenses in 2019 amounted to € 2.6 million.
Net profit*. As a result of the factors described above, net loss was € 7.2 million in the year ended December 31, 2020 compared to a net
profit of € 1.6 million in the year ended December 31, 2019, or a decrease of € 8.8 million.
EBITDA. As a result of the factors described above, our consolidated EBITDA decreased from € 26.2 million in the year ended
December 31, 2019 to € 15.1 million in the year ended December 31, 2020, a decrease of €11.1 million, or 42.3%. Our EBITDA included expenses of
€ 2.5 million from Engimplan’s impairment and € 2.1 million from the tracheal splint development project impairment, and income for € 0.8 million
from the revaluation of our initial 50% interest in Materialise Motion, which expenses and income were not reflected in our Adjusted EBITDA. Our
Adjusted EBITDA decreased from €26.7 million in the year ended December 31, 2019 to €20.4 million in the year ended December 31, 2020, a
decrease of € 6.3 million, or 23.5%.
Our Materialise Software segment’s Adjusted EBITDA decreased from € 13.8 million in the year ended December 31, 2019 to
€ 13.4 million in the year ended December 31, 2020, a decrease of €0.4 million, or 3.1%. This segment’s Adjusted EBITDA margin (the segment’s
Adjusted EBITDA divided by the segment’s revenue) increased from 33.2% for the year ended December 31, 2019 to 34.3% in the year ended
December 31, 2020. The increase in the Adjusted EBITDA margin was due to cost control measures related to compensation and other expenses. The
revenue decreased by 6.2% (which was due to the COVID-19 pandemic), which was almost completely matched by a decrease in operating expenses by
8.3%, mainly in G&A expenses and S&M expenses. The segment’s R&D costs were flat.
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Our Materialise Medical segment’s Adjusted EBITDA increased from € 10.8 million in the year ended December 31, 2019 to
€13.9 million in the year ended December 31, 2020. The segment’s Adjusted EBITDA margin increased from 17.7% in the year ended December 31,
2019 to 22.5% in the year ended December 31, 2020. The segment’s Adjusted EBITDA margin was affected positively by cost control measures related
to raw materials, S&M expenses and G&A expenses. The segment’s R&D expenses increased.
Our Materialise Manufacturing segment’s Adjusted EBITDA decreased from € 12.2 million in the year ended December 31, 2019 to
€ 2.5 million in the year ended December 31, 2020. The Adjusted EBITDA margin of this segment decreased from 12.9% in the year ended
December 31, 2019 to 3.7% in the year ended December 31, 2020. While the gross margin dropped by 7%, operating expenses (S&M, R&D, and G&A)
decreased by 14.7%.
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Reconciliation of Net Profit to Segment Adjusted EBITDA
in 000€
Net profit (loss)
Income tax expense / (benefit)
Finance costs
Finance income
Share in loss of joint venture
Operating profit
Depreciation and amortization
Corporate research and development
Corporate headquarters costs
Net other operating income (expense)
Impairments
Re-valuation of 50% Materialise Motion interest
Segment Adjusted EBITDA (unaudited)
For the year ended
December 31,
2020*
2019
(7,192) 1,644
(1,028) 2,595
5,995 3,682
(2,452) (1,377)
392
39
(4,639) 6,936
19,775 19,278
2,824 1,859
11,719 11,077
(3,668) (2,410)
4,606 —
(770) —
29,847 36,740
*
The year 2020 has been adjusted retrospectively restated to reflect the final accounting of the business combination with Materialise Motion.
B. Liquidity and Capital Resources
Prior to our initial public offering, we historically funded our operations principally from cash generated from operations and borrowings.
From our initial public offering on June 30, 2014 through December 31, 2021, we have raised approximately $258.5 million in aggregate net proceeds
from public offerings of our ADSs and a private placement of our ordinary shares. Most recently, on July 6, 2021, we sold 4,600,000 ADSs in a
follow-on public offering at a public offering price of $24.00 per ADS, and received net proceeds of approximately $105 million. As we continue to
grow our business, we envision funding our operations through multiple sources, including the remaining proceeds from our equity offerings, and future
earnings and cash flow from operations and borrowings. We may also seek to raise additional capital from offerings of our equity or debt securities on
an opportunistic basis when we believe there are suitable opportunities for doing so.
We expect our main uses of cash in the future will be funding our business operations, capital expenditures and loan reimbursements,
acquisitions and partnerships. We believe that we will have sufficient liquidity to satisfy the operating requirements of our business through the next
12 months.
Our liquidity plans are subject to a number of risks and uncertainties, including those described in the section of this annual report titled
“Item 3. Key Information—D. Risk Factors,” some of which are outside of our control. Macro-economic conditions, including the impact of the
COVID-19 pandemic and the armed conflict in Ukraine on the global economy, could hinder our business plans, which could, in turn, adversely affect
our financing strategy.
Cash Flows
The table below summarizes our cash flows from operating activities, investing activities and financing activities for the years ended
December 31, 2021, 2020 and 2019.
in 000€
Net cash flow from operating activities
Net cash flow from/(used in) investing activities
Net cash flow from/(used in) financing activities
Net increase / (decrease) of cash and cash equivalents
66
For the year ended December 31,
2019
2020
2021
25,845 29,978 28,402
(13,134) (28,265) (25,617)
71,156 (16,888) 10,781
83,867 (15,175) 13,566
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Comparison of Years Ended December 31, 2021 and 2020
Net cash flow from operating activities amounted to € 25.8 million in the year ended December 31, 2021 compared to € 30.0 million in the
year ended December 31, 2020, a decrease of € 4.1 million, or 14%. The increase in Adjusted EBITDA of € 12.1 million was offset in full by the
adverse impact from the revenue growth on our working capital.
Net cash flow used in investing activities was € 13.1 million in the year ended December 31, 2021 compared to € 28.3 million in the year
ended December 31, 2020, a decrease of € 15.2 million, or 54%. In 2020, in addition to capital expenditures of €17.6 million, cash flow used in
investing activities were impacted by the acquisition of our remaining interest in Materialise Motion and convertible loans we granted to Ditto and AM
Flow. For more information regarding these loans, see Note 3 to our consolidated financial statements. In 2021, our capital expenditures amounted to
€ 11.7 million and the convertible loan granted to Ditto of € 3.9 million was fully repaid. We also granted a convertible loan to Link3D for € 2.2 million
and purchased an option agreement to acquire Link3D for € 1.7 million. Additionally, PMV, who owned 16.66% of the shares of our subsidiary RapidFit
NV, exercised its put option in 2021, resulting in us paying € 0.9 million to acquire this remaining 16.66% of the shares of RapidFit NV.
Net cash flow from financing activities was € 71.2 million in the year ended December 31, 2021 compared to € 16.9 million in net cash
flow used in financing activities in the year ended December 31, 2020. The positive cash flow in 2021 was driven by the net capital increase
€ 88.1 million. In 2021, we also did not enter into any new loans or borrowings, while the repayment of borrowings and leases amounted to
€18.1 million.
Comparison of Years Ended December 31, 2020 and 2019
Net cash flow from operating activities was € 30.0 million in the year ended December 31, 2020 compared to € 28.4 million in the year
ended December 31, 2019, an increase of € 1.6 million, or 5.6%. The decrease in Adjusted EBITDA (€6.3 million) was offset in full by improvements in
our working capital.
Net cash flow used in investing activities was € 28.3 million in the year ended December 31, 2020 compared to € 25.6 million in the year
ended December 31, 2019, an increase of € 2.6 million, or 10.3%. In 2020, in addition to capital expenditures of € 17.6 million, cash flow used in
investing activities were impacted by the acquisition of our remaining interest in Materialise Motion and convertible loans we granted to Ditto and AM
Flow. For more information regarding these loans, see Note 3 to our consolidated financial statements.
Net cash flow used in financing activities was € 16.9 million in the year ended December 31, 2020 compared to € 10.8 million in net cash
flow from financing activities in the year ended December 31, 2019, a decrease of € 27.7 million, or 256.7 %. In 2020 we did not enter into any new
loans or borrowings, while the repayment of borrowings and leases amounted to €17.4 million. During 2019, we drew an additional €25.0 million
tranche under our finance contract with the European Investment Bank, and €4.0 million to finance capital expenditures from other credit institutions.
Investments in Property, Plant & Equipment and Intangible Assets
The table below describes cash paid for investments in property, plant & equipment and intangible assets for the years ended
December 31, 2021, 2020 and 2019:
in 000€
Purchase of property, plant and equipment
Purchase of intangible assets
Total
67
For the year ended December 31,
2020
2021
7,934 11,032 13,472
3,788 6,618 2,193
11,722 17,650 15,665
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Indebtedness
As of December 31, 2021, we had loans and borrowings in the total amount of € 99.1 million, with mainly fixed interest rates. These loans
include secured bank loans used to finance the acquisition of ACTech, the construction of office and production facilities in Belgium and Poland, the
acquisition of production equipment and installations, and research and development projects.
The following table sets forth our principal indebtedness:
in 000€
K€35,000 EIB bank loan
K€28,000 acquisition bank loan
K€18,000 secured bank loans
K€12,300 bank loans ACTech
K€9,050 other facility loans
Bank investment loans - top 20 outstanding
Bank investment loans - other
Lease liabilities
Institutional loan
Convertible bonds
Related party loan
Total loans and borrowings
Current
Non-Current
2019
2021
As of December 31
2020
33,333 35,000 35,000
15,604 18,621 21,612
16,592 17,013 17,429
8,160 10,470 11,850
2,248 2,910
3,599
12,852 17,280 22,132
4,429
1,569 2,681
9,876
8,621 10,624
824
—
353
1,000
— —
187
158
99,107 115,110 127,938
21,202 17,523 16,838
77,905 97,588 111,100
128
K€35,000 EIB bank loan
On December 20, 2017, we entered into a finance contract with the European Investment Bank, or EIB, to finance future research and development
programs. The contract provides a credit of up to € 35.0 million drawable in two tranches. As part of the first tranche, an amount of €10.0 million was
drawn in July of 2018. The duration of the loan will be between six to eight years, and includes a two-year loan repayment grace period.
In July 2019, the second tranche of € 25.0 million was drawn. Similar to the first tranche, the duration of the loan will be between six to eight years, and
includes a two-year loan repayment grace period.
Loans under the contract are made at a fixed rate, based on the Euribor rate at the time of the borrowing, plus a variable margin. The applied rate for the
first tranche is initially equal to 2.4%. The applied rate for the second tranche is initially equal to 2.72% and varies in function of certain EBITDA levels
and debt ratios. The contract contains customary security, covenants and undertakings. Certain of the covenants have been temporarily waived or
adjusted as a result of the COVID-19 pandemic. For more information regarding these waivers, see Note 15 to our consolidated financial statements.
K€28,000 Acquisition loan
This bank loan was concluded in October 2017 to finance the acquisition of ACTech. The loan includes a portion of € 18.0 million, repayable monthly
over seven years, and a bullet portion of € 10.0 million, payable at once in October 2024. The interest rate is fixed for the duration of the loan, and
amounts to 1% on average for both portions. The bank loans are secured with a business pledge mandate, a share pledge on Materialise Germany
GMBH, and debt covenants.
K€18,000 secured bank loans
The € 18.0 million loan has been concluded in 2016 in two agreements to finance the construction of new facilities in Leuven (Belgium) and in Poland,
both maturing in 2032. The agreement for the Belgian facility financing amounts to € 12.0 million (drawn per end 2020: € 11.7 million; per end 2019
€ 11.7 million), and with reimbursements only starting in December 2022. The agreement for the Polish facility financing amounts to € 6.0 million (fully
drawn per end of 2018), and with reimbursements only starting in June 2019. The average interest rate of both agreements amounts to 1%. The bank
loan is secured with a mortgage mandate on the Belgian facility buildings.
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K€12,300 bank loans
In March 2018, three bank loans originating from the acquired ACTech business were refinanced in their entirety for an aggregate amount of
€ 9.3 million, with the maturity adjusted to May 2025 and the first repayments beginning in August 2020. The interest rate was fixed at approximately
1.6%, and pledges including a € 4.7 million mortgage on ACTech’s facilities and guaranteed by Materialise NV. In addition, a new investment credit of
€ 3.0 million was obtained from Commerzbank in June 2018, repayable as from January 2019 and with a fixed interest rate of 1.5%.
K€9,050 - Other facility loans
Three facility loans were contracted in 2005, 2006 and 2012 for the construction of Leuven office and production facilities (€ 2.0 million, € 0.3 million
and € 5.0 million respectively) and another loan for the Czech Republic offices in 2008 (€ 1.8 million). The aggregate balance of the four loans
amounted to €2.9 million as of December 31, 2021. All loans have a repayment schedule of 15 years and interest rates are fixed between 4% and 5% for
the four loans.
Bank investment loans
The 20 largest of these investment loans outstanding as of December 31, 2021 amount to a balance of € 12.9 million. They were agreed in 2018, 2017
and prior years to finance various investments in machinery, printers, equipment, and software tools. The vast majority of the loans have a
reimbursement period over seven years, and are at fixed interest rates with weighted average below 1%.
K€8,621 Lease liabilities included lease with related party
We have had several lease obligations, mainly with financial institutions and related to the financing of buildings and various other items of plant and
equipment such as 3D printers. As at December 31, 2021 the balance of these lease obligations amounts to € 8.6 million, and are mostly at fixed interest
rates with weighted average below 2%.
K€2,000 institutional loan
This loan was contracted with a governmental institution in Germany to finance the production operations of Materialise Germany for a maximum
amount of € 2.0 million. The loan was repayable over a four year period, starting as of September 2017 with a fixed interest rate of 0.25% payable per
quarter. This loan was repaid in full during the year ended December 31, 2021.
Related party loan
Ailanthus NV previously granted us a loan at a fixed interest rate of 4.23% that matures in 2025. Prior to the merger between Ailanthus NV and
Materialise NV, Ailanthus NV was demerged into Lunebeke NV, a newly incorporated company. As a result of this demerger, the loan was transferred
from Ailanthus NV to Lunebeke NV. For more information on the merger and related demerger, see “Item 7. Major Shareholders and Related Party
Transactions—B. Related Party Transactions.” The purpose of the loan was to finance the purchase of a building in France. The amounts outstanding as
of December 31, 2021 were K€128 (2020: K€158; 2019: K€187). The interest expense for the year ended December 31, 2021 was K€5 (2020: K€7;
2019: K€9).
Material Unused Sources of Liquidity
Our cash and cash equivalents as of December 31, 2021, 2020 and 2019 were € 196.0 million, € 111.5 million and € 128.9 million, respectively. We
have no longer undrawn lines of credit at December 31, 2021.
Transfers from Subsidiaries
The amount of dividends payable by our subsidiaries to us is subject to, among other restrictions, general limitations imposed by the corporate laws,
capital transfer restrictions and exchange control restrictions of the respective jurisdictions where those subsidiaries are organized and operate. For
example, China has very specific approval regulations for all capital transfers to or from the country, certain capital transfers to and from
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Ukraine are subject to obtaining a specific permit and current legislation in Brazil permits the Brazilian government to impose temporary restrictions on
remittances of foreign capital abroad in the event of a serious imbalance or an anticipated serious imbalance in Brazil’s balance of payments. Dividends
paid to us by certain of our subsidiaries may also be subject to withholding taxes in certain jurisdictions. Of our cash and cash equivalents held outside
of Belgium as of December 31, 2021, 2020 and 2019, the amount of cash that would have been subject to withholding taxes if transferred to us by way
of dividends and the amount of cash that could not have been transferred by law, or the transfer of which would have been subject to prior approval that
was beyond our control, was in each case immaterial.
Contractual Obligations
Our contractual commitments will have an impact on our future liquidity. The table below sets forth our contractual obligations as of
December 31, 2021, which represents contractually committed future obligations:
in 000€
Loans and borrowings
Lease Liabilities
Scheduled interest payments(1)
Purchase obligations
Total
Total
90,486
8,621
5,384
7,043
111,534
Less than 1
year
17,849
3,353
1,374
6,723
29,299
2-3 years
39,837
3,426
2,116
320
45,699
4-5 years
18,610
861
1,061
0
20,532
More than 5
years
14,190
981
832
0
16,003
(1)
Scheduled interest payments comprise the interest payable on loans and borrowings and lease commitments. No interest is payable on the other
contractual obligations in the above table.
As of December 31, 2021 and 2020, we had no significant purchase commitments related to property, plant & equipment.
C. Research and Development, Patents and Licenses
For information regarding our research and development program, see “Item 4. Information on the Company—B. Business Overview—
Research and Development.”
D. Trend Information
Impact of COVID-19 on our Business
In 2020, the vast majority of the businesses addressed by our segments were adversely affected by the effects of the COVID-19 pandemic,
which had a negative impact on our results of our operations. These effects diminished in 2021, although we continued to experience the negative
impact from the pandemic in certain business lines that have not yet recovered in full. In particular, during the first half of 2021, order intake levels from
automotive, aerospace and certain industrial clients in our Materialise Software and Materialise Manufacturing segments remained below the historical
levels pre-pandemic 2019. To date, we have not incurred significant bad debt or major delays in trade payments as a result of the pandemic.
Impact of the armed conflict in Ukraine
As discussed in more detail in “Item 3. Key Information—D. Risk Factors” of this annual report, we have historically maintained an office
in Kyiv, employing over 400 collaborators who are mainly engaged in engineering, software development and supporting IT and staff functions. As a
result of the armed conflict in Ukraine, our operations from our Kyiv office have come to a standstill.
To-date, most our our personnel from the office in Kyiv have continued to work for us throughout the armed conflict, either remotely from
Ukraine or other neighboring countries or from our Wroclaw office, while others remain unable to perform their work. As of the date of this annual
report, we have been able to continue servicing our customers without significant disruption or delay, as personnel with similar skills and competencies
located elsewhere in the world have increased their roles and responsibilities to assist displaced personnel.
Despite our initiating an intense relocation and support program, it is impossible to predict how much of our Ukrainian workforce will be
able or willing to continue working for us. As we are unable to predict how the armed conflict in Ukraine will evolve, we cannot exclude that delays or
disruption in certain of our services may occur, which could impact our business and operations, results of operations, financial condition, cash flows
and liquidity.
Although the impact of the armed conflict in Ukraine has not had a material adverse effect on our financial results to-date, we have
incurred and will continue to incur expenses related to the relocation and support efforts of Ukrainian personnel, and we will be affected by additional
operating expenses from hiring additional and more expensive resources outside Ukraine.
It is still uncertain to what extent some of the development projects of our Materialise Software and Materialise Medical segments, and to
a lesser extent our Materialise Manufacturing segment, will be impacted. As a result of such impact, some of our anticipated product releases may be
delayed, which may adversely affect our revenue.
In addition, although only less than 0.3% of our revenue in 2021 was generated in Russia, we expect that the trade sanctions that have been
imposed against Russia by, among others, the United States and the European Union, will have a negative impact on our revenue for the year ended
December 31, 2022.
As of the date of this annual report, we are unable to predict how the armed conflict in Ukraine will evolve or what the impact of any
political and direct and indirect economic repercussions will be on the global economy and our business. Indirect economic repercussions could, for
example, come from continued or further increased inflation, or currencies instability. As a result, we are unable to assess with certainty its impact on
our business and operations, results of operations, financial condition, cash flows and liquidity.
E. Critical Accounting Estimates
For information regarding our critical accounting estimates, see “—Operating Results—Critical Accounting Policies and Accounting
Estimates” above.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material
to investors.
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ITEM 6. DIRECTORS,SENIOR MANAGEMENT AND EMPLOYEES
A. Directors and Senior Management
The following table sets forth certain information with respect to the current members of our board of directors and senior management:
Name
Directors:
Wilfried Vancraen
Peter Leys
A Tre C CVOA, represented by Johan De Lille
Hilde Ingelaere
Sander Vancraen
Jürgen Ingels
Jos Vander Sloten
Lieve Verplancke
Bart Luyten
Volker Hammes
Senior Management and Executive Committee Members:
Wilfried Vancraen
Peter Leys
Hilde Ingelaere
Seaquence BV, represented by Johan Pauwels
Bart Van der Schueren
Alfinco BV, represented by Johan Albrecht
De Vet Management BV, represented by Brigitte de Vet-Veithen
Level 5 BV, represented by Jurgen Laudus
Eduard Crits
SoHo services, represented by Conny Hooghe
Carla Van Steenbergen
Age
60
57
59
60
31
51
59
62
45
58
60
57
60
54
55
58
51
43
63
56
46
Position
Founder, Director & Chief Executive Officer
Executive Chairman
Director
Director & Executive Vice President
Director
Director
Director
Director
Director
Director
Founder, Director & Chief Executive Officer
Executive Chairman
Director & Executive Vice President
Executive Vice President, Chief Operating
Officer
Executive Vice President, Chief Technology
Officer
Executive Vice President, Chief Financial
Officer
Vice President, Materialise Medical segment
Vice President, Materialise Manufacturing
segment
Chief Information Officer
Vice President, Human Resources
Vice President, Chief Legal Officer
The term of the directorship of each member of our board of directors will expire at the 2022 annual general meeting of shareholders. The
business address of the members of our board of directors is the same as our business address: Technologielaan 15, 3001 Leuven, Belgium. Our board of
directors has determined that Jürgen Ingels, Bart Luyten, Volker Hammes, Lieve Verplancke and A Tre C CVOA (represented by Johan De Lille) are
independent under Belgian law and the Nasdaq Stock Market listing requirements.
The following is a brief summary of the business experience of the current members of our board of directors:
Wilfried Vancraen. Wilfried Vancraen has served as one of our directors and as our Chief Executive Officer since founding our company
in July 1990. Mr. Vancraen previously worked as a research engineer and consultant at the Research Institute of the Belgian Metalworking Industry,
where he was introduced to 3D printing. Passionate about this new technology and firm in his belief that it could help create a better and healthier world,
he founded Materialise in July 1990. Mr. Vancraen holds several patents related to the technical and medical applications of 3D printing and remains
committed to using the technology to make positive changes in people’s lives. In recent years, Mr. Vancraen has been awarded the RTAM/SME Industry
Achievement Award, the highest honor in the 3D printing industry, has been selected as the most influential person in additive manufacturing by
industry professionals and TCT Magazine, and has been listed one of the five leading players in his sector by the Financial Times. He is also the
recipient of a 2013 Visionaries! Award from the Museum of Art and Design in New York. Mr. Vancraen holds a Master of Science in Electro-
Mechanical Engineering and a Master in Business Administration from KU Leuven. Wilfried Vancraen was chosen in the TCT Hall of Fame in 2017 for
his contributions to the 3D printing industry. In 2018, he was chosen by the Additive Manufacturing Users Group (AMUG) as the Innovators Showcase
and received the Industry Dino Award. In 2019, Mr. Vancraen was appointed as a faculty honorary professor at the Faculty of Engineering, KU Leuven
on the recommendation of the Department of Mechanical Engineering because of his role as founder and CEO of our company.
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Peter Leys. Peter Leys has served as one of our directors and as our Executive Chairman since 2013. Previously, from 1990 to 2013,
Mr. Leys was at the Brussels office of Baker & McKenzie CVBA, where he focused on mergers and acquisitions, and capital markets. Mr. Leys lectures
a contract negotiation course at the KU Leuven. Mr. Leys holds a Candidacy Degree in Philosophy from KU Leuven and Master of Law degrees from
KU Leuven and the University of Georgia.
Johan De Lille. Johan De Lille has represented A Tre C CVOA as one of our directors since July 2006, and A Tre C CVOA has been an
independent director of Materialise since 2006. Mr. De Lille started his professional career as an auditor at Arthur Andersen LLP in 1988. In 1994, he
became Vice President & Group Controller of Ackermans & van Haaren NV, a Belgian public holding company. In 1999, he became Chief Financial
Officer of Easdaq/Nasdaq Europe and took on the role of Chief Financial Officer of Option NV, a Belgian public technology company, in 2001. Mr. De
Lille joined Delhaize Group, a Belgian public company, as Vice President & Controller in September 2002, and later became Chief Internal Auditor of
the Delhaize Group in August 2006, and Chief Financial Officer of Delhaize Belgium in January 2009. Since 2013, Mr. De Lille has acted as Chief
Financial & Information Officer of BMT Group, an industrial family owned holding company active in high-precision machining. Mr. De Lille serves as
an independent director on the board of directors of Boma NV, a Belgian private company specializing in cleaning products. In 1988, Mr. De Lille was
the award winner for the best final paper of the Department of Economics from KU Leuven. In 2010, he received the CFO Magazine Award for the Best
Finance Team of the year for Working Capital in Belgium. Mr. De Lille holds a Master’s degree in Economics, with a major in Econometrics and
Mathematical Economics, from KU Leuven.
Hilde Ingelaere. Hilde Ingelaere co-founded Materialise in 1990, together with the company’s Chief Executive Officer, Wilfried
Vancraen, and has served as one of our directors since 1997. In her early years at Materialise, Ms. Ingelaere managed several staff departments including
human resources, finance and legal. Today as the Executive Vice President of Materialise, she plays an important role in strategic negotiations with a
focus on partnerships and applications in the medical domain. Prior to joining Materialise, Ms. Ingelaere conducted cardiovascular clinical research at
Bristol-Myers Squibb from 1986 to 1989. She then worked as a business analyst with Plant Genetic Systems from 1989 to 1992. Ms. Ingelaere holds a
Master’s degree in Bioengineering from KU Leuven, where she focused on Biotechnology, and a Master’s degree in Business Administration from KU
Leuven.
Sander Vancraen. Sander Vancraen has served as one of our directors since 2020. Mr. Vancraen holds a Bachelor’s degree in Aerospace
Engineering from Delft University of Technology, with a thesis on a GES (Gravity Explorer Satellite), providing data on temporal changes in Earth’s
gravity field for scientific use at low cost. He also holds a Master’s degree in Aerospace Engineering, track Space Exploration, fromDelft University of
Technology, with a thesis on aCOTS GNSS Receiver, testing of an onboard receiver for the Indian Space Research Organization. In 2013, he did a three
month internship at Materialise USA in Plymouth, MI, supporting the clinical engineering team. From 2013 to 2018, he managed a guesthouse,
Intermezzo. Since October 2018, he has been a design engineer for the EASA DOA of TUI fly, a charter airline.
Jürgen Ingels. Jürgen Ingels has served as one of our independent directors since November 2013. Mr. Ingels is Founder and Managing
Partner of SmartFin, a growth stage private equity fund that was set up in December 2014. In October 2014, Mr. Ingels sold Clear2Pay NV/S.A., a
global innovative payments software technology company he founded in 2000, to FIS Global. The clients of Clear2Pay include global and major
regional financial institutions such as ING Group, Banco Santander, S.A., Crédit Agricole S.A., BNP Paribas, The U.S. Federal Reserve, Royal Bank of
Scotland, The People’s Bank of China (PBOC). Mr. Ingels started his career in private equity in 1997 at Dexia NV/S.A., where his role was focused on
investing in technology companies. Mr. Ingels currently serves as a director on the board of directors for Guardsquare NV, Projective NV, Itineris NV,
Willemen Groep, Ghelamco NV, WDP (Euronext), and Recharge.com. In 2018, Mr. Ingels founded Scale-Ups.eu and organized Supernova, a four-day
technology event in Antwerp with over 30.000 visitors. Mr. Ingels holds a Master’s degree in Business Administration and a Master’s degree in Political
and Social Sciences from the University of Antwerp. In 2020 Mr. Ingels published his first book Start Grow Sell. In the book he reveals 50 lessons he
has learned as an entrepreneur.
Jos Vander Sloten. Jos Vander Sloten has served as one of our directors since January 2007. Mr. Vander Sloten is a full professor at the
Faculty of Engineering Science, KU Leuven and chaired the Division of Biomechanics for two terms from 2006 to 2014. He chaired the Leuven
Medical Technology Centre (L-MTC), which he founded in 2008 until the end of his two terms in 2016. Mr. Vander Sloten teaches engineering
mechanics, problem solving and engineering design, computer integrated surgery systems, and medical device design including regulatory affairs. From
2006 to 2012, he served as program director of the Master in Biomedical Engineering at KU Leuven. His research interests are computer applications in
musculoskeletal biomechanics and computer integrated surgery, on which he authored more than 160 journal papers. Mr. Vander Sloten is a Founding
Fellow of the European Alliance for Medical and Biological Engineering and Science, where he previously served as president in 2006, president-elect
in 2005 and secretary-general from 2003 to 2004. In 2015, he was elected as a member of the International Academy for Medical and Biological
Engineering. Mr. Vander Sloten holds a Master’s degree in Mechanical Engineering and a PhD in Mechanical Engineering – Biomedical Engineering
from KU Leuven. Since 2016, he is Vice-Dean for International Affairs at the Faculty of Engineering Science, KU Leuven.
Lieve Verplancke. Lieve Verplancke has served as one of our independent directors since June 2015. Ms. Verplancke began her career in
1984 with The Beecham Group (now part of GlaxoSmithKline), and has since held key management positions with Merck & Co., as well as Bristol-
Myers Squibb, where she served as Managing Director, leading their Belgian/GDL subsidiary until 2012. Ms. Verplancke has also served as a board
member for Brussels-based Europe Hospitals, the Imelda Hospital in Bonheiden, the Euronext fund, Quest for Growth, MDxHealth and the Stichting
tegen Kanker. She is also the founder and managing director of Qaly@Beersel, an elderly care center in Belgium. In addition to being a medical doctor
(MD – KU Leuven), Ms. Verplancke holds a postgraduate degree in Economics and a Master in Business Administration from the University of
Antwerp. She has also completed courses at INSEAD, CEDEP, Columbia University and the Vlerick Business School, and is a certified Executive
Coach (PCC).
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Bart Luyten. Bart Luyten has served as one of our independent directors since June 2017 and also previously served as representative of
one of our directors from 2012 to 2015. Mr. Luyten is Founder and Managing Partner of SmartFin, a private equity fund platform investing in early- and
growth stage technology companies through four investment entities under the SmartFin brand. Previously, Mr. Luyten was the Founder and Managing
Director of Sniper Investments NV, a B2B technologies fund that was set up in 2010. Mr. Luyten has experience as Investment Director of Partners At
Venture, Managing Partner of Privast Capital Partners and General Partner of Nausicaa Ventures, all Belgian-based private equity and venture capital
funds with a focus on B2B technology investments. Mr. Luyten currently holds positions on the boards of directors of a number of European B2B
technology companies such as Betty Blocks, Recharge and Eyesee. Mr. Luyten holds a Master of Science degree in Applied Economics from the
University of Antwerp and a postgraduate Master degree in SME management from VIZO Brussels.
Volker Hammes. Volker Hammes, has served as one of our directors since November 2018. Mr. Hammes has served as a Managing
Director of BASF New Business GmbH, a subsidiary of BASF SE, the German chemical conglomerate (FWB: BAS), since January 2016 as well as first
as Managing Director and then as Chairman of BASF 3D Printing Solutions GmbH, another subsidiary of BASF, since August 2017 and June 2019
respectively. Between 2012 and 2016, Mr. Hammes also served as director or officer of various BASF affiliates, including as Chief Executive Officer
and Managing Director, Head of Business Center Turkey, Middle East and North Africa of BASF Turk Kimya San. Ltd. Sti. In addition, Mr. Hammes
has served as a director on the board of directors of Essentium Inc. and Evolve Additive Solutions, both providers of industrial 3D printing solutions,
since December 2017 and January 2021 respectively. Mr. Hammes holds a Master of Science degree in Mechanical Engineering, Polymer Technology
from RWTH Aachen.
Our board of directors has established an Executive Committee. The following is a brief summary of the professional experience of the
members of our Executive Committee, which was established effective as of January 1, 2017:
Johan Pauwels. Johan Pauwels has served as an Executive Vice President of our company since January 2011 and has been with our
company since our founding. In 1990, Mr. Pauwels completed his Master’s thesis on stereolithography on the very first 3D printing machine at
Materialise. After graduating in 1991, Mr. Pauwels stayed on with our company, focusing on software development to support our 3D printing services.
Throughout his career with our company, Mr. Pauwels has held several positions, including Software Sales Manager and Director of Sales, and is
currently an Executive Vice President responsible for global sales organization and our sales offices around the world. As of 2021, Mr. Pauwels is also
the Chief Operating Officer of our company. Mr. Pauwels holds a Master’s degree in Electro-Mechanical Engineering from KU Leuven.
Bart Van der Schueren. Bart Van der Schueren has served as an Executive Vice President of our company since January 2011 and as our
Chief Technology Officer since 2016. In February 2022, he also assumed the position of Vice President of the Materialise Software segment. Prior to
joining Materialise, Mr. Van der Schueren was at KU Leuven as a liaison engineer for the newly founded Materialise and established the basic research
activities for the company while also founding the research activities in 3D printing at the KU Leuven. Mr. Van der Schueren then went on to obtain a
PhD in selective laser metal sintering. In 1995, Mr. Van der Schueren officially joined Materialise and ran the service bureau. Over the years, his
dedication and expertise has grown the service bureau from a regional player to one of the most prominent additive manufacturing facilities in Europe.
In 2011, Mr. Van der Schueren became an Executive Vice President of our company, responsible for the Materialise Manufacturing segment and
focusing on production and engineering services. Since 2018, Mr. Van der Schueren is globally responsible for the research activities of Materialise, and
since 2022, he is also responsible for the activities of the Materialise Software segment. Mr. Van der Schueren holds a PhD in Selective Laser Metal
Sintering and a Master’s degree in Mechanical Engineering from KU Leuven.
Johan Albrecht. Johan Albrecht has represented Alfinco BV as our Chief Financial Officer since August 2015. Mr. Albrecht joined
Materialise from BARC NV, a global central laboratory that supports the pharmaceutical and biotech industry in the development of new drugs, where
he served as Chief Financial Officer between 1989 and 2015, with responsibility for its worldwide financial and business reporting and control
systems. Mr. Albrecht was also a member of BARC NV’s executive committee and a director in its subsidiaries in Belgium, the United States, China,
Australia, Singapore and South Africa. After Cerba European Lab, a network of 200 laboratories, acquired BARC NV in 2007, Mr. Albrecht also joined
Cerba European Lab’s executive committee in 2011. Prior to joining BARC NV, Mr. Albrecht served in various financial capacities with Pizzaland
Benelux (United Biscuits), Applied Data Research and Minit International. Mr. Albrecht holds a postgraduate degree in corporate finance from KU
Leuven and a Bachelor of Science in Business Administration from HU Brussels University.
Brigitte de Vet-Veithen. Brigitte de Vet-Veithen has represented De Vet Management BV as Vice President Medical since June 2016.
Mrs. de Vet-Veithen has more than 20 years of experience in the Healthcare and Life Sciences Sector. She has worked in various management roles for
Johnson & Johnson, ultimately serving as Vice President for the EMEA region of Cordis Neurovascular and General Manager of Cordis in Germany.
Before joining Materialise she has held various leadership roles as representative of De Vet Management BV including the role of Chief Executive
Officer of Acertys group, a provider of medical devices, software, services and supplies to hospitals and medical professionals. Mrs. de Vet-Veithen
holds a Master of Business Administration with a Major in Engineering from HEC Liege and an MBA from INSEAD.
Jurgen Laudus. Jurgen Laudus serves as Vice-President of our Materialise Manufacturing segment. Mr. Laudus joined us in August 2001
as project manager and continued to our U.K. office to become Rapid Tooling manager in 2003. For two years, Mr. Laudus was responsible for both our
Rapid Tooling sales support and production management. In 2005, Mr. Laudus returned to Belgium to become international production manager for our
additive manufacturing services and later on sales manager, playing an active role in the growth of the additive manufacturing production activities of
Materialise. Mr. Laudus holds a Master of Science degree in Engineering from the KU Leuven.
Eddy Crits. Eduard (Eddy) Crits has served as our Chief Information Officer since August 2018. For the past 30 years of his career,
Mr. Crits held managerial and executive positions in ICT, Product Development, Operations and Engineering in global technological companies such as
Agfa, IPTE and IBA. Mr. Crits holds a PhD degree in Physics from KU Leuven and an Executive MBA degree from the University of Antwerp.
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Conny Hooghe. Conny Hooghe represented SoHo Services as our Global HR Director since September 2017. She holds a Master of
Industrial Psychology from the University of Ghent. Previously she has held several human resources management positions within technological
oriented or IT companies like Wolters Kluwer, Fujitsu Services and Atos Origin.
Carla Van Steenbergen. Carla Van Steenbergen has served as our in-house counsel since 2003, and her role has gradually evolved into our
Chief Legal Officer. Ms. Van Steenbergen has served as our Compliance Officer since June 2014, and is a member of our Executive Committee in
addition to being secretary to the board of directors. Ms. Van Steenbergen graduated from the law faculty of KU Leuven in 1999. After having worked
for three years at Brussels’ based law firm Marx Van Ranst Vermeersch & Partners, she temporarily moved to London to earn a LLM degree at King’s
College London. Upon her return to Belgium, she started working as in-house legal counsel for our company, a position which she holds to this day.
Over the years, our legal department has expanded, changing Ms. Van Steenbergen’s role from the sole company lawyer to that of a legal team manager.
Family Relationships
Wilfried Vancraen and Hilde Ingelaere are spouses. Sander Vancraen is the son of Wilfried Vancraen and Hilde Ingelaere. No other family
relationship exists between any members of our board of directors or senior management.
Board Diversity Disclosure
In accordance with Nasdaq Listing Rule 5606, each company must disclose annually information on each director’s voluntary self-
identified characteristics. The table below includes information on the diversity of our board of directors based upon information voluntarily provided
by each director.
Board Diversity Matrix
Country of Principal Executive Offices:
Foreign Private Issuer
Disclosure Prohibited under Home Country Law
Total Number of Directors
Part I: Gender Identity
Directors
Part II: Demographic Background
Underrepresented Individual in Home Country Jurisdiction
LGBTQ+
Did Not Disclose Demographic Background
74
Belgium
Yes
No
10
Female
Male
Non-
Binary
Did Not
Disclose
Gender
2
8
0
0
0
0
0
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B. Compensation
Compensation of Directors
Our Remuneration and Nomination Committee recommends the level of remuneration for directors. These recommendations are subject to
approval by our board of directors and, subsequently, by our shareholders at the annual general meeting. During the year ended December 31, 2021,
only the directorships of Mr. Wilfried Vancraen, Mr. Leys, Ms. Ingelaere, Mr. De Lille, Mr. Vander Sloten, Mr. Ingels, Mr. Luyten, Ms. Verplancke and
Mr. Hammes were remunerated. See “—Compensation of Senior Management and Executive Committee” below for more information about the
remuneration of the directorships of Mr. Wilfried Vancraen, Mr. Leys and Ms. Ingelaere. During the year ended December 31, 2021, Mr. De Lille,
Mr. Vander Sloten, Mr. Ingels, Mr. Luyten, Ms. Verplancke and Mr. Hammes each received annual remuneration equal to € 10,000. In addition, Mr. De
Lille, Mr. Vander Sloten, Mr. Ingels, Mr. Luyten, Ms. Verplancke and Mr. Hammes each received a remuneration of € 1,250 per physical board meeting
that he or she attended and € 625 for each board meeting held via conference call (lasting more than one hour) that he or she attended.
In addition, the Chairman of the Audit Committee received an annual remuneration of € 7,500. Each independent member (including the
Chairman) of the Audit Committee or the Remuneration and Nomination Committee received a remuneration of € 1,250 for each physical committee
meeting that he or she attended, and € 625 for each committee meeting held via conference call (lasting more than one hour) and that he or she attended.
The Remuneration and Nomination Committee benchmarks directors’ compensation against peer companies to ensure that it is competitive. In addition,
our board of directors sets and revises, from time to time, the rules and level of compensation for directors carrying out a special mandate or sitting on
one or more of the board of directors committees and the rules for reimbursement of directors’ business-related out-of-pocket expenses.
Compensation of Senior Management and Executive Committee
In 2021, the aggregate total gross compensation of our senior management amounted to € 2.9 million, which included base salary, bonus
payments, company car allowance and other benefits. This amount also includes the remuneration of the directorships of Mr. Wilfried Vancraen,
Mr. Leys and Ms. Ingelaere and the compensation for the members of the Executive Committee.
We have entered into services agreements (Contracts for Paid Office as a member of the Executive Committee) with each member of our
Executive Committee. The terms of these agreements are substantially similar. These agreements generally provide for an annual base salary. In addition
to the fixed remuneration components, under the terms of these agreements, members of our Executive Committee are entitled to certain additional
benefits (including mobile phone and director and officer liability insurance) and reimbursement of necessary and reasonable expenses. These services
agreements with members of our Executive Committee provide for payments and benefits (including upon termination of employment) that we believe
are in line with customary market practice for similar companies who are operating in our industry.
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C. Board Practices
Service Contracts
Except as described above under “—B. Compensation—Compensation of Senior Management and Executive Committee,” we do not have
service contracts with any member of our board of directors or Executive Committee.
Board of Directors Practices
Decisions are generally made by our board of directors as a whole. However, decisions on certain matters may be delegated to committees
of our board of directors or to the Executive Committee to the extent permitted by law and our restated articles of association. The chairperson, or if he
or she is prevented from doing so, the vice chairperson, chairs the meetings of our board of directors.
Our board of directors transferred management powers to the Executive Committee, except for the general policy of the company and
other powers which are reserved by Belgian company law to the board of directors. The Executive Committee is supervised by our board of directors.
The following actions are comprised under general policy of our company and are thus excluded from the powers of the Executive Committee:
•
•
•
•
•
•
•
•
mergers and acquisitions;
transfer and waive of intellectual property rights to third parties;
granting of exclusivity rights to third parties with an important impact on the freedom of a particular business segment;
nomination and removal of members of the Executive Committee;
opening of offices abroad and nomination and removal of managers thereof;
conclusion of financial loans;
sale and purchase of real estate; and
cancellation of a particular product line.
Our board of directors entrusted the daily management of the company to Wilfried Vancraen, our Chief Executive Officer, in conformity
with article 7:121of the Belgian Companies and Associations Code.
Pursuant to our restated articles of association, our board of directors may form committees from among its members and charge them
with the performance of specific tasks. The committees’ tasks, authorizations and processes are determined by our board of directors. Where permissible
by law and our restated articles of association, important powers of our board of directors may also be transferred to committees.
Audit Committee
The Audit Committee consists of three members: Johan De Lille (Chairman), Bart Luyten and Jürgen Ingels. Our board of directors has
determined that Messrs. De Lille, Luyten and Ingels are independent under Rule 10A-3 of the Exchange Act and the applicable rules of the Nasdaq
Stock Market and that each of Messrs. De Lille, Luyten and Ingels qualifies as an “audit committee financial expert” as defined under the Exchange Act.
Our Audit Committee assists our board of directors in overseeing the accuracy and integrity of our accounting and financial reporting
processes and audits of our consolidated financial statements, the implementation and effectiveness of an internal control system and our compliance
with legal and regulatory requirements, the independent auditors’ qualifications and independence and the performance of the independent auditors.
The Audit Committee’s duties and responsibilities to carry out its purposes include, among others:
•
•
•
the review of our accounting processes;
the review of the effectiveness of our internal systems of control, risk management and compliance;
the consideration and recommendation of the nomination, compensation, retention and termination of the Company’s statutory
auditor for Belgian company law purposes and the Company’s independent auditor for SEC purposes, the commissioning of the
auditors to conduct audits, agreeing on additional services to be provided by the auditors under their respective engagements, the
establishment of the scope and the main review points of the audit and oversight of the auditors’ work (including resolution of
disagreements with the auditors);
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•
•
•
•
•
the preparation of our board of directors’ resolution on our consolidated financial statements;
reviewing our interim consolidated financial statements that are made public or otherwise filed with any securities regulatory
authority;
discussing any flaws relating to our internal control systems, as reported by our board of directors to the audit committee;
monitoring our bookkeeping and records; and
the establishment of procedures for (i) the receipt, retention and treatment of complaints we receive regarding accounting, internal
accounting controls or auditing matters and (ii) the confidential, anonymous submission by our employees of concerns regarding
questionable accounting or auditing matters.
Our Audit Committee is entitled to review information on any point it wishes to verify, and is authorized to acquire such information from
any of our employees. It is also authorized to obtain independent advice, including legal advice, if this is necessary for an inquiry into any matter under
its responsibility. It is entitled to call on the resources that would be needed for this task. It is entitled to receive reports directly from the auditors,
including reports with recommendations on how to improve our control processes.
Remuneration and Nomination Committee
Our Remuneration and Nomination Committee consists of three members: Wilfried Vancraen, Jozef Vander Sloten and Lieve Verpancke.
Our board of directors has determined that Ms. Verplancke is independent under the applicable rules of the Nasdaq Stock Market.
Our Remuneration and Nomination Committee assists our board of directors in its decisions relating to the remuneration policy and
individual remuneration packages for our board of directors, the appointment of directors, the Chief Executive Officer and the other members of senior
management.
The Remuneration and Nomination Committee’s duties and responsibilities to carry out its purposes include, among others:
•
•
•
•
•
•
•
•
identifying individuals qualified to become members of our board of directors, consistent with criteria approved by our board of
directors;
recommending to our board of directors the director nominees for each annual general meeting, taking into account any nomination
rights that certain shareholders may have under our restated articles of association;
recommending to our board of directors director nominees to fill vacancies;
recommending to our board of directors qualified and experienced directors for service on the committees of the board of directors;
recommending to our board of directors the compensation of the members of senior management;
recommending to our board of directors any incentive compensation plans and equity-based plans, and awards thereunder, and
profit-sharing plans for our employees;
evaluating the performance of our Chief Executive Officer; and
advising our board of directors on other compensation issues.
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D. Employees
The table below sets out information about the number of FTEs and fully dedicated consultants, which consultants included individual
professionals who are registered as private entrepreneurs in Ukraine and who work exclusively with our company. FTEs who are a part of one or more
of our three core competencies are allocated to one of our segments and therefore included in our segment reporting.
At December 31,
Total
Segments:
Materialise Software
Materialise Medical
Materialise Manufacturing
Additional staff
2021
2019
2,332 2,163 2,177
2020
281 285 303
861 738 763
752 760 775
438 380 336
We currently do not have a workers’ council or trade union delegation. We have a health and safety committee entitled to certain
information and consultation rights under Belgian law, at our Belgian headquarters. We consider our employee relations to be good and have never
experienced a work stoppage.
E. Share Ownership
The following table sets forth information relating to beneficial ownership of our ordinary shares, as of April 22, 2022, for each member of
our board of directors and senior management as of April 22, 2022:
Name of beneficial owner(1)
Wilfried Vancraen(3)
Peter Leys(4)
A Tre C CVOA, represented by Johan De Lille(5)
Sander Vancraen
Jürgen Ingels
Jos Vander Sloten
Lieve Verplancke
Hilde Ingelaere(3)
Bart Luyten
Volker Hammes
Johan Pauwels(6)
Bart Van der Schueren(7)
Johan Albrecht(8)
Jurgen Laudus(9)
Carla Van Steenbergen(10)
Brigitte de Vet-Veithen(11)
Conny Hooghe
Eddy Crits
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Ordinary Shares Beneficially
Owned as of April 22, 2022
Number(2)
32,251,036
320,459
—
—
—
12,000
—
32,251,036
—
—
150,545
143,346
10,545
45,145
28,635
27,793
—
—
Percent(2)
54.6
*
—
—
—
*
—
54.6
—
—
*
*
—
*
*
*
—
—
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Less than 1%
Except as otherwise indicated, the address for each of the persons named above is Technologielaan 15, 3001 Leuven, Belgium.
*
(1)
(2) Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In computing the number of shares beneficially
owned by a person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days of
April 22, 2022, including through the exercise of any option, warrant or other right or the conversion of any other security. These shares, however,
are not included in the computation of the percentage ownership of any other person. Except as otherwise indicated, we believe the persons named
in this table have sole voting and investment power with respect to all ordinary shares shown as beneficially owned by them, subject to community
property laws where applicable and to the information contained in the footnotes to this table.
(3) Consists of (i) 110,545 ordinary shares and 27,135 ADSs held by Mr. Vancraen, (ii) 110,545 ordinary shares and 27,135 ADSs held by
Ms. Ingelaere and (iii) 30,858,964 ordinary shares and 1,116,712 ADSs jointly held by Mr. Vancraen and Ms. Ingelaere through Idem, a
partnership (maatschap) that is controlled and managed by Mr. Vancraen and Ms. Ingelaere.
(4) Consists of (i) 7,040 ADSs held by Peter Leys, 4,215 ADSs held by Els Kindt (the spouse of Peter Leys), 22,862 ADS held by Riverside, a
partnership (maatschap) that is controlled and managed by Mr. Leys and Ms. Kindt and 75,000 ADSs held by Mountain View, a partnership that is
controlled and managed by Mr. Leys and Ms. Kindt and (ii) 6,000 ordinary shares held by Peter Leys, 103,561 ordinary shares held by Els Kindt
and 101,781 ordinary shares held by Mountain View.
The address for A Tre C CVOA is Timmermansstraat 32, 8340 Damme, Belgium.
(5)
(6) Consists of (i) 40,000 ordinary shares and 10,545 ADSs held jointly with Mr. Pauwels’ spouse Kristine Van Muylder, and (ii) 100,000 ordinary
shares jointly held by Mr. Pauwels and Ms. Van Muylder through Sorelle, a partnership that is controlled and managed by Mr. Pauwels and
Ms. Van Muylder.
(7) Consists of (i) 124,552 ordinary shares held by Mr. Van der Schueren and (ii) 18,794 ADSs held by Mr. Van der Schueren.
(8) Consists of 10,545 ADSs held by Mr. Albrecht. Does not include 4,545 warrants issued and granted to Mr. Albrecht under the 2014 Warrant Plan,
which warrants are exercisable for 4,545 ordinary shares at €8.81 per share, vest 25% on a yearly basis beginning in October 2018 and expire in
2024 (with the percentage vesting on each applicable vesting date calculated as a percentage of the total number of warrants initially granted).
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(9) Consists of 45,145 ADSs held by Mr. Laudus.
(10) Consists of 10,545 ordinary shares and 18,090 ADSs held by Ms. Van Steenbergen.
(11) Consists of 18,000 ordinary shares and 9,793 ADSs held by Ms. de Vet-Veithen.
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ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A. Major Shareholders
The following table sets forth information relating to beneficial ownership of our ordinary shares, as of April 22, 2022, for each person
who is known by us to own beneficially 5% or more of our outstanding ordinary shares:
Name of Beneficial Owner(1)
Wilfried Vancraen(3)
Hilde Ingelaere(3)
ARK Investment Management LLC(4)
Ordinary Shares Beneficially
Owned as of April 22, 2022
Number(2)
32,251,036
32,251,036
6,128,880
Percent(2)
54.6
54.6
11.31
Except as otherwise indicated, the address for each of the persons named above is Technologielaan 15, 3001 Leuven, Belgium.
(1)
(2) Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In computing the number of shares beneficially
owned by a person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days of
April 22, 2022, including through the exercise of any option, warrant or other right or the conversion of any other security. These shares, however,
are not included in the computation of the percentage ownership of any other person. Except as otherwise indicated, we believe the persons named
in this table have sole voting and investment power with respect to all ordinary shares shown as beneficially owned by them, subject to community
property laws where applicable and to the information contained in the footnotes to this table.
(3) Consists of (i) 110,545 ordinary shares and 27,135 ADSs held by Mr. Vancraen, (ii) 110,545 ordinary shares and 27,135 ADSs held by
Ms. Ingelaere and (iii) 30,858,964 ordinary shares and 1,116,712 ADSs jointly held by Mr. Vancraen and Ms. Ingelaere through Idem, a
partnership (maatschap) that is controlled and managed by Mr. Vancraen and Ms. Ingelaere.
(4) Based on a Schedule 13G/A filed with the SEC on February 9, 2022 by ARK Investment Management LLC (“ARK”). ARK is an investment
advisor and in the Schedule 13G/A filed by ARK it is reported that ARK has (a) sole voting power with respect to 5,807,312 ADSs; (b) shared
voting with respect to 116,023 ADSs; and (c) sole dispositive power with respect to 6,128,880 ADSs.
None of our shareholders have different voting rights from other shareholders, except that as long as the Family Shareholders control,
directly or indirectly, in the aggregate at least 20% of the voting rights attached to our ordinary shares, a majority of our directors must be appointed by
our shareholders from a list of candidates proposed by the Family Shareholders. We are not aware of any arrangement that may, at a subsequent date,
result in a change of control of our company.
As of February 1, 2022, there were 43 individual holders of record entered in our share register. The number of individual holders of
record is based exclusively upon our share register and does not address whether a share or shares may be held by the holder of record on behalf of more
than one person or institution who may be deemed to be the beneficial owner of a share or shares in our company. As of February 1, 2022, 53,68% of
our outstanding ordinary shares were held in Belgium by 42 holders of record. As of February 1, 2022, assuming that all of our ordinary shares
represented by ADSs are held by residents of the United States, approximately 46,32% of our outstanding ordinary shares were held in the
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United States by one holder of record, the Bank of New York Mellon, depositary of the ADSs. At such date, there were outstanding 27.360.625 ADSs,
each representing one of our ordinary shares, and in the aggregate representing approximately 46,32% of our outstanding ordinary shares. The actual
number of holders is greater than these numbers of record holders, and includes beneficial owners whose ADSs are held in street name by brokers and
other nominees. This number of holders of record also does not include holder whose shares may be held in trust by other entities.
B. Related Party Transactions
Since January 1, 2021, there has not been, nor is there currently proposed, any material transaction or series of similar material
transactions to which we were or are a party in which any of the members of our board of directors or senior management, holders of more than 10% of
any class of our voting securities, or any member of the immediate family of any of the foregoing persons, had or will have a direct or indirect material
interest, other than the compensation and shareholding arrangements we describe in “Item 6. Directors, Senior Management and Employees” and “—A.
Major Shareholders,” and the transactions we describe below.
Lunebeke NV
In the past, Ailanthus NV, which was a shareholder of our company up until it was merged into our company (which we refer to as the
“Merger”) and which was owned and controlled by Mr. Vancraen and Ms. Ingelaere, had provided several loans and financial leases to us for the
purchase of machinery and a portion of our office and production buildings.
Ailanthus NV had granted us a loan at a fixed interest rate of 4.23% that matures in 2025. The purpose of the loan was to finance the
purchase of a building in France. Prior to the Merger, Ailanthus NV was demerged into Lunebeke NV, a newly incorporated company. All of Ailanthus
NV’s assets and liabilities were transferred to Lunebeke NV, with the exception of (i) the ordinary shares of our company held by Ailanthus NV and
(ii) the corresponding accounting equity components. As such, the loan granted by Ailanthus NV was also transferred from Ailanthus NV to Lunebeke
NV. For additional information about the loan, see Note 15 to our audited consolidated financial statements.
We used to rent apartments on a regular basis from Ailanthus NV in order to host our employees from foreign subsidiaries who were
visiting our headquarters in Leuven. The total amount owed to Ailanthus NV for rent in 2021 was approximately €37k. This activity was also transferred
from Ailanthus NV to Lunebeke NV as a result of Ailanthus’s demerger.
Indemnification Agreement
In connection with and prior to the Merger, we entered into an indemnification agreement with Ailanthus NV and with Wilfried Vancraen,
Hilde Ingelaere and Lunebeke NV (which we refer to collectively as the “indemnifying parties”). Pursuant to the indemnification agreement, among
other things, the indemnifying parties agreed to reimburse us for: (i) costs incurred by us in connection with the Merger, (ii) possible liabilities of our
company as a result of the Merger, and (iii) possible negative tax consequences, if any, for certain of our shareholders. The obligation to reimburse our
shareholders applies to shareholders who were shareholders prior to April 30, 2021 (which we refer to as “qualifying shareholders”).
The term of the indemnification agreement expires on December 31, 2030. However, we and any qualifying shareholders have the right to
make claims against the indemnifying parties for a period of 10 years following the occurrence giving rise to the claim.
Registration Rights Agreement
On September 15, 2016, we entered into a registration rights agreement with certain holders of our ordinary shares, warrants and
convertible bonds, including certain of our directors, senior management and consultants, which we refer to as the Registration Rights Agreement. In
accordance with the terms of the Registration Rights Agreement, we filed a shelf registration statement on Form F-3 registering certain ordinary shares
represented by ADSs to be sold by the selling shareholders from time to time. These ordinary shares consisted of ordinary shares previously issued to
and ordinary shares issuable upon exercise of warrants or conversion of convertible bonds held by the selling shareholders, as well as ordinary shares
underlying ADSs that were acquired by the selling shareholders on the Nasdaq Global Select Market.
Letter Agreement Regarding Shares Issuance and Registration Rights
In connection with the Merger, we entered into a letter agreement, dated December 31, 2020, with Wilfried Vancraen and Hilde Ingelaere
pursuant to which, among other things, we granted certain demand and “piggyback” registration rights to Wilfried Vancraen and Hilde Ingelaere in
respect of the new ordinary shares that were issued to them in connection with the Merger.
C. Interests of Experts and Counsel
Not applicable.
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ITEM 8. FINANCIAL INFORMATION
A. Consolidated Financial Statements and Other Information
See “Item 3.A. Key Information— A. Selected Financial Data” and “Item 18. Financial Statements.”
Legal or Arbitration Proceedings
From time to time, we may be subject to various claims or legal or arbitration proceedings that arise in the ordinary course of our business.
On September 21, 2021, the Brussels Court of Appeal issued a judgment regarding the termination of a supply agreement that we entered
into with Dentsply Implants NV in 2010. In its judgment, the Court of Appeal overruled the judgment issued by the court of first instance (which had
previously ruled in favor of Dentsply Implants NV), and fixed the amount of the financial compensation to Dentsply Implants NV at an amount, which,
increased with legal interests and costs, resulted in a total amount payable by us to Dentsply Implants NV of € 866,909,74. This judgment of the
Brussels Court of Appeal is final, and payment was made on November 25, 2021.
On November 15, 2021, we received a written notice from counsel for Zimmer Biomet, informing us of Zimmer Biomet’s decision to file
a request for arbitration with the Belgian Centre for Arbitration and Mediation. Zimmer Biomet believes that we have a contractual obligation pursuant
to the terms of our collaboration to indemnify Zimmer Biomet for the expenses it incurred as a result of its settlement with Conformis, Inc. of a patent
dispute. We believe there are meritorious defenses to Zimmer Biomet’s claim and intend to contest it vigorously. However, an adverse resolution of this
arbitration could have an adverse effect on our results of operations, financial condition or cash flows in the period in which the arbitration is resolved.
No amounts have been accrued for this loss contingency.
Other than the litigation described above, we are currently not a party to any other legal or arbitration proceedings, which, in the opinion of
our management, is likely to have or could reasonably possibly have a material adverse effect on our business, financial condition or results of
operations.
Policy on Dividend Distribution
We have never declared or paid any cash dividends on our shares, and we have no present intention of declaring or paying any dividends in
the foreseeable future. Any recommendation by our board of directors to pay dividends, subject to compliance with applicable law and any contractual
provisions that restrict or limit our ability to pay dividends, including under agreements for indebtedness that we may incur, will depend on many
factors, including our financial condition, results of operations, legal requirements, capital requirements, business prospects and other factors that our
board of directors deems relevant.
All of the shares represented by the ADSs have the same dividend rights as all of our other outstanding shares. In general, distributions of
dividends proposed by our board of directors require the approval of our shareholders at a shareholders’ meeting, although our board of directors may
declare interim dividends without shareholder approval.
Furthermore, pursuant to Belgian law, the calculation of amounts available for distribution to shareholders, as dividends or otherwise, must
be determined on the basis of our non-consolidated statutory Belgian GAAP financial statements. In addition, in accordance with Belgian law and our
restated articles of association, we must allocate each year an amount of at least 5% of our annual net profit under our statutory non-consolidated
accounts (prepared in accordance with Belgian GAAP) to a legal reserve until the reserve equals 10% of our share capital. As a consequence of these
facts there can be no assurance as to whether dividends or other distributions will be paid out in the future or, if they are paid, their amount.
For information regarding the Belgian withholding tax applicable to dividends and related U.S. reimbursement procedures, see “Item 10.
Additional Information—E. Taxation—Belgian Taxation.”
B. Significant Changes
None.
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ITEM 9. THE OFFER AND LISTING
A. Offer and Listing Details
Price History
The ADSs, each representing one ordinary share, have been listed on the Nasdaq Global Select Market under the symbol “MTLS” since
June 25, 2014. Prior to that date, there was no public trading market for ADSs or our ordinary shares.
B. Plan of Distribution
Not applicable.
C. Markets
The ADSs have been listed on the Nasdaq Global Select Market under the symbol “MTLS” since June 25, 2014.
D. Selling Shareholders
Not applicable.
E. Dilution
Not applicable.
F. Expenses of the Issue
Not applicable.
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ITEM 10. ADDITIONAL INFORMATION
A. Share Capital
Not applicable.
B. Memorandum and Articles of Association
The information called for by this item was previously reported in Exhibit 2.3 (Description of Securities) to our Annual Report on Form
20-F for the year ended December 31, 2020, which exhibit is incorporated herein by reference, and is supplemented by the following additional
information related to changes in our share capital. The share capital of Materialise NV was increased following the exercise of warrants previously
issued under our 2007 Warrant Plan on November 27, 2014, with € 4,336.77 (excluding an issuance premium of € 69,359.23) against the issuance of
75,200 new ordinary shares.
On March 5, 2015, the board of directors increased the share capital of Materialise NV by €4,626.50 (excluding an issuance premium of
€ 574,290.50) against the issuance of 80,182 new ordinary shares.
The share capital of Materialise NV was increased following the exercise of warrants previously issued under our 2007 Warrant Plan on
November 20, 2015, with € 5,647.15 (excluding an issuance premium of € 90,392.85) against the issuance of 98,000 new ordinary shares. The 2007
Warrant Plan 2007 is now terminated. There are no outstanding warrants issued under this plan.
On December 18, 2015, the board of directors adopted a new Warrant Plan, our 2015 Warrant Plan, and issued 1,400,000 warrants, which
warrants are exercisable for 1,400,000 new ordinary shares. As of December 31, 2020, 352,000 of the warrants were granted.
On March 30, 2018, the board of directors increased the share capital of Materialise NV by € 5,931.68 (excluding an issuance premium of
€ 201,331.37) against the issuance of 102,856 new ordinary shares.
On July 19, 2018, the board of directors increased the share capital of Materialise NV by € 112,636.20 (excluding an issuance premium of
€ 21,418,670.32) against the issuance of 1,953,125 new ordinary shares.
On July 18, 2018, the board of directors decided to increase the share capital of Materialise NV, which capital increase was confirmed on
July 26 and July 27, 2018, by € 173,009.19 (excluding an issuance premium of € 33,188,838.54) and € 25,951.38 (excluding an issuance premium of
€ 4,967,220.35), respectively, against the issuance of 3,000,000 and 450,000 new ordinary shares, respectively.
On December 28, 2018, the board of directors increased the share capital of Materialise NV following the exercise of warrants previously
issued under the 2013 Warrant Plan and the 2014 Warrant Plan by € 1,102.07 (excluding an issuance premium of € 39,676.43) and € 2,321.96 (excluding
share premium of € 352,210.06), respectively, against the issuance of 19,100 and 40,242 new ordinary shares, respectively.
On November 29, 2019, the board of directors increased the share capital of Materialise NV following the exercise of warrants previously
issued under the 2013 Warrant Plan and the 2014 Warrant Plan by € 10,274.68 (excluding an issuance premium of € 345,325.58) and € 5,973.90
(excluding an issuance premium of € 906,636.38), respectively, against the issuance of 178,164 and 103,588 new ordinary shares, respectively.
On April 16, 2020, the board of directors increased the share capital of Materialise NV following the exercise of warrants previously
issued under the 2015 Warrant Plan by € 1,254.32 (excluding an issuance premium of € 139,033.18) against the issuance of 21,750 new ordinary shares.
On October 9, 2020, the board of directors increased the share capital of Materialise NV following the conversion of the convertible bonds
held by Peter Leys and his spouse by € 1,000,000 against the issuance of 508,904 new ordinary shares.
On November 13, 2020, the board of directors increased the share capital of Materialise NV following the exercise of warrants previously
issued under the 2013 Warrant Plan, the 2014 Warrant Plan and the 2015 Warrant Plan by € 2,180.98 (excluding an issuance premium of 231,347.86),
€ 15,212.54 (excluding an issuance premium of € 1,757,042.30) and € 11,324.48 (excluding an issuance premium of € 954,563.02) against the issuance
of 115,176, 201,164 and 149,750 new ordinary shares, respectively.
On December 31, 2020, in the context of the merger between Materialise NV and Ailanthus NV, the extraordinary general meeting of
shareholders decided to increase the share capital of Materialise NV and in the same notarial deed of the same date, decided to decrease the share capital
of Materialise NV by the same amount. As a result, the share capital of Materialise NV did not change as a result of the aforementioned merger.
On May 5, 2021, the board of directors increased the share capital of Materialise NV following the exercise of warrants previously issued
under the 2015 Warrant Plan by € 102,09 (excluding an issuance premium of € 8.605,41) against the issuance of 1.350 new ordinary shares.
On June 9, 2021, the board of directors decided to increase the share capital of Materialise NV, which capital increase was confirmed on
June 14, 2021 and July 6, 2021, by € 320.000,00 (excluding an issuance premium of € 78.484.793,95) and € 48.000,00 (excluding an issuance premium
of € 11.772.719,09), respectively, against the issuance of 4,000,000 and 600,000 new ordinary shares, respectively.
On November 23, 2021, the board of directors increased the share capital of Materialise NV following the exercise of warrants previously
issued under the 2014 Warrant Plan and the 2015 Warrant Plan by € 13.655,81 (excluding an issuance premium of 1.570.065,03) and € 8.595,46
(excluding an issuance premium of € 721.222,04) against the issuance of 179.764 and 113.150 new ordinary shares, respectively.
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C. Material Contracts
We have not entered into any material contracts in the prior two years other than in the ordinary course of business and other than those
described elsewhere in this annual report, including under “—B. Memorandum and Articles of Association,” “Item 7. Major Shareholders and Related
Party Transactions—B. Related Party Transactions.”
D. Exchange Controls
There are no Belgian exchange control regulations that impose limitations on our ability to make, or the amount of, cash payments to
residents of the United States. See “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Transfers from
Subsidiaries” for a discussion of various restrictions applicable to transfers of funds by our subsidiaries.
E. Taxation
Belgian Taxation
The following paragraphs are a summary of material Belgian tax consequences of the ownership of ADSs by an investor. The summary is
based on laws, treaties and regulatory interpretations in effect in Belgium on the date of this document, all of which are subject to change, including
changes that could have retroactive effect.
The summary only discusses Belgian tax aspects which are relevant to U.S. holders of ADSs (“Holders”). This summary does not address
Belgian tax aspects which are relevant to persons who are residents in Belgium or engaged in a trade or business in Belgium through a permanent
establishment or a fixed base in Belgium. This summary does not purport to be a description of all of the tax consequences of the ownership of ADSs,
and does not take into account the specific circumstances of any particular investor, some of which may be subject to special rules, or the tax laws of any
country other than Belgium. This summary does not describe the tax treatment of investors that are subject to special rules, such as banks, insurance
companies, collective investment undertakings, dealers in securities or currencies, persons that hold, or will hold, ADSs in a position in a straddle, share-
repurchase transaction, conversion transactions, synthetic security or other integrated financial transactions. Investors should consult their own advisers
regarding the tax consequences of an investment in ADSs in the light of their particular circumstances, including the effect of any state, local or other
national laws, treaties and regulatory interpretation thereof.
In addition to the assumptions mentioned above, it is also assumed in this discussion that for purposes of the domestic Belgian tax
legislation, the owners of ADSs will be treated as the owners of the ordinary shares represented by such ADSs. However, the assumption has not been
confirmed by or verified with the Belgian Tax Administration.
For the purposes of this summary, ADSs or ordinary shares means ordinary shares represented by ADSs. Both terms are used
interchangeably.
Dividend Withholding Tax
As a general rule, a withholding tax of 30% is levied on the gross amount of dividends paid on or attributed to the ordinary shares
represented by the ADSs, subject to such relief as may be available under applicable domestic or tax treaty provisions. Dividends subject to the dividend
withholding tax include all benefits attributed to the ordinary shares represented by the ADSs, irrespective of their form. A reimbursement of fiscal
capital made in accordance with the Belgian Code of Companies and Associations is partly considered to be a distribution of the existing taxed reserves
(irrespective whether incorporated into the capital or not) and/or the tax-free reserves incorporated into the capital. The proportion is determined on the
basis of the ratio between certain taxed reserves and tax-free reserves incorporated into the capital on the one hand and, on the other hand, the aggregate
of such reserves and the fiscal capital. In principle, fiscal capital includes paid-up statutory share capital, and subject to certain conditions, the paid-up
issue premiums and the cash amounts subscribed to at the time of the issue of profit sharing certificates.
In case of a redemption by us of own shares represented by ADSs, the redemption distribution (after deduction of the portion of fiscal
capital represented by the redeemed shares) will be treated as a dividend which in certain circumstances may be subject to a withholding tax of 30%,
subject to such relief as may be available under applicable domestic or tax treaty provisions. In case of a liquidation of our Company, any amounts
distributed in excess of the fiscal capital will be subject to a 30% withholding tax, subject to such relief as may be available under applicable domestic
or tax treaty provisions.
For non-residents, the dividend withholding tax will be the only tax on dividends in Belgium, unless the non-resident holds ADSs in
connection with a business conducted in Belgium, through a fixed base in Belgium or a Belgian permanent establishment.
Relief of Belgian Dividend Withholding Tax
Under the Belgium-United States Tax Treaty (the “Treaty”), there is a reduced Belgian withholding tax rate of 15% on dividends paid by
us to a U.S. resident which beneficially owns the dividends and is entitled to claim the benefits of the Treaty under the limitation of benefits article
included in the Treaty, (a “Qualifying Holder”). If such Qualifying Holder is a company that owns directly at least 10% of our voting stock, the Belgian
withholding tax rate is further reduced to 5%. No withholding tax is however applicable if the Qualifying Holder, is: (i) a company that is a
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resident of the United States that has owned directly ADSs representing at least 10% of our capital for a 12-month period ending on the date the
dividend is declared, or (ii) a pension fund that is a resident of the United States, provided that such dividends are not derived from the carrying on of a
business by the pension fund or through an associated enterprise.
Under the normal procedure, we or our paying agent must withhold the full Belgian withholding tax (without taking into account the
Treaty rate). Qualifying Holders may make a claim for reimbursement for amounts withheld in excess of the rate defined by the Treaty. The
reimbursement form (Form 276 Div-Aut.) may be obtained from the Centre Etrangers, Team 6, Kruidtuinlaan 50, PO 3429, 1000 Brussels, Belgium or
online on the website of the Belgian tax authorities. Qualifying Holders may also, subject to certain conditions, obtain the reduced Treaty rate at source.
Qualifying Holders should deliver a duly completed Form 276 Div-Aut. no later than ten days after the date on which the dividend is paid or attributed.
U.S. holders should consult their own tax advisors as to whether they qualify for reduction in withholding tax upon payment or attribution of dividends,
and as to the procedural requirements for obtaining a reduced withholding tax upon the payment of dividends or for making claims for reimbursement.
Withholding tax is also not applicable, pursuant to Belgian domestic tax law, on dividends paid to certain U.S. pension funds provided that
the U.S. pension fund (i) qualifies as a non-resident saver for Belgian withholding tax purposes (i.e., it has a separate legal personality and fiscal
residence outside of Belgium and without a permanent establishment or fixed base in Belgium), (ii) has a corporate purpose that consists solely in
managing and investing funds collected in order to pay legal or complementary pensions, (iii) has activity that is limited to the investment of funds
collected in the exercise of its statutory purpose, without any profit making activity and (iv) is exempt from income taxes in the United States.
Furthermore, such pension fund may not contractually be obligated to redistribute the dividends to any beneficial owner of such dividends for whom it
would manage the ADSs nor obligated to pay a manufactured dividend with respect to the ADSs under a securities borrowing transaction (save in
certain particular cases as described in Belgian law) and subject to certain procedural formalities.
Under Belgian domestic tax law, a withholding tax exemption is available to dividends paid to a non-resident corporate shareholder
(located in a Member State of the European Union or in a country with which Belgium has entered in a double tax treaty including sufficient information
exchange provisions) provided that (i) at the date of payment or attribution of the dividend it holds a participation in our company representing at least
10% of our share capital, (ii) this holding is held or will be held in full ownership for an uninterrupted period of at least one year, (iii) this non-resident
corporate shareholder is tax resident of the country where it is established according to the tax laws of and the bilateral tax treaties established by such
country, (iv) this non-resident corporate shareholder is subject to a corporate income tax regime similar to Belgian corporate income tax regime without
benefitting from a tax regime that derogates from the ordinary tax regime and (v) its legal form is (similar to one of the legal forms) listed in the annex
of the E.U. directive dated 23 July 1990 (90/435/EC) as amended by the directive of 22 December 2003 (2003/123/EC). This reduced withholding tax
will apply provided that certain procedural formalities are complied with.
Finally, a withholding tax exemption is available, pursuant to Belgian domestic tax law, to dividends paid to a non-resident corporate
shareholder (located in the European Economic Area or in a country with which Belgium has entered in a double tax treaty including sufficient
information exchange provisions) to the extent that at the date of payment or attribution of the dividend it holds a participation in our company
representing less than 10% of our share capital but the acquisition value of which is at least €2.5 million and provided that certain other conditions are
met, i.e., that (i) this holding is held or will be held in full ownership for an uninterrupted period of at least one year (ii) this non-resident corporate
shareholder is subject to a corporate income tax regime similar to Belgian corporate income tax regime without benefitting from a tax regime that
derogates from the ordinary tax regime, and (iii) its legal form is (similar to one of the legal forms) listed in the annex I, part A, of the E.U. directive
dated 30 November 2011 (2011/96/EU) as amended by the directive of 8 July 2014 (2014/86/EU). This reduced withholding tax will apply only if and to
the extent that the ordinary Belgian withholding tax cannot be credited or reimbursed to the non-resident corporate shareholder referred to above and
subject to certain procedural formalities.
Capital Gains and Losses
Pursuant to the Treaty, capital gains and/or losses realized by a Qualifying Holder from the sale, exchange or other disposition of ADSs do
not fall within the scope of application of Belgian domestic tax law.
Capital gains realized on ADSs by a corporate Holder which is not entitled to claim the benefits of the Treaty under the limitation of
benefits article included in the Treaty are generally not subject to taxation in Belgium unless the corporate Holder is acting through a Belgian permanent
establishment or a fixed place in Belgium to which the ADSs are effectively connected. Capital losses are not deductible.
Private individual Holders who are not entitled to claim the benefits of the Treaty under the limitation of benefits article included in the
Treaty and which are holding ADSs as a private investment will, as a rule, not be subject to tax on any capital gains arising out of a disposal of ADSs.
Losses will, as a rule, not be deductible in Belgium.
However, if the gain realized by such individual Holders on ADSs is deemed to be realized outside the scope of the normal management of
such individual’s private estate and the capital gain is obtained or received in Belgium, the gain will in principle be taxable at 33%. The Official
Commentary to the ITC 1992 stipulates that occasional transactions on a stock exchange regarding ADSs should not be considered as transactions
realized outside the scope of normal management of one’s own private estate.
Capital gains realized by such individual Holders on the disposal of ADSs for consideration, outside the exercise of a professional activity,
to a non-resident company (or a body constituted in a similar legal form), to a foreign state (or one of its political subdivisions or local authorities) or to
a non-resident legal entity who is established outside the European Economic Area, are in principle taxable at a rate of 16.5% if, at any time during the
five years preceding the sale, such individual Holders has owned directly or indirectly, alone or with his/her spouse or with certain relatives, a
substantial shareholding in us (that is, a shareholding of more than 25% of our shares).
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Capital gains realized by a Holder upon the redemption of ADSs or upon our liquidation will generally be taxable as a dividend. See
section “Dividend Withholding Tax.”
Estate and Gift Tax
There is no Belgian estate tax on the transfer of ADSs upon the death of a Belgian non-resident.
Donations of ADSs made in Belgium may or may not be subject to gift tax in Belgium depending on the modalities under which the
donation is carried out.
Belgian Tax on Stock Exchange Transactions
A tax on stock exchange transactions (taxe sur les opérations de bourse/taks op de beursverrichtingen) is generally levied on the purchase
and the sale and on any other acquisition and transfer for consideration of existing ADSs on the secondary market carried out by a Belgian resident
investor through a professional intermediary if (i) executed in Belgium through a professional intermediary, or (ii) deemed to be executed in Belgium,
which is the case if the order is directly or indirectly made to a professional intermediary established outside of Belgium, either by private individuals
having their usual residence in Belgium, or legal entities for the account of their seat or establishment in Belgium.
The applicable rate amounts to 0.35% of the consideration paid but with a cap of € 1,600 per transaction and per party. The tax is due
separately from each party to any such transaction, i.e., the seller (transferor) and the purchaser (transferee), both collected by the professional
intermediary.
However, if the intermediary is established outside of Belgium, the tax will in principle be due by the ordering private individual or legal
entity, unless that individual or entity can demonstrate that the tax has already been paid. Professional intermediaries established outside of Belgium can,
subject to certain conditions and formalities, appoint a Belgian representative for tax purposes, which will be liable for the tax on stock exchange
transactions in respect of the transactions executed through the professional intermediary.
Belgian non-residents who purchase or otherwise acquire or transfer, for consideration, ADSs in Belgium for their own account through a
professional intermediary may be exempt from the tax on stock exchange transactions if they deliver a sworn affidavit to the intermediary in Belgium
confirming their non-resident status.
Prior to February 20, 2021, a tax on repurchase transactions (taxe sur les reports/taks op de reportverrichtingen) at the rate of 0.085% was
due from each party to any such transaction entered into or carried out in Belgium by a Belgian resident investor in which a stockbroker acted for either
party (with a maximum amount of € 1,600 per transaction and per party). This tax has been repealed following the Law of 26 January 2021.
No stock exchange tax, nor tax on repurchase transactions is payable by: (i) professional intermediaries described in Article 2, 9° and 10°
of the Law of August 2, 2002 acting for their own account, (ii) insurance companies described in Article 2, §1 of the Law of 9 July 1975 acting for their
own account, (iii) professional retirement institutions referred to in Article 2, 1° of the Law of October 27, 2006 relating to the control of professional
retirement institutions acting for their own account, (iv) collective investment institutions acting for their own account, or (v) regulated real estate
companies (for the stock exchange tax only).
No stock exchange tax, nor tax on repurchase transactions will thus be due by Holders on the subscription, purchase or sale of ADSs, if the
Holders are acting for their own account. In order to benefit from this exemption, the Holders must file with the professional intermediary in Belgium a
sworn affidavit evidencing that they are non-residents for Belgian tax purposes
Belgian Annual Tax on Securities Accounts
Pursuant to the Law of February 17, 2021 introducing a new annual tax on securities accounts due on securities accounts held through an
intermediary if the average value of the taxable financial instruments held on this securities account exceeds €1 million during a reference period of 12
consecutive months. This new annual tax on securities accounts has been introduced because the previous tax on securities accounts was annulled by the
Belgian Constitutional Court.
The annual tax on securities accounts is due irrespective of whether the holder of a securities account is a physical person or a legal entity.
If the holder of a securities account is a Belgian resident, the annual tax on securities accounts will be applicable both to securities accounts held in
Belgium as well as securities accounts held abroad. For non-residents, only securities accounts held in Belgium fall in scope of the annual tax on
securities accounts. A double tax treaty could prevent Belgium to levy the annual tax on securities accounts.
Certain exemptions exist to mitigate the impact of the annual tax on securities accounts on the financial sector. As such, securities accounts
held by certain financial undertakings are exempt.
All securities held on a securities account are targeted, such as shares, bonds, participations in investment funds and investment
companies, but also derived products, such as index trackers, turbo’s, real estate certificates and cash. The rate of the annual tax on securities accounts
amounts to 0.15% on securities accounts of which the average value exceeds €1 million during a reference period of 12 consecutive months. In order to
avoid that the payment of the tax would result in a decrease of the average value below the €1 million threshold, the rate is limited to 10% of the
difference between the taxable base and €1 million in those cases. The reference period is a subsequent period of 12 months starting on October 1 and
ending September 30 of the subsequent year or (i) any earlier date when the account is closed; or (ii) the moment when the account holder becomes a
resident of a state with which Belgium has concluded a tax treaty and the tax treaty allocates the taxing rights to the other state. The average value is
calculated by taking the average of the securities accounts values on December 31, March 31, June 30 and September 30.
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The tax must be declared and paid by the Belgian resident intermediary with whom the securities account is held. If a securities account is
held with a non-resident intermediary, the holder of the securities account itself is responsible for the declaration and the payment of the annual tax on
securities accounts. Alternatively, the foreign intermediary could also voluntarily appoint a recognized responsible representative in Belgium to declare
and pay the tax.
In case of non-declaration, late, inaccurate or incomplete declaration, as well as non-payment or late payment, a penalty varying from 10%
to 200% of the tax due can be imposed. Every holder of the securities account is jointly and severally liable to pay these penalties. The Law furthermore
includes a general anti-abuse provision pursuant to which the following is not allowed: (i) distributing taxable financial instruments over different
securities accounts to avoid the threshold of €1 million for an individual account, (ii) converting taxable financial instruments into nominative securities
(the latter are out of scope of the tax); (iii) transferring a securities account to a foreign legal entity which then transfers the securities to a foreign
securities account, etc. In the aforementioned circumstances, there is a refutable presumption that abuse exists. However, the Law also includes
situations in which there is an irrefutable presumption of abuse. As such, the following transactions taking place as of October 30, 2020 onwards will be
considered to constitute abuse: (i) splitting of a securities account into multiple securities accounts held by the same intermediary; and (ii) the
conversion of taxable financial instruments held in a securities account to nominal financial instruments.
Prospective Holders should consult their own tax advisors as to whether they are subject to the new annual tax on securities accounts.
Proposed Financial Transactions Tax
On February 14, 2013, the European Commission published a proposal for a Directive for a common financial transactions tax (“FTT”) in
Belgium, Germany, Greece, Spain, France, Italy, Austria, Portugal, Slovenia, Estonia and Slovakia (collectively, the “Participating Member States”). On
December 8, 2015, Estonia declared that it will no longer support the FTT.
The proposed FTT has a very broad scope and could, if introduced in its current form, apply to certain dealings in ADSs in certain
circumstances. The FTT could apply in certain circumstances to persons both within and outside of the Participating Member States. Generally, it would
apply to certain dealings in ADSs where at least one party is a financial institution, and at least one party is established in a Participating Member State.
A financial institution may be, or be deemed to be, “established” in a Participating Member State in a broad range of circumstances,
including by transacting with a person established in a Participating Member State.
Currently, the proposed FTT remains subject to further negotiations between the Participating Member States (excluding Estonia). It may
therefore be adjusted prior to any implementation, of which the timing and fate remains unclear. Moreover, additional E.U. Member States could decide
to participate or drop out of the negotiations. Prospective Holders of ADSs are advised to seek their own professional advice in relation to the FTT.
U.S. Taxation
The following is a discussion of the material U.S. federal income tax considerations to U.S. holders (as defined below) of acquiring,
holding and disposing of the ADSs. The following discussion applies only to U.S. holders that purchase ADSs, will hold ADSs as capital assets for U.S.
federal income tax purposes (generally, assets held for investment) and that are not residents of, or ordinarily resident in, Belgium for tax purposes nor
hold their ADSs as part of a permanent establishment in Belgium. The discussion also does not address any aspect of U.S. federal taxation other than
U.S. federal income taxation. In particular, this summary does not address all tax considerations applicable to investors that own (directly or by
attribution) 10% or more of our stock by vote or value, nor does this summary discuss all of the tax considerations that may be relevant to certain types
of investors subject to special treatment under the U.S. federal income tax laws (such as financial institutions, insurance companies, real estate
investment trusts, regulated investment companies, investors liable for the alternative minimum tax, certain U.S. expatriates, individual retirement
accounts and other tax-deferred accounts, partnerships or other pass-through entities for U.S. federal income tax purposes, tax-exempt organizations,
dealers in securities or currencies, securities traders that elect mark-to-market tax accounting, investors that will hold the ADSs as part of constructive
sales, straddles, hedging, integrated or conversion transactions for U.S. federal income tax purposes or investors whose “functional currency” is not the
U.S. dollar). Further, this discussion is limited to U.S. holders that hold our ADSs or ordinary shares as “capital assets” within the meaning of
Section 1221 of the Code (generally, property held for investment) at all relevant times and does not address all U.S. federal income tax consequences
relevant to a U.S. holder’s particular circumstances, including the impact of the Medicare tax on net investment income.
The following summary is based on the U.S. Internal Revenue Code of 1986, as amended (the “Code”), U.S. Treasury Regulations
thereunder, published rulings of the U.S. Internal Revenue Service (the “IRS”), the Treaty, and judicial and administrative interpretations thereof, in
each case as available on the date of this prospectus supplement. Changes to any of the foregoing, or changes in how any of these authorities are
interpreted, may affect the tax consequences set out below, possibly retroactively. No ruling will be sought from the IRS with respect to any statement or
conclusion in this discussion, and there can be no assurance that the IRS will not challenge such statement or conclusion in the following discussion or,
if challenged, a court will uphold such statement or conclusion.
For purposes of the following summary, a “U.S. holder” is a beneficial owner of ADSs that is for U.S. federal income tax purposes: (i) a
citizen or individual resident of the United States, (ii) a corporation or other entity treated as a corporation for U.S. federal income tax purposes created
or organized in or under the laws of the United States or any state thereof (including the District of Columbia), (iii) an estate, the income of which is
subject to U.S. federal income taxation regardless of its source or (iv) a trust if (x) a court within the United States is able to exercise primary
supervision over its administration and (y) one or more United States persons (as defined in the Code) have the authority to control all of the substantial
decisions of such trust.
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If a partnership (including any entity treated as a partnership for U.S. federal income tax purposes) holds ADSs, the U.S. federal income
tax consequences to the partners of such partnership will depend on the activities of the partnership and the status of the partners. A partnership
considering an investment in ADSs, and partners in such partnership, should consult their own tax advisers about the consequences of the investment.
We do not expect to be a PFIC, and the discussion under “—Distributions by Us” and “—Proceeds from the Sale, Exchange or Retirement
of the ADSs” below assumes we will not be a PFIC. See “—Passive Foreign Investment Company” discussion below.
Prospective purchasers of ADSs should consult their own tax advisers with respect to the U.S. federal, state, local and non-U.S. tax
consequences to them in their particular circumstances of acquiring, holding, and disposing of, ADSs.
Ownership of ADSs in General
The discussion below is based, in part, on representations by the Depositary and assumes that each obligation under the deposit agreement
and any related agreement will be performed in accordance with its terms.
For U.S. federal income tax purposes, an owner of ADSs generally will be treated as the owner of the ordinary shares represented by such
ADSs. However, the U.S. Treasury has expressed concerns that parties to whom interests such as the ADSs are delivered in transactions similar to
pre-release transactions may be taking actions that are inconsistent with the claiming of foreign tax credits for U.S. holders of ADSs. Accordingly, the
analysis of the creditability of Belgian taxes could be affected by actions taken by parties to whom the ADSs are pre-released. No gain or loss will be
recognized if you exchange ADSs for the ordinary shares represented by those ADSs. Your tax basis in such ordinary shares will be the same as your tax
basis in such ADSs, and the holding period in such ordinary shares will include the holding period in such ADSs.
Distributions by Us
Subject to the application of the PFIC rules discussed below, the U.S. dollar value of distributions paid by us (including the amount of any
taxes withheld) out of its earnings and profits, as determined under U.S. federal income tax principles, will be subject to tax as foreign source ordinary
dividend income and will be includible in your gross income upon receipt by the Depositary. However, we do not maintain calculations of its earnings
and profits in accordance with U.S. federal income tax accounting principles. U.S. holders should therefore assume that any distribution by us with
respect to ordinary shares or ADSs will constitute ordinary dividend income. Subject to applicable limitations, so long as the ADSs are regularly traded
on the Nasdaq Global Select Market, we expect that dividends paid by us will be classified as “qualified dividend income” generally subject to tax at
lower rates than other items of ordinary income when received by individuals and other non-corporate U.S. holders. Any dividends we pay with respect
to the ADSs or ordinary shares will constitute foreign source income for foreign tax credit purposes.
The U.S. dollar value of distributions paid by us will be calculated by reference to the exchange rate in effect on the date the dividend
distribution is received by the Depositary, regardless of when the Depositary converts the payments into U.S. dollars. If the foreign currency is
converted by the Depositary on a later date, a U.S. holder will be required to recognize foreign currency gain or loss in respect of the foreign currency
based on the difference between the rate at which it is converted and the rate on the date the dividend was received by the Depositary.
Subject to certain limitations, Belgian withholding tax, if any, paid in connection with any distribution with respect to ordinary shares or
ADSs may be eligible to be claimed as a credit against your U.S. federal income tax liability. Alternatively, if a credit is not claimed for any non-U.S.
income taxes for that taxable year, such Belgian withholding tax may be eligible to be taken as a deduction . If you are eligible for benefits under the
Treaty or are otherwise entitled to a refund for the taxes withheld, you will not be entitled to a foreign tax credit or deduction for the amount of any
Belgian taxes withheld in excess of the maximum rate under the Treaty or for the taxes with respect to which you can obtain a refund from the Belgian
taxing authorities. As the relevant rules are very complex, you should consult your own tax advisor concerning the availability and utilization of the
foreign tax credit or deductions for non-U.S. taxes in your particular circumstances.
Proceeds from the Sale, Exchange or Retirement of the ADSs
Upon the sale, exchange or retirement of ADSs, a U.S. holder will generally recognize U.S. source capital gain or loss equal to the
difference, if any, between the U.S. dollar amount realized on the sale, exchange or retirement and the U.S. holder’s tax basis in the ADSs (generally
their cost in U.S. dollars). Any gain or loss generally will be long-term capital gain or loss if the ADSs have been held for more than a year. If you are a
non-corporate U.S. holder, including an individual U.S. holder, you may be eligible for reduced U.S. federal income tax rates for long-term capital gains.
The deductibility of capital losses is subject to limitations.
Gain or loss you recognize on the sale, exchange or retirement of ADSs will generally be treated as U.S. source income or loss for foreign
tax credit purposes.
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Passive Foreign Investment Company
We believe that we were not a PFIC for the tax year ended December 31, 2021, and we do not expect to be classified as a PFIC for U.S.
federal income tax purposes for the current tax year ending December 31, 2022, or for the foreseeable future. Additionally, PFIC status is a factual
determination for each taxable year that cannot be made until after the close of each such year and will depend to a large degree on the market price of
our ADSs, which could fluctuate significantly. Therefore, we cannot assure you that we will not be considered a PFIC for the taxable year ended
December 31, 2021 or in any subsequent taxable year. If we are a PFIC at any time during the holding period of a U.S. holder, the U.S. holder would be
subject to potentially materially greater amounts of tax and subject to additional U.S. tax reporting and compliance requirements. In addition, a
non-corporate U.S. holder will not be eligible for qualified dividend income treatment on dividends received from us if we are treated as a PFIC for the
taxable year in which the dividends are received or for the preceding taxable year.
A non-U.S. corporation is a PFIC in any taxable year in which, after taking into account certain look-through rules, either (i) at least 75%
of its gross income is passive income or (ii) at least 50% of the average value (determined on a quarterly basis) of its assets is attributable to assets that
produce or are held to produce passive income. Passive income generally includes dividends, interest, rents, royalties, gross income from certain
commodities transactions, and capital gains. If a non-U.S. corporation owns at least 25% by value of the stock of another corporation, the foreign
corporation is treated for purposes of the PFIC tests as owning its proportionate share of the assets of the other corporation, and as receiving directly its
proportionate share of the other corporation’s income. The same general look-through rule applies when a foreign corporation owns at least 25% by
value of the partnership (a look-through partnership)—the foreign corporation is treated as owning its share of the partnership’s assets and deriving its
share of the partnership’s income, characterized as passive or active at the partnership level. In the case the foreign corporation satisfies an “active
partner” test, the foreign corporation may treat less-than-25% owned partnerships as look-through partnerships, unless the foreign corporation elects
otherwise. Although the determination of whether a non-U.S. corporation is a PFIC for a given taxable year is based on its income and assets for that
taxable year, as determined under the PFIC rules, once a non-U.S. corporation is a PFIC for any taxable year, it generally remains a PFIC for any
investors that owned interests in all or a portion of such taxable year even if it would not otherwise qualify as a PFIC in later taxable years. We do not
undertake to monitor our PFIC status on an ongoing basis.
The Code imposes additional taxes on gains from the sale or other disposition of, and “excess distributions” with respect to, shares of a
PFIC owned directly (or deemed to be owned directly or indirectly under certain attribution rules) by a U.S. holder. In general, an excess distribution is
any distribution to the U.S. holder that is greater than 125% of the average annual distributions received by the U.S. holder (including return of capital
distributions) during the three preceding taxable years or, if shorter, the U.S. holder’s holding period for the ADSs. If we were a PFIC in any year in
which a U.S. holder held the ADSs (i) the gain or excess distribution would be allocated ratably over the U.S. holder’s holding period for the ADSs,
(ii) the amount allocated to the taxable year in which the gain or excess distribution was realized and to any year before we became a PFIC would be
taxable as ordinary income, (iii) the amount allocated to each other prior year would be subject to tax at the highest rate in effect for that year and
(iv) the interest charge generally applicable to underpayments of tax would be imposed in respect of the tax allocated to each such year. For these
purposes, a U.S. holder who uses the ADSs as collateral for a loan would be treated as having disposed of such ADSs.
The PFIC rules provide for certain elections that can, in certain circumstances, alter the tax consequences of PFIC status as generally
described above, thereby mitigating the adverse tax consequences that generally apply under the PFIC rules as described above. One such election, the
“qualified electing fund” or “QEF” election, allows a U.S. holder to include in income its share of the corporation’s income on a current basis and it
requires (among other things) that the U.S. holder include with its U.S. federal income tax return a “PFIC Annual Information Statement” provided by
the foreign corporation and disclosing to the U.S. Holder its pro rata share of the corporation’s “ordinary earnings” and “net capital gain” as determined
under U.S. federal income tax principles. A QEF election also can, in certain circumstances, cause the “excess distribution” regime described above not
to apply, generally resulting in more favorable tax consequences upon receipt of PFIC excess distributions or the recognition of gain on sale of PFIC
shares (or ADSs). However, we do not intend to calculate our “ordinary earnings” or “net capital gain,” nor do we intend to supply U.S. holders with the
required “PFIC Annual Information Statement.” Therefore, it generally will not be possible for you to make a QEF election if we are, or if we become, a
PFIC.
A different election, the “mark-to-market” election could be available if our ADSs or ordinary shares, as applicable, are considered
“marketable stock” as defined under applicable U.S. Treasury Regulations. This election can be made if the ADSs are considered to be “marketable
securities” for purposes of the PFIC rules. The ADSs should be marketable securities for these purposes to the extent they are “regularly traded” on the
Nasdaq Global Select Market. Generally, shares are treated as “regularly traded” in any calendar year in which more than a de minimis quantity of the
shares are traded on a qualified exchange on at least 15 days during each calendar quarter. Subject to certain limitations, a U.S. holder that makes a valid
mark-to-market election with respect to the ADSs would be required to take into account the difference, if any, between the fair market value at the end
of each taxable year and the fair market value at the end of the preceding taxable year (or the acquisition price in the first year the election is in effect) of
those ADSs, as ordinary income or ordinary loss (but only to the extent of the net amount previously included as income by the U.S. holder as a result of
the mark-to-market election). A U.S. holder’s basis in the ADSs will be increased by the amount of any ordinary income inclusion and decreased by the
amount of any ordinary loss taken into account under the mark-to-market rules. Gains from an actual sale or other disposition of the ADSs for which this
election has been properly made would be treated as ordinary income, any losses incurred on a sale or other disposition of the ADSs would be treated as
an ordinary loss to the extent of any net mark-to-market gains for prior years and any additional loss would be capital loss.
Even if a valid mark-to-market election is made with respect to the ADSs, there is a significant risk that indirect interests in any of our
subsidiaries that are PFICs will not be covered by this election but will be subject to the excess distribution rules described above. Under these rules,
distribution from, and dispositions of interests in, these subsidiaries, as well as certain other transactions, generally will be treated as a distribution or
disposition subject to the discussion above regarding excess distributions.
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Prospective U.S. holders are urged to consult their own tax advisers about the consequences of holding the ADSs if we are considered a
PFIC in any taxable year, including the availability of the mark-to-market election, and whether making the election would be advisable in their
particular circumstances. In particular, U.S. holders should consider carefully the impact of a mark-to-market election with respect to their ADSs given
that there is a significant risk that we will have subsidiaries that are classified as PFICs.
Medicare Tax
Certain U.S. holders who are individuals, estates and trusts will be required to pay an additional 3.8% tax on some or all their “net
investment income,” which generally includes its dividend income and net gains from the disposition of the ADSs. U.S. holders should consult their
own tax advisors regarding the applicability of this additional tax on their particular situation.
Information Reporting and Backup Withholding
Information returns may be filed with the IRS in connection with distributions on the ADSs and the proceeds from the sale or other
disposition of the ADSs unless a U.S. holder establishes that it is exempt from the information reporting rules. A U.S. holder may be subject to backup
withholding on these payments if it fails to provide its tax identification number to the paying agent and comply with certain certification procedures.
The amount of any backup withholding from a payment to a U.S. holder will be allowed as a credit against its U.S. federal income tax liability and may
entitle the U.S. holder to a refund, provided that the required information is timely furnished to the IRS.
Tax Return Disclosure Requirement
U.S. federal income tax law requires certain U.S. investors to disclose information relating to investments in securities of a non-U.S.
issuer. Failure to comply with applicable disclosure requirements could result in the imposition of substantial penalties. U.S. holders should consult their
own tax advisors regarding any disclosure obligations.
F. Dividends and Paying Agents
Not applicable.
G. Statement by Experts
Not applicable.
H. Documents on Display
We previously filed with the SEC our registration statement on Form F-1 (Registration No. 333-194982), as amended, and our registration
statement on Form F-3 (Registration No. 333-258949), including the prospectuses contained therein, to register our ordinary shares. We have also filed
with the SEC a related registration statement on F-6 (Registration No. 333-196734) to register the ADSs.
We are subject to the periodic reporting and other informational requirements of the Exchange Act as applicable to foreign private issuers.
Our annual reports on Form 20-F are due within four months after each fiscal year end. We are not required to disclose certain other information that is
required from U.S. domestic issuers. Also, as a foreign private issuer, we are exempt from the rules of the Exchange Act prescribing the furnishing of
proxy statements to shareholders and our directors, senior management and principal shareholders are exempt from the reporting and short-swing profit
recovery provisions contained in Section 16 of the Exchange Act.
Our SEC filings, including the registration statement, are available to you on the SEC’s website at http://www.sec.gov.
We have filed our restated articles of association and all other deeds that are to be published in the annexes to the Belgian State Gazette
with the clerk’s office of the Commercial Court of Leuven (Belgium), where they are available to the public. A copy of our restated articles of
association is also publicly available as an exhibit to this annual report, as well as on the website of the Royal Federation of Belgian Notaries (only in
Dutch, French or German, https://statuten.notaris.be/costa_v1/enterprises/search). This website address is included in this annual report as an inactive
textual reference only, and the information and other content appearing on this website are not incorporated by reference into this annual report. In
accordance with Belgian law, we must prepare audited annual statutory and consolidated financial statements. The audited annual statutory and
consolidated financial statements and the reports of our board and statutory auditor relating thereto are filed with the Belgian National Bank, where they
are available to the public.
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I. Subsidiary Information
Not applicable.
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ITEM 11.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risk from fluctuations in interest rates and foreign currency exchange rates which may adversely affect our
results of operations and financial condition. We seek to minimize these risks through regular operating and financing activities.
Interest Rate Risk
Although we mainly have loans outstanding with a fixed interest rate, some of the loans have been contracted with variable interest rates.
The most significant loans with variable interest rates have been secured by means of a variable to fixed interest rate swap. We therefore believe that we
are not materially affected by changes in interest rates. For information with respect to the interest rate swaps, see Note 20 to our audited consolidated
financial statements.
Foreign Exchange Rate Risk and Inflation Risk
We transact business globally and are subject to risks associated with fluctuating foreign exchange rates. The geographic areas outside of
the Eurozone to which we sell our products and services are generally not considered to be subject to a substantially higher inflation than in the
Eurozone. In the years ended December 31, 2021, 2020 and 2019, 35%, 35% and 29% of our revenue, respectively, were derived from sales in a
currency different from the euro. Receivables denominated in a foreign currency are initially recorded at the exchange rate at the transaction date and
subsequently re-measured in euro based on period-end exchange rates. Transaction gains and losses that arise from exchange rate fluctuations are
charged to income. We primarily have exposure to the U.S. dollar, British pound, Japanese yen and Brazilian real as foreign currency.
If the U.S. dollar (rate for €1) would have appreciated by 10%, the operating result would have been € 1.3 million higher, excluding the
effect of the cash and term accounts held in U.S. dollars. If the U.S. dollar (rate for €1) would have depreciated by 10%, the net result would have been
€ 1.1 million lower, excluding the effect of the cash and term accounts held in U.S. dollars.
To limit the exposure to foreign currency rate fluctuations on the British pound and Japanese yen, we have entered into currency rate
swaps as of 2017.
Additionally, we are exposed to credit risk, liquidity risk and challenges related to capital management.
Credit Risk
Credit risk is the risk that third parties may not meet their contractual obligations resulting in a loss for us. We are exposed to credit risk
from our operating activities and from our financing activities, which are mainly deposits with financial institutions. We limit this exposure by
contracting with credit-worthy business partners or with financial institutions which meet high credit rating requirements. In addition, the portfolio of
receivables is monitored on a continuous basis.
Customer credit risk is managed by each business unit subject to our established policy, procedures and controls relating to customer credit
risk management. An impairment analysis is performed at each reporting date using a provision matrix to measure ECLs. The provision rates are based
on days past due for groupings of various customer segments with similar loss patterns (i.e., by legal entity). The calculation reflects the probability-
weighted outcome, the time value of money and reasonable and supportable information that is available at the reporting date about past events, current
conditions and forecasts of future economic conditions. Generally, trade receivables are written-off if past due for more than one year and are not subject
to enforcement activity. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets at amortized
cost or fair value, as disclosed in Note 20 to our consolidated financial statements. We do not hold collateral as security.
We evaluate the concentration of risk with respect to trade receivables as low, as our customers are located in several jurisdictions and
industries and operate in largely independent markets.
Liquidity Risk
The liquidity risk is that we may not have sufficient cash to meet our payment obligations. This risk is countered by day-by-day liquidity
management at corporate level. We have historically entered into financing and lease agreements with financial institutions to finance significant
projects and certain working capital requirements. We no longer have undrawn lines of credit at December 31, 2021. These line of credit arrangements
do not contain significant financial covenants.
On December 20, 2017, EIB and Materialise entered into a finance contract to support our ongoing research and development programs
for growth from 2017 to 2020. The contract provides a credit of up to € 35.0 million drawable in two tranches. The first tranche could not exceed
€ 25.0 million and could be drawn during the first year of the contract. We drew € 10.0 million of this first tranche in the course of 2018 and
€ 25.0 million in the second tranche in the course of 2019. The duration of the loan will be between six to eight years starting from the disbursement of
the respective tranches, and includes a two-year loan reimbursement grace period. Loans under the contract will be made at a fixed rate, based on the
Euribor rate at the time of the borrowing, plus a variable margin. The interest rate for the first tranche is equal to 2.40% and the interest rate for the
second tranche is 2.72% and varies in function of certain EBITDA levels and debt ratios. The contract contains customary security, covenants and
undertakings. As of December 31, 2019, € 35.0 million was drawn in connection with this agreement.
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Capital Management
The primary objective of our capital management strategy is to ensure we maintain healthy capital ratios to support our business and
maximize shareholder value. Capital is defined as our shareholders’ equity.
We consistently review our capital structure and make adjustments in light of changing economic conditions. We made no changes to our
capital management objectives, policies or processes during the years ended December 31, 2021, 2020 and 2019
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ITEM 12.
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
A. Debt Securities
Not applicable.
B. Warrants and Rights
Not applicable.
C. Other Securities
Not applicable.
D. American Depositary Shares
Bank of New York Mellon serves as the depositary for the ADSs. Each ADS represents one ordinary share (or a right to receive one
ordinary share) deposited with the principal Amsterdam office of ING Securities Services, Inc., as custodian for the depositary. Each ADS also
represents any other securities, cash or other property which may be held by the depositary. The depositary’s corporate trust office at which the ADSs
are administered is located at 240 Greenwich Street, New York, New York 10286. The Bank of New York Mellon’s principal executive office is located
at 240 Greenwich Street, New York, New York 10286.
A deposit agreement among us, the depositary and the ADS holders sets out the ADS holder rights as well as the rights and obligations of
the depositary. New York law governs the deposit agreement and the ADSs. A copy of the deposit agreement is incorporated by reference as an exhibit
to this annual report on Form 20-F.
Pursuant to the terms of the deposit agreement, you, as an ADS holder, will be required to pay the following fees to the depositary:
Persons depositing or withdrawing ordinary shares
or ADS holders must pay to the depositary:
$5.00 (or less) per 100 ADSs (or portion of 100 ADSs)
For:
Issuance of ADSs, including issuances resulting from a distribution of
ordinary shares or rights or other property
Cancellation of ADSs for the purpose of withdrawal, including if the
deposit agreement terminates
$0.05 (or less) per ADS
Any cash distribution to you
A fee equivalent to the fee that would be payable if securities distributed to
you had been ordinary shares and the shares had been deposited for issuance
of ADSs
Distribution of securities distributed to holders of deposited securities
which are distributed by the depositary to you
$0.05 (or less) per ADS per calendar year
Depositary services
Registration or transfer fees
Expenses of the depositary
Transfer and registration of ordinary shares on our share register to or
from the name of the depositary or its agent when you deposit or
withdraw shares
Cable, telex and facsimile transmissions (when expressly provided in the
deposit agreement) converting foreign currency to U.S. dollars
Taxes and other governmental charges the depositary or the custodian has to
pay on any ADS or ordinary shares underlying an ADS, such as share transfer
taxes, stamp duty or withholding taxes
As necessary
Any charges incurred by the depositary or its agents for servicing the
deposited securities
As necessary
The depositary collects its fees for delivery and surrender of ADSs directly from investors depositing ordinary shares or surrendering
ADSs for the purpose of withdrawal or from intermediaries acting for them. The depositary collects fees for making distributions to investors by
deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The depositary may collect its annual
fee for depositary services by deduction from cash distributions or by directly billing investors or by charging the book-entry system accounts of
participants acting for them. The depositary may collect any of its fees by deduction from any cash distribution payable to ADS holders that are
obligated to pay those fees. The depositary may generally refuse to provide fee-based services until its fees for those services are paid.
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From time to time, the depositary may make payments to us to reimburse or share revenue from the fees collected from ADS holders, or
waive fees and expenses for services provided, generally relating to costs and expenses arising out of establishment and maintenance of the ADS
program. In performing its duties under the deposit agreement, the depositary may use brokers, dealers or other service providers that are affiliates of the
depositary and that may earn or share fees or commissions.
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ITEM 13.
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
None.
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ITEM 14.
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
Material Modifications to the Rights of Security Holders
None.
Use of Proceeds
Not applicable.
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ITEM 15.
CONTROLS AND PROCEDURES
a) Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our
disclosure controls and procedures as of December 31, 2021. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and
15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be
disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and
communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions
regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost benefit relationship of
possible controls and procedures. Based on this evaluation, management concluded as of December 31, 2021 that our disclosure controls and procedures
were not effective due to the material weakness identified below.
b) Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules
13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed by, or under the supervision of, our
Chief Executive Officer and Chief Financial Officer and effected by our management and other personnel to provide reasonable assurance regarding the
reliability of our financial reporting and the preparation of our financial statements for external reporting purposes in accordance with IFRS. Internal
control over financial reporting includes policies and procedures that pertain to the maintenance of records that in reasonable detail accurately and fairly
reflect the transactions and dispositions of our assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of
our financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in
accordance with the authorization of our board of directors and management; and provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with our policies and procedures may deteriorate.
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a
reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected on a timely basis.
Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2021 using the criteria set forth
by the Committee of Sponsoring Organizations of the Treadway Commission in the Internal Control-Integrated Framework, 2013 (the “COSO 2013
Framework”).
Based on its assessment, our management, including our Chief Executive Officer and our Chief Financial Officer, has concluded that our
internal control over financial reporting was not effective as of December 31, 2021 due to a material weakness in our internal control over financial
reporting. We did not have effective monitoring processes to assess the consistent operation of internal control over financial reporting, including due to
a lack of resources.
This material weakness could cause misstatements in any financial statement line items.
Notwithstanding the identified material weakness and management’s assessment that internal control over financial reporting was not
effective as of December 31, 2021, management believes that the audited consolidated financial statements contained in this Annual Report on Form
20-F fairly present, in all material respects, our financial condition, results of operations and cash flows for the fiscal years presented in conformity with
IFRS.
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The material weakness did not result in any identified material misstatements to the financial statements.
c) Attestation Report of the Registered Public Accounting Firm
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Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
Materialise NV:
Opinion on Internal Control Over Financial Reporting
We have audited Materialise NV and subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2021, based on criteria
established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In
our opinion, because of the effect of the material weakness, described below, on the achievement of the objectives of the control criteria, the Company
has not maintained effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control –
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated
statements of financial position of the Company as of December 31, 2021 and 2020, the related consolidated income statements, consolidated statements
of comprehensive income, consolidated statements of changes in equity, and consolidated cash flow statements for each of the years in the two-year
period ended December 31, 2021, and the related notes (collectively, the consolidated financial statements), and our report dated April 29, 2022
expressed an unqualified opinion on those consolidated financial statements.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable
possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. A
material weakness related to ineffective monitoring processes to assess the consistent operation of internal control over financial reporting, including
due to a lack of resources, has been identified and included in management’s assessment.
The material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2021 consolidated financial
statements, and this report does not affect our report on those consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness
of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting in
Item 15(b). Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public
accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal
control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our
opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s
internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a
material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
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KPMG Bedrijfsrevisoren – KPMG Réviseurs d’Entreprises BV/SRL
/s/ Gotwin Victor Jaak Jackers
Zaventem, Belgium
April 29, 2022
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d) Changes in Internal Control over Financial Reporting
Other than discussed under “Remediation Progress over Prior Material Weaknesses” below, there were no changes in our internal control
over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting.
Remediation Progress over Prior Material Weaknesses
In connection with the audits of our consolidated financial statements as of and for each of the years ended December 31, 2020 and 2019
we and our independent registered public accounting firm identified certain material weaknesses in our internal controls over financial reporting:
•
•
•
•
Ineffective risk assessment processes to identify and assess the risks of misstatement within the financial reporting process and to design
and implement controls to mitigate those risks, in particular in the areas of loans and borrowings, taxes, leases and information produced
by the entity that is used to operate certain controls over financial reporting.
Ineffective monitoring processes to assess the consistent operation of internal control over financial reporting and to remediate known
control deficiencies, including due to a lack of resources.
Ineffective processes to ensure the proper review and approval of journal entries prior to posting to the general ledger.
Ineffective controls over the completeness and accuracy of information produced by the entity that is used to operate certain controls over
financial reporting.
We implemented a remediation plan addressing deficiencies in our internal controls that were previously reported as of December 31,
2020, including in particular:
•
In respect of the risk assessment component of our internal control system, the previously identified material weakness is now remediated
as of December 31, 2021 due to the following changes:
•
•
•
the risk assessment procedures necessary to identify process risk points within our control environment now operate at a
sufficient level of precision to identify key risks, particularly in the areas of loans and borrowings, taxes, and leases;
for controls containing a review element, the definition and documentation of the steps to be performed by the control
operator and the criteria for investigation (including the analysis if any thresholds used) were established; and
a systematic and disciplined approach for identifying information produced by the entity (IPE) and for testing controls over
the completeness and accuracy of IPE was established.
•
In respect of our entity level controls, the monitoring component of our internal control system has been further improved due to the
following changes:
•
the internal audit department was strengthened and performed a higher number of independent assessments of internal
controls.
•
•
The material weakness identified over the review and approval of journal entries has been remediated as of December 31, 2021. We have
updated the controls over manual journal entries with clearly defined criteria for investigation in general, and ensured consistent review
and approval of the resulting journal entries by an independent reviewer.
We have remediated the previously identified material weakness related to certain process level controls as of December 31, 2021. We
have updated the design of our controls over the completeness and accuracy of IPE used in the execution of certain controls.
Remediation Plan
During the year ending December 31, 2022, we plan to continue to further enhance our internal controls over financial reporting and to
enhance our overall control environment. We are committed to ensuring that our internal control over financial reporting is designed and operating
effectively. More particularly, as a result of the material weakness identified in paragraph 15(b), Management’s Annual Report on Internal Control over
Financial Reporting, the following further remediation action is being taken:
•
We will strengthen our compliance functions and control ownership functions further with additional resources to assist in the monitoring
processes to support the consistent operation of internal control over financial reporting.
Although we intend to complete the remediation process as promptly as possible, we cannot at this time estimate how long it will take to
remediate these material weaknesses. In addition, we may discover additional material weaknesses that require additional time and resources to
remediate and we may decide to take additional measures to address the material weaknesses or modify the remediation steps described above. Until
these weaknesses are remediated, we plan to continue to perform additional analyses and other procedures to ensure that our consolidated financial
statements are prepared in accordance with IFRS.
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ITEM 16A.
AUDIT COMMITTEE FINANCIAL EXPERT
Our board of directors has determined that each of the members of our audit committee, Johan De Lille, Jürgen Ingels and Bart Luyten, is
an “audit committee financial expert” as defined in Item 16A of Form 20-F under the Exchange Act and is independent under Rule 10A-3 under the
Exchange Act.
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ITEM 16B.
CODE OF ETHICS
We have adopted a written code of conduct and ethics that outlines the principles of legal and ethical business conduct under which we do
business. The code of conduct and ethics applies to all of our directors, senior management, consultants and other employees, including our Chief
Executive Officer and Chief Financial Officer. We have posted this code of conduct and ethics on our website at www.materialise.com. This website
address is included in this annual report as an inactive textual reference only, and the information and other content appearing on our website are not
incorporated by reference into this annual report. We have not granted any waivers from any provision of our code of conduct and ethics since its
adoption.
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ITEM 16C.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
KPMG Bedrijfsrevisoren—KPMG Réviseurs d’Entreprises BV/SRL (PCAOB ID No. 1050, with registered address at Luchthaven Brussel
Nationaal 1K, 1930 Zaventem, Belgium) acted as our independent auditor for the fiscal year ended 31 December 2021 and 2020. BDO Bedrijfsrevisoren
BV acted as our independent auditor for the fiscal year ended 31 December 2019. The following table sets forth by category of service the total fees for
services provided by KPMG Bedrijfsrevisoren—KPMG Réviseurs d’Entreprises BV/SRL and its affiliates and BDO Bedrijfsrevisoren BV and its
affiliates to us during 2021 and 2020.
in 000€
Audit Fees
Audit-Related Fees
All Other Fees
Total
Audit Fees
For the year ended December 31
2021
2020
1,006
478
—
1,484
1,151
43
—
1,194
Audit fees consist of the aggregate fees billed in connection with the audit of our annual consolidated and statutory financial statements
and internal controls.
Audit-Related Fees
Audit-related fees are fees for services that are traditionally performed by the independent accountants and in the table above primarily
related to services performed in connection with the capital increase through public offering the quarterly attestation reports for EIB and the consent of
BDO Bedrijfsrevisoren BV for referring to their audit opinion on the financial statements for RSPrint NV for the year 2017. In addition, KPMG
Bedrijfsrevisoren - KPMG Réviseurs d’Entreprises BV/SRL reported on the merger between Materialise NV and Ailanthus NV.
All Other Fees
Non-audit fees paid to KPMG Bedrijfsrevisoren—KPMG Réviseurs d’Entreprises BV/SRL or its affiliates or to BDO Bedrijfsrevisoren
BV or to its affiliates for the fiscal years ended December 31, 2021 and 2020.
Audit Committee Pre-Approval Policies and Procedures
The pre-approval of the Audit Committee or member thereof, to whom pre-approval authority has been delegated, is required for the
engagement of our independent auditors to render audit or non-audit services. Audit Committee pre-approval of audit and non-audit services will not be
required if the engagement for the services is entered into pursuant to pre-approval policies and procedures established by our audit committee regarding
our engagement of the independent auditors, provided the policies and procedures are detailed as to the particular service, our audit committee is
informed of each service provided and such policies and procedures do not include delegation of the Audit Committee’s responsibilities under the
Exchange Act to our management. Audit Committee pre-approval of non-audit services (other than review and attest services) also will not be required
if such services fall within available exceptions established by the SEC.
All audit fees, audit related fees and tax fees for the fiscal years ended December 31, 2021 and 2020 were pre-approved under the
pre-approval policies of the Audit Committee.
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ITEM 16D.
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
None.
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ITEM 16E.
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
None.
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ITEM 16F.
CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
Not applicable.
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ITEM 16G.
CORPORATE GOVERNANCE
The Listing Rules of the Nasdaq Stock Market include certain accommodations in the corporate governance requirements that allow
foreign private issuers, such as us, to follow “home country” corporate governance practices in lieu of the otherwise applicable corporate governance
standards of the Nasdaq Stock Market. The application of such exceptions requires that we disclose each noncompliance with the Nasdaq Stock Market
Listing Rules and describe the Belgian corporate governance practices we do follow in lieu of the relevant Nasdaq Stock Market corporate governance
standard. We follow Belgian corporate governance practices in lieu of the corporate governance requirements of the Nasdaq Stock Market in respect of
the following:
•
•
•
•
Quorum at Shareholder Meetings. Nasdaq Stock Market Listing Rule 5620(c) requires that for any meeting of shareholders, the quorum
must be no less than 33% or 1/3 of the outstanding ordinary shares. There is no quorum requirement under Belgian law for our shareholders’
meetings, except as provided for by law in relation to decisions regarding certain matters.
Independent Director Majority on Board/Meetings. Nasdaq Stock Market Listing Rules 5605(b)(1) and (2) require that a majority of the
board of directors must be comprised of independent directors and that independent directors must have regularly scheduled meetings at
which only independent directors are present. We are not required under Belgian law to have any independent directors on our board of
directors. However, our restated articles of association provide that our board of directors must be comprised of at least seven and no more
than 11 directors, of which at least three directors must be independent directors under Belgian law. We do not intend to require our
independent directors to meet separately from the full board of directors on a regular basis or at all although the board of directors is
supportive of its independent members voluntarily arranging to meet separately from the other members of our board of directors.
Director Nominations/Remuneration and Nomination Committee Composition. Nasdaq Stock Market Listing Rule 5605(d)(2) requires
that compensation of officers must be determined by, or recommended to, the board of directors for determination, either by a majority of the
independent directors, or a compensation committee comprised solely of independent directors. Nasdaq Stock Market Listing Rule 5605(e)
requires that director nominees be selected, or recommended for selection, either by a majority of the independent directors or a nominations
committee comprised solely of independent directors. Under Belgian law, we are not subject to any such requirements. In particular, we are
not required by Belgian law to set up any compensation or nominations committees within our board of directors, and are therefore not
subject to any Belgian legal requirements as to the composition of such committees either. However, our restated articles of association
provide that our board of directors may form committees from among its members. See “Item 6. Directors, Senior Management and
Employees—C. Board Practices —Board of Directors Practices.” Our board of directors has set up and appointed a Remuneration and
Nomination Committee. Our Remuneration and Nomination Committee is currently comprised of three directors, one of whom is
independent. In addition, as long as the Family Shareholders control, directly or indirectly, in the aggregate at least 20% of the voting rights
attached to our ordinary shares, a majority of our directors must be appointed by our shareholders from a list of candidates proposed by the
Family Shareholders.
Shareholder Approval of Equity Compensation Plans. Nasdaq Stock Market Listing Rule 5635(c) requires shareholder approval prior to
the issuance of securities in connection with equity-based compensation of officers, directors, employees or consultants. On December 18,
2015, our board of directors adopted a stock option plan, the 2015 Warrant Plan. Warrants under the 2015 Warrant Plan may be offered upon
decision by our board of directors (or its proxy holder(s)) to employees, consultants and directors of our company and our subsidiaries. In lieu
of the Nasdaq Stock Market Listing Rule 5635(c), we followed Belgian law regarding the issuance of shares or securities in connection with
the remuneration of the directors and/or the employees of a Belgian company.
Under Belgian company law, a Belgian company may issue shares or grant rights to acquire shares pursuant to a resolution of the general
meeting of shareholders or, within certain limits, pursuant to a resolution of the board of directors if so authorized by the shareholders’ meeting (the
so-called authorized capital). By resolution of our extraordinary shareholders’ meeting of April 23, 2014, which entered into force on June 30, 2014, our
shareholders authorized our board of directors, for a period of five years from August 18, 2014, to increase our share capital, in one or more transactions
(including through the issuance of warrants), up to a maximum amount of € 2,714,634.83.
More recently, by resolution of our extraordinary shareholders’ meeting of November 5, 2020, which entered into force on November 9,
2020, our shareholders authorized our board of directors, for a period of five years from November 9, 2020, to increase our share capital, in one or more
transactions (including through the issuance of warrants), up to a maximum amount of € 4,067,700.72.
The board of directors is authorized to limit or cancel the preferential subscription right of current shareholders (for example, when it
decides to issue warrants), if this is in the interest of our company. The board of directors can do this for the benefit of one or more specific persons,
even if these persons are not personnel of our company or our subsidiaries.
Pursuant to this authorization, our board of directors may determine to adopt other equity-based compensation plans for our officers,
directors, employees or consultants.
111
ITEM 16H. MINE SAFETY DISCLOSURE
Not applicable.
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ITEM 16I.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
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ITEM 17.
FINANCIAL STATEMENTS
Not applicable.
PART III
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ITEM 18.
FINANCIAL STATEMENTS
See our consolidated financial statements beginning on page F-1 of this annual report.
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ITEM 19.
EXHIBITS
1.1*
Restated Articles of Association of Materialise NV (English translation)
2.1
2.2
2.3
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
Deposit Agreement, dated as of June 24, 2014, among Materialise NV and The Bank of New York Mellon (incorporated by reference to
Exhibit 4.1 to the Company’s Registration Statement on Form F-1 (File No. 333-194982))
Form of American Depositary Receipt (included in Exhibit 2.1)
Description of Securities (incorporated by reference to Exhibit 2.3 to the Company’s Annual Report on Form 20-F for the year ended
December 31, 2020)
2014 Warrant Plan (English translation) (incorporated by reference to Exhibit 10.3 to the Company’s Registration Statement on Form F-1
(No. 333-194982))
Form of Warrant Agreement under 2014 Warrant Plan (English translation) (incorporated by reference to Exhibit 4.6 to the Company’s
Registration Statement on Form S-8 (No. 333-197236))
2015 Warrant Plan (English translation) (incorporated by reference to Exhibit 4.5 to the Company’s Annual Report on Form 20-F for the
year ended December 31, 2015)
Form of Warrant Agreement under 2015 Warrant Plan (English translation) (incorporated by reference to Exhibit 4.4 to the Company’s
Registration Statement on Form S-8 (File No. 333-212445))
Registration Rights Agreement, dated September 15, 2016, among Materialise NV and the Holders party thereto (incorporated by reference
to Exhibit 4.8 to the Company’s Registration Statement on Form F-3 (No. 333-258949))
Share and Loan Purchase and Transfer Agreement, dated October 4, 2017, among Materialise GmbH, Materialise N.V. and the Sellers party
thereto (incorporated by reference to Exhibit 4.9 to the Company’s Annual Report on Form 20-F for the year ended December 31, 2018)
Merger Deed (English translation) (incorporated by reference to Exhibit 2.1 to the Company’s Report on Form 6-K, furnished to the SEC
on January 4, 2021)
Indemnification Agreement, among Materialize NV, Ailanthus NV, Wilfried Vancraen, Hilde Ingelaere and Lunebeke NV (English
translation) (incorporated by reference to Exhibit 10.1 to the Company’s Report on Form 6-K, furnished to the SEC on January 4, 2021)
Letter Agreement Regarding Share Issuance and Registration Rights, dated December 31, 2020, among Materialise NV, Wilfried Vancraen
and Hilde Ingelaere (incorporated by reference to Exhibit 10.2 to the Company’s Report on Form 6-K, furnished to the SEC on January 4,
2021)
8.1*
Subsidiaries of Materialise NV
12.1*
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
12.2*
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
13.1**
13.2**
23.1
23.2
101.INS
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE
104
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
Consent of KPMG Bedrijfsrevisoren BV, independent registered public accounting firm
Consent of BDO Bedrijfsrevisoren, BV, independent registered public accounting firm
Inline XBRL Instance Document
Inline XBRL Taxonomy Extension Schema
Inline XBRL Taxonomy Extension Calculation Linkbase
Inline XBRL Taxonomy Extension Definition Linkbase
Inline XBRL Taxonomy Extension Label Linkbase
Inline XBRL Taxonomy Extension Presentation Linkbase
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
*
**
+
Filed herewith.
Furnished herewith.
The registrant has omitted portions of the referenced exhibit pursuant to a request for confidential treatment under Rule 24b-2 promulgated under
the Exchange Act.
116
Table of Contents
Signatures
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the
undersigned to sign this annual report on its behalf.
MATERIALISE NV
/s/ Wilfried Vancraen
By:
Name: Wilfried Vancraen
Title:
Chief Executive Officer
Date: April 29, 2022
117
Table of Contents
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements for the Years Ended December 31, 2021, 2020 and 2019
Report of Independent Registered Public Accounting Firm
Report of Independent Registered Public Accounting Firm (BDOBedrijfsrevisoren BV: Zaventem, Belgium: PCAOBID#1432)
Consolidated income statements
Consolidated statements of comprehensive income
Consolidated statements of financial position
Consolidated statements of changes in equity
Consolidated cash flow statements
Notes to the consolidated financial statements
F-2
F-4
F-5
F-6
F-7
F-9
F-10
F-12
F-1
Table of Contents
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
Materialise NV:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statements of financial position of Materialise NV and subsidiaries (the Company) as of December 31,
2021 and 2020, the related consolidated income statements, consolidated statements of comprehensive income, consolidated statements of changes in
equity, and consolidated cash flow statements for each of the years in the two-year period ended December 31, 2021 and the related notes (collectively,
the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position
of the Company as of December 31, 2021 and 2020 and the results of its operations and its cash flows for each of the years in the two-year period ended
December 31, 2021, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
We also have audited the adjustments to the 2019 consolidated financial statements to retrospectively reflect the final accounting for a business
combination as described in Notes 2 and 4 to the consolidated financial statements. In our opinion, such adjustments are appropriate and have been
properly applied. We were not engaged to audit, review, or apply any procedures to the 2019 consolidated financial statements of the Company other
than with respect to the retrospective adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2019
consolidated financial statements taken as a whole.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s
internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated April 29, 2022 expressed an adverse opinion
on the effectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent
with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits
included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures
in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable
basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was
communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the
consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical
audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the
critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Impairment analysis for the Engimplan cash generating unit
As discussed in Note 3 to the consolidated financial statements, the Company performs impairment testing on an annual basis and whenever events or
changes in circumstances indicate that the carrying amount of a cash generating unit (CGU) may not be recoverable. The Company determined the
recoverable amount of the Engimplan CGU based on the value-in-use using a discounted cash flow model. As discussed in Note 5 to the consolidated
financial statements, the Company determined that the value-in-use of the Engimplan CGU approximated its carrying value at December 31, 2021.
We identified the evaluation of the impairment analysis for the Engimplan CGU as a critical audit matter. A high degree of subjective auditor judgment
and specialized skills and knowledge was required to evaluate the Engimplan CGU’s forecasted year-on-year growth rate of revenue and gross margin,
perpetual growth rate and the discount rate, as changes in these assumptions could cause significant changes in the value-in-use of the Engimplan CGU.
F-2
Table of Contents
The following are the primary procedures we performed to address this critical audit matter.
•
We evaluated the design and tested the operating effectiveness of an internal control related to the Company’s impairment process
including the evaluation of the assumptions for the year-on-year growth rate of revenue and gross margin, perpetual growth rate and
the discount rate used to determine the value-in-use.
•
•
•
•
We evaluated the reasonableness of the year-on-year growth rate of revenue and gross margin by comparing them to the Engimplan
CGU’s historical performance.
We assessed management’s ability to accurately forecast by comparing forecasts made by management in the prior year to the actual
performance of the Engimplan CGU.
We evaluated the perpetual growth rate by comparing it to the Engimplan CGU’s historical performance and to external market and
industry data.
We also involved valuation professionals with specialized skills and knowledge, who assisted in evaluating the Company’s discount
rate, by comparing it against a discount rate range that was independently developed using publicly available market data for
comparable entities.
KPMG Bedrijfsrevisoren – KPMG Réviseurs d’Entreprises BV/SRL
/s/ Gotwin Victor Jaak Jackers
We have served as the Company’s auditor since 2020.
Zaventem, Belgium
April 29, 2022
F-3
Table of Contents
Report of Independent Registered Public Accounting Firm
Shareholders and Board of Directors
Materialise NV
Leuven, Belgium
Opinion on the Consolidated Financial Statements
We have audited, before the effects of the adjustments to retrospectively apply the final accounting for a business combination that occurred in 2019 as
described in Note 4 to the consolidated financial statements as of December 31, 2021, the accompanying consolidated statement of financial position of
Materialise NV (the “Company”) and subsidiaries as of December 31, 2019, the related consolidated income statement, statements of comprehensive
income, changes in equity, and cash flows for the year ended December 31, 2019, and the related notes (collectively referred to as the “consolidated
financial statements”). In our opinion, the consolidated financial statements, before the effects of the adjustments to retrospectively apply the final
accounting for a business combination that occurred in 2019 as described in Note 4 to the consolidated financial statements as of December 31, 2021,
present fairly, in all material respects, the financial position of the Company and subsidiaries at December 31, 2019, and the results of its operations and
its cash flows for the year ended December 31, 2019, in conformity with International Financial Reporting Standards as issued by the International
Accounting Standards Board.
We were not engaged to audit, review, or apply any procedures to the adjustments to retrospectively apply the final accounting for a business
combination that occurred in 2019 as described in Note 4 to the consolidated financial statements as of December 31, 2021 and, accordingly, we do not
express an opinion or any other form of assurance about whether such adjustments are appropriate and have been properly applied. Those adjustments
were audited by KPMG Bedrijfsrevisoren—KPMG Réviseurs d’Entreprises BV/SRL.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the
Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities
and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or
fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made
by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable
basis for our opinion.
/s/ Veerle Catry
BDO Bedrijfsrevisoren BV
Represented by Veerle Catry
We have served as the Company’s auditor from 2014 through 2020.
Zaventem, Belgium
April 30, 2020
F-4
Table of Contents
Consolidated income statements
in 000€, except per share data
Revenue
Cost of sales
Gross profit
Research and development expenses
Sales and marketing expenses
General and administrative expenses
Net other operating income
Operating profit (loss)
Financial expenses
Financial income
Share in loss of joint venture, after tax
Profit (loss) before taxes
Income tax benefit/(expense)
Net profit (loss) for the year
Net profit (loss) attributable to:
The owners of the parent
Non-controlling interest
Earnings per share attributable to the owners of the parent
Basic
Diluted
For the year ended December 31,
2019
2020*
2021
Notes
22.1 205,450 170,449 196,679
22.2 (87,278) (76,446) (87,052)
118,172 94,003 109,627
22.3 (26,891) (27,104) (23,348)
22.4 (49,151) (44,636) (52,989)
22.5 (33,315) (29,337) (31,786)
5,432
22.6
6,936
(3,682)
1,377
(392)
4,239
(2,595)
1,644
3,402
12,217
(4,101)
5,620
8 —
13,736
(591)
13,145
2,436
(4,638)
(5,995)
2,452
(39)
(8,221)
1,028
(7,193)
22.8
22.9
22.1
13,154
(9)
(7,044)
(148)
1,586
58
23
23
0.23
0.23
(0.13)
(0.13)
0.03
0.03
*
The year 2020 has been adjusted retrospectively to reflect the final accounting of the business combination with Materialise Motion. See
additional information in Notes 2 and 4.
The accompanying notes from page F-12 to page F-77 form an integral part of these consolidated financial statements.
F-5
Table of Contents
Consolidated statements of comprehensive income
in 000€
Net profit (loss) for the year
Other comprehensive (loss)/ income
Items that are or may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations
Items that will not be reclassified to profit or loss
Fair value adjustment through OCI—Equity instruments
Other comprehensive (loss)/ income, net of taxes
Total comprehensive (loss)/ income for the year, net of taxes
Total comprehensive (loss)/ income attributable to:
The owners of the parent
Non-controlling interest
For the year ended December 31,
2019
2021
2020*
13,145 (7,193) 1,644
1,565 (6,176)
244
10
(3,443)
(1,878) (5,687)
11,267 (12,880)
489 —
244
1,888
11,276 (11,817)
(9) (1,063)
2,041
(153)
*
The year 2020 has been adjusted retrospectively to reflect the final accounting of the business combination with Materialise Motion. See
additional information in Notes 2 and 4.
The accompanying notes from page F-14 to page F-78 form an integral part of these consolidated financial statements.
F-6
Table of Contents
Consolidated statements of financial position
in 000€
Assets
Non-current assets
Goodwill
Intangible assets
Property, plant & equipment
Right-of-use assets
Investments in joint ventures
Deferred tax assets
Investments in convertible loans
Investments in non-listed equity instruments
Other non-current assets
Total non-current assets
Current assets
Inventories and contracts in progress
Trade receivables
Other current assets
Cash and cash equivalents
Total current assets
Total assets
Notes
2021
As of December 31,
2020*
2019
5 18,726 18,599 19,607
6 31,668 32,981 27,395
7 84,451 88,267 91,006
9,054 10,996 10,586
7
39
8 — —
192
201
22.10
2,750
6,203
10
3,046
3,842
10
3,594
4,093
10
155,604 165,182 158,215
227
3,560
399
7,519
9 11,295 10,043 12,696
11 41,541 30,871 40,977
10
8,616
12 196,028 111,538 128,897
257,804 160,742 191,186
413,408 325,924 349,401
8,940
8,290
*
The year 2020 has been adjusted retrospectively to reflect the final accounting of the business combination with Materialise Motion. See
additional information in Notes 2 and 4.
The accompanying notes from page F-14 to page F-78 form an integral part of these consolidated financial statements.
F-7
Table of Contents
Consolidated statements of financial position
in 000€
Equity and liabilities
Equity
Share capital
Share premium
Retained earnings
Other reserves
Equity attributable to the owners of the parent
Non-controlling interest
Total equity
Non-current liabilities
Loans & borrowings
Lease liabilities
Deferred tax liabilities
Deferred income
Other non-current liabilities
Total non-current liabilities
Current liabilities
Loans & borrowings
Lease liabilities
Trade payables
Tax payables
Deferred income
Other current liabilities
Total current liabilities
Total equity and liabilities
Notes
2021
As of December 31,
2020*
2019
4,489
4,096
13
3,066
13 233,872 141,274 138,090
(272)
13
(1,378)
13
232,577 133,183 139,506
3,276
1 —
232,578 133,183 142,782
(7,316)
(4,871)
965
(6,749)
13
15 72,637 90,502 104,673
6,427
15
5,747
22.10
5,031
18
696
16
89,395 108,295 122,574
7,086
4,983
5,327
398
5,268
4,371
4,952
2,167
3,353
3,539
15 17,849 13,984 13,389
3,449
15
20,171 17,698 18,517
17
3,363
18 33,307 29,555 27,641
19 15,972 18,695 17,686
91,435 84,445 84,045
413,408 325,924 349,401
974
783
*
The year 2020 has been adjusted retrospectively to reflect the final accounting of the business combination with Materialise Motion. See
additional information in Notes 2 and 4.
The accompanying notes from page F-14 to page F-78 form an integral part of these consolidated financial statements.
F-8
Table of Contents
Consolidated statements of changes in equity
in 000€
At January 1, 2021 as reported*
Completion of accounting for Materialise Motion business
combination
At January 1, 2021 As adjusted*
Net profit (loss) for the year
Other comprehensive income (loss)
Total comprehensive income (loss)
Capital increase through public offering
Capital increase through exercise of warrants
Incorporation NCI Tianjin Zhenyuan Materialise Medical
Technology Ltd
Equity-settled share-based payment expense
At December 31, 2021
Attributable to the owners of the parent
Notes
Share
capital
Share
premium
Retained
earnings
Other
reserves
Total
4,096 141,274 (7,395) (4,871) 133,104
Non-
controlling
interest
Total
equity
— 133,104
79 —
79
4 — —
2 4,096 141,274 (7,316) (4,871) 133,183
— — 13,154 — 13,154
— — — (1,878)
(1,878)
— — 13,154 (1,878) 11,276
13 371 90,235 (4,873) — 85,733
2,344
13
2,322 — —
22
13 — — — — —
41
14 —
965 (6,749) 232,577
41 — —
4,489 233,872
79
—
— 133,183
(9) 13,145
(1,878)
(9) 11,267
— 85,733
2,344
—
—
10
—
10
41
1 232,578
*
The year 2020 has been adjusted retrospectively to reflect the final accounting of the business combination with Materialise Motion. See
additional information in Notes 2 and 4.
The accompanying notes from page F-14 to page F-78 form an integral part of these consolidated financial statements.
Attributable to the owners of the parent
in 000€
At January 1, 2020
Net profit (loss) for the year
Other comprehensive income (loss)
Total comprehensive income (loss)
Capital increase through conversion of convertible bonds
Capital increase through exercise of warrants
Acquisition NCI Engimplan
Equity-settled share-based payment expense
At December 31, 2020
in 000€
At January 1, 2019
Net profit (loss) for the year
Other comprehensive income (loss)
Total comprehensive income (loss)
Capital increase through exercise of warrants
Acquisition NCI Engimplan
Equity-settled share-based payment expense
At December 31, 2019
Non-
controlling
interest
Share
capital
Share
Retained
earnings
Other
reserves
Total
Notes
premium
(211) (1,378) 139,567
3,066 138,090
(7,124)
— — (7,124) —
— — — (4,772)
(4,772)
— — (7,124) (4,772) (11,896)
1,000
3,112
1,279
103
4,096 141,274 (7,395) (4,871) 133,104
13 1,000 — — —
3,082 — —
13
— — — 1,279
103 — —
14 —
30
Total
equity
3,107 142,675
(7,272)
(148)
(5,687)
(915)
(1,063) (12,959)
1,000
—
3,112
—
(934)
(2,213)
—
103
— 133,104
Attributable to the owners of the parent
Non-
controlling
interest
Notes
Total
Share
premium
Other
reserves
Share
capital
Retained
earnings
3,050 136,637 (1,857) (1,841) 135,989
1,646
— — 1,646 —
456
456
— — —
2,102
456
— — 1,646
1,268
1,252 — —
— — — — —
208
7
(211) (1,378) 139,567
3,066 138,090
201 —
16
13
14 —
Total
equity
— 135,989
1,724
78
(211)
245
1,969
(133)
1,268
—
3,240
3,240
208
—
3,107 142,675
F-9
Table of Contents
Consolidated cash flow statements
in 000€
Operating activities
Net profit (loss) for the year*
Non-cash and operational adjustments
Depreciation of property, plant & equipment
Amortization of intangible assets
Impairment of goodwill and intangible assets
Share-based payment expense
Loss (gain) on disposal of property, plant & equipment
Movement in provisions
Movement in reserve for bad debt and slow moving inventory
Financial income
Financial expense
Impact of foreign currencies
Share in loss of joint venture (equity method)
Income taxes and deferred taxes*
Fair value adjustment
Other
Working capital adjustment and income tax paid
Decrease (increase) in trade receivables and other current assets
Decrease (increase) in inventories and contracts in progress
Increase in trade payables and other payables
Income tax paid
Interest received
Net cash flow from operating activities
Notes
For the year ended December 31,
2019
2020*
2021
13,145 (7,193) 1,644
7
5; 6
752
10
137
516
14 (1,036)
210
99
255
7 15,574 14,932 14,419
6 4,975 4,742 4,859
177 4,606 —
302
165
138
121
22.9 (5,620) (2,300) (1,377)
22.8 4,101 5,821 3,682
(176)
40
392
8 —
22.10
591 (1,049) 2,595
4; 10 — (1,093) —
(245)
— —
61
39
216
(10,920) 9,205
(745)
(1,423) 2,724
6,453
583 4,196
(1,152) (2,618) (2,139)
355
25,845 29,978 28,402
103
376
*
The year 2020 has been adjusted retrospectively to reflect the final accounting of the business combination with Materialise Motion. See
additional information in Notes 2 and 4.
The accompanying notes from page F-14 to page F-78 form an integral part of these consolidated financial statements.
F-10
Table of Contents
Consolidated cash flow statements
in 000€
Investing activities
Purchase of property, plant & equipment
Purchase of intangible assets
Proceeds from the sale of property, plant, equipment and intangibles (net)
Acquisition of subsidiary (net of cash)
Investments in joint-ventures / shares
Convertible loan granted
Other equity investments in non-listed entities
Interest received
Net cash flow used in investing activities
Financing activities
Proceeds from loans & borrowings
Repayment of loans & borrowings
Repayment of leases
Capital increase in parent company
Direct attributable expense capital increase
Interest paid
Other financial income (expense), net
Net cash flow from financing activities
Net increase/(decrease) of cash and cash equivalents
Cash and cash equivalents at beginning of the year
Exchange rate differences on cash and cash equivalents
Cash and cash equivalents at end of the year
Notes
For the year ended December 31,
2019
2020*
2021
7
6
(7,934) (11,032) (13,472)
(2,193)
(6,618)
(3,788)
278
552
462
(6,331)
4
(8,031)
(875)
8 — —
(875)
(2,743)
(2,836)
(281)
(300)
— — —
(13,134) (28,265) (25,617)
10
(999)
10 —
(3,640)
4,112
15 — — 29,000
15 (14,277) (13,736) (12,126)
(5,283)
(3,775)
15
13 88,117
1,268
13 — — —
(2,286)
208
71,156 (16,888) 10,781
83,867 (15,175) 13,566
12 111,538 128,897 115,506
(175)
12 196,028 111,538 128,897
(2,268)
(1,356)
(2,326)
3,417
(2,184)
624
*
The year 2020 has been adjusted retrospectively to reflect the final accounting of the business combination with Matrialise Motion. See additional
information in Notes 2 and 4.
The accompanying notes from page F-14 to page F-78 form an integral part of these consolidated financial statements.
11
Table of Contents
Notes to the consolidated financial statements
1 Corporate information
Materialise NV is a limited liability company with its office at Technologielaan 15, 3001 Leuven, Belgium. The consolidated financial statements
comprise Materialise NV (the “Company” or “Parent”) and its subsidiaries (collectively, the “Group” or “we,” “us” and “our”). See Note 28 for a list of
subsidiaries of the Company.
We are a leading provider of additive manufacturing and medical software and of sophisticated 3D printing services. Our products and services are
offered through a market oriented organization that is active across three principal market segments: (i) Materialise Software, (ii) Materialise Medical,
and (iii) Materialise Manufacturing. We sell our products and services in Europe, the Americas, Africa and Asia-Pacific.
The consolidated financial statements of the Group for the year ended December 31, 2021 were approved and authorized for issue on April 27, 2022 in
accordance with a resolution of the Company’s board of directors.
2 Basis of preparation
The consolidated financial statements of the Group for the three years ended December 31, 2021, 2020 and 2019 are prepared in accordance with the
International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) (collectively “IFRS”).
These consolidated financial statements have been prepared on a historical cost basis, except for the assets and liabilities that have been acquired as part
of a business combination, which have been initially recognized at fair value, and certain financial assets such as the non-listed equity instruments and
the convertible loan receivable which are both included in the other non-current assets and the share appreciation rights are measured at fair value.
The financial statements are prepared on a going concern basis. The consolidated financial statements are presented in thousands of euros (K€ or
thousands of €) and all “currency” values are rounded to the nearest thousand (€000), except when otherwise indicated.
The preparation of financial statements in compliance with IFRS requires the use of certain critical accounting estimates. It also requires Group
management to exercise judgment in applying the Group’s accounting policies. The areas where significant judgment and estimates have been made in
preparing the financial statements and their effect are disclosed in Note 3.
Impact of COVID-19 on our Business
In 2020, the vast majority of the businesses addressed by our segments were adversely affected by the effects of the COVID-19 pandemic, which had a
negative impact on our results of operations. These effects have faded out in 2021, although we continued to experience a negative impact from the
COVID-19 pandemic in certain business lines that have not yet recovered in full. In particular, during the first half of 2021, order intake levels from
automotive, aerospace, and certain industrial clients in our Materialise Software and Materialise Manufacturing segments remained below the pre-
pandemic 2019 levels. To-date, we have not incurred significant bad debt or major delays in trade payments as a result of the ongoing COVID-19
pandemic.
New standards, interpretations and amendments adopted by the Group
The following amendments and interpretations issued by the IASB and IFRIC apply for the first time in 2021, but do not have a significant impact on
the consolidated financial statements of the Group.
•
•
•
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Interest Rate Benchmark Reform – Phase 2 (issued on 27 August 2020)
Amendments to IFRS 4 Insurance Contracts – deferral of IFRS 9 (issued on 25 June 2020)
Amendments to IFRS 16 Leases: Covid-19-Related Rent Concessions beyond 30 June 2021 (issued on 31 March 2021) – effective as from
1 April 2021
A number of new standards, amendments to standards and interpretations are not yet effective for the year ended 31 December 2021, and have not been
applied in preparing these consolidated financial statements. The amendments are not expected to have a material impact on the Group’s consolidated
financial statements.
Amendments to IAS 1 Presentation of Financial statements: Classification of Liabilities as Current or Non-current, issued on 23 January 2020,
clarify a criterion in IAS 1 for classifying a liability as non-current: the requirement for an entity to have the right to defer settlement of the liability for
at least 12 months after the reporting period.
The amendments:
•
specify that an entity’s right to defer settlement must exist at the end of the reporting period;
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•
•
•
clarify that classification is unaffected by management’s intentions or expectations about whether the entity will exercise its right to defer
settlement;
clarify how lending conditions affect classification; and
clarify requirements for classifying liabilities an entity will or may settle by issuing its own equity instruments.
On July 15, 2020, the IASB issued Classification of Liabilities as Current or Non-current — Deferral of Effective Date (Amendment to IAS 1) deferring
the effective date of the January 2020 amendments to IAS 1 by one year to annual reporting periods beginning on or after January 1, 2023 with early
application permitted.
The IASB has published a new exposure draft on the topic on 19 November 2021.
Amendments to IFRS 3 Business Combinations; IAS 16 Property, plant and Equipment; IAS 37 Provisions, Contingent Liabilities and
Contingent Assets as well as Annual improvements, issued on 14 May 2020, include several narrow-scope amendments which are changes that
clarify the wording or correct minor consequences, oversights or conflicts between requirements in the Standards:
•
•
•
•
Amendments to IFRS 3 Business Combinations update a reference in IFRS 3 to the Conceptual Framework for Financial Reporting
without changing the accounting requirements for business combinations.
Amendments to IAS 16 Property, Plant and Equipment prohibit a company from deducting from the cost of property, plant and
equipment amounts received from selling items produced while the company is preparing the asset for its intended use. Instead, a company
will recognize such sales proceeds and related cost in profit or loss. The amendments also clarify that testing whether an item of PPE is
functioning properly means assessing its technical and physical performance rather than assessing its financial performance.
Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets specify which costs a company includes when
assessing whether a contract will be loss-making. The amendments clarify that the ‘costs of fulfilling a contract’ comprise both: the
incremental costs; and an allocation of other direct costs.
Annual Improvements to IFRS Standards 2018–2020 make minor amendments to IFRS 1 First-time Adoption of International Financial
Reporting Standards, IFRS 9 Financial Instruments, IAS 41 Agriculture and the Illustrative Examples accompanying IFRS 16 Leases.
These amendments are effective for annual periods beginning on or after 1 January 2022 with early application permitted.
Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies, issued on
12 February 2021, include narrow-scope amendments to improve accounting policy disclosures so that they provide more useful information to
investors and other primary users of the financial statements. The amendments to IAS 1 require companies to disclose their material accounting policy
information rather than their significant accounting policies. The amendments to IFRS Practice Statement 2 provide guidance on how to apply the
concept of materiality to accounting policy disclosures.
These amendments are effective for annual periods beginning on or after 1 January 2023 with early application permitted.
Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates, issued on
12 February 2021, clarify how companies should distinguish changes in accounting policies from changes in accounting estimates. The distinction is
important because changes in accounting estimates are applied prospectively only to future transactions and other future events, but changes in
accounting policies are generally also applied retrospectively to past transactions and other past events.
These amendments are effective for annual periods beginning on or after 1 January 2023 with early application permitted.
Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction, issued on 7 May 2021,
clarifies how companies should account for deferred tax on transactions such as leases and decommissioning obligations. IAS 12 Income Taxes specifies
how a company accounts for income tax, including deferred tax, which represents tax payable or recoverable in the future. In specified circumstances,
companies are exempt from recognizing deferred tax when they recognize assets or liabilities for the first time. Previously, there had been some
uncertainty about whether the exemption applied to transactions such as leases and decommissioning obligations—transactions for which companies
recognize both an asset and a liability. The amendments clarify that the exemption does not apply and that companies are required to recognize deferred
tax on such transactions. The aim of the amendments is to reduce diversity in the reporting of deferred tax on leases and decommissioning obligations.
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These amendments are effective for annual periods beginning on or after 1 January 2023 with early application permitted.
Retroactive adjustments in the reporting year 2020
The Group has adjusted retrospectively the reporting year 2020 for the following impacts:
•
Our consolidated financial statements for the year ended December 31, 2020 appearing in our Annual Report on Form 20-F, as filed with
the U.S. Securities and Exchange Commission on April 30, 2021 (the “FY 2020 Form 20-F”), included provisional accounting for the
Materialise Motion (formerly RS Print) business combination. At approval of our 2020 consolidated financial statements by the Board, the
deferred tax analysis was not yet finalized.
As of October 2021, we completed the analysis of deferred taxes in respect of the Materialise Motion business combination, with
corresponding adjustments to goodwill and deferred taxes. The impact has been accounted for as retrospective adjustments to our
consolidated statement of financial position as of December 31, 2020 and our consolidated income statement for the year ended
December 31, 2020. The adjustment results in a decrease in deferred tax liabilities of K€ 1,822, an increase in deferred income tax benefit
of K€ 79, a decrease in goodwill of K€ 1,743 and an increase in consolidated reserves of K€ 79.
We refer to Note 4 for a detailed discussion of the Materialise Motion business combination.
The impact of the retrospective adjustments on the consolidated statement of financial position as of December 31, 2020 and the consolidated income
statement for the year ended December 31, 2020 is as follows:
Retrospective adjustment impact on statement of financial position
in 000€
Assets
Non-current assets
Goodwill
Intangible assets
Property, plant & equipment
Right-of-use assets
Investments in joint ventures
Deferred tax assets
Investments in convertible loans
Investments in non-listed equity instruments
Other non-current assets
Total non-current assets
Current assets
Inventories and contracts in progress
Trade receivables
Other current assets
Cash and cash equivalents
Total current assets
Total assets
F-14
As previously
reported
As of December 31, 2020
IFRS 3 Materialise
Motion
20,342
32,981
88,267
10,996
—
201
6,203
3,842
4,093
166,925
10,043
30,871
8,290
111,538
160,742
327,667
(1,743)
—
—
—
—
—
—
—
—
(1,743)
—
—
—
—
—
(1,743)
As adjusted
18,599
32,981
88,267
10,996
—
201
6,203
3,842
4,093
165,182
10,043
30,871
8,290
111,538
160,742
325,924
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Equity and liabilities
Equity
Share capital
Share premium
Consolidated reserves
Other comprehensive loss
Equity attributable to the owners of the parent
Non-controlling interest
Total equity
Non-current liabilities
Loans & borrowings
Lease liabilities
Deferred tax liabilities
Deferred income
Other non-current liabilities
Total non-current liabilities
Current liabilities
Loans & borrowings
Lease liabilities
Trade payables
Tax payables
Deferred income
Other current liabilities
Total current liabilities
Total equity and liabilities
Retrospective adjustment impact on income statement
in 000€
Revenue
Cost of sales
Gross profit
Research and development expenses
Sales and marketing expenses
General and administrative expenses
Net other operating income / (expenses)
Operating profit (loss)
Financial expenses
Financial income
Share in loss of joint venture
Loss before taxes
Income taxes
Net loss for the year
Net loss attributable to:
The owners of the parent
Non-controlling interest
As previously
reported
As of December 31, 2020
IFRS 3 Materialise
Motion
4,096
141,274
(7,395)
(4,871)
133,104
—
133,104
90,502
7,086
6,805
5,327
398
110,118
13,984
3,539
17,698
974
29,555
18,695
84,445
327,667
—
—
79
—
79
—
79
—
—
(1,822)
—
—
(1,822)
—
—
—
—
—
—
—
(1,743)
As previously
reported
For the year ended December 31, 2020
IFRS 3 Materialise
Motion
170,449
(76,446)
94,003
(27,104)
(44,636)
(29,337)
2,436
(4,639)
(5,995)
2,453
(39)
(8,221)
949
(7,272)
(7,124)
(148)
F-15
—
—
—
—
—
—
—
—
—
—
—
—
79
79
79
—
As adjusted
4,096
141,274
(7,316)
(4,871)
133,183
—
133,183
90,502
7,086
4,983
5,327
398
108,296
13,984
3,539
17,698
974
29,555
18,695
84,445
325,924
As adjusted
170,449
(76,446)
94,003
(27,104)
(44,636)
(29,337)
2,436
(4,639)
(5,995)
2,453
(39)
(8,221)
1,028
(7,193)
(7,045)
(148)
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3 Summary of significant accounting policies
Basis for consolidation
The consolidated financial statements comprise the financial statements of the Group and its subsidiaries.
Entities are fully consolidated from the date of acquisition, which is the date when the Group obtains control, and continue to be consolidated until the
date when such control ceases. The financial statements of the entities are prepared for the same reporting period as the parent company, using consistent
accounting policies. All intra-Group balances, transactions, unrealized gains and losses resulting from intra-Group transactions and dividends are fully
eliminated.
The Group attributes profit or loss and each component of other comprehensive income to the owners of the parent company and to the non-controlling
interest based on present ownership interests, even if the results in the non-controlling interest have a negative balance.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over the
subsidiary, it will derecognize the assets (including goodwill) and liabilities of the subsidiary, any non-controlling interest and the other components of
equity related to the subsidiary. Any surplus or deficit arising from the loss of control is recognized in profit or loss. If the Group retains an interest in
the previous subsidiary, then such interest is measured at fair value at the date the control is lost.
The proportion allocated to the parent and non-controlling interests in preparing the consolidated financial statements is determined based solely on
present ownership interests.
As of November 9, 2020, the Group acquired full ownership of Materialise Motion (formerly RS Sprint), and Materialise Motion is included in the
consolidated financial statements of the Group as from that date, after having been accounted for as a joint venture under the equity method up to
November 8, 2020 – see Note 8.
Non-controlling interests
The Group has the choice, on a transaction by transaction basis, to initially recognize any non-controlling interest in the acquiree which is a present
ownership interest and entitles its holders to a proportionate share of the entity’s net assets in the event of liquidation at either acquisition date fair value
or, at the present ownership instruments’ proportionate share in the recognized amounts of the acquiree’s identifiable net assets. Other components of
non-controlling interest such as outstanding share options are generally measured at fair value. The Group has not elected to take the option to use fair
value in acquisitions completed to date. As of December 31, 2021, the only non-controlling interest relates to Tianjin Zhenyuan Materialise Medical
Technology Ltd., a subsidiary that Materialise, together with Zhenyuan (Tianjin) Medical Appliances Technology Co., Ltd., incorporated on June 22,
2021. Materialise holds 51% of the shares of this subsidiary. See also Note 4.
Foreign currency translation
The Group’s consolidated financial statements are presented in euros, which is also the parent company’s functional currency. For each entity, the Group
determines the functional currency, and items included in the financial statements of each entity are measured using the functional currency.
Financial statements of foreign subsidiaries
Foreign subsidiaries use the local currencies of the country where they operate. The statement of financial position is translated into euro at the closing
rate on the reporting date and their income statement is translated at the average exchange rate at each month-end. Differences resulting from the
translation of the financial statements of said subsidiaries are recognized in other comprehensive income as “exchange differences on translation of
foreign operations”.
Foreign currency transactions
Transactions denominated in foreign currencies are translated into euro at the exchange rate of the previous day. Monetary items in the statement of
financial position are translated at the closing rate at each reporting date and the relevant translation adjustments are recognized in financial or operating
result depending on its nature.
Business combinations and goodwill
Business combinations are accounted for using the acquisition method at the acquisition date, which is the date at which the Group obtains control over
the entity. The cost of an acquisition is measured as the amount of the consideration transferred to the seller, measured at the acquisition date fair value,
and the amount of any non-controlling interest in the acquiree.
The Group measures goodwill initially at cost at the acquisition date, being:
•
•
the fair value of the consideration transferred to the seller, plus
the amount of any non-controlling interest in the acquiree, plus
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•
•
if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree re-measured at the acquisition
date, less
the fair value of the net identifiable assets acquired and assumed liabilities
Goodwill is recognized with any impairment in carrying value being charged to the consolidated income statement. Where the fair value of identifiable
assets, liabilities and contingent liabilities exceeds the fair value of consideration paid, the excess is credited in full to the consolidated income statement
on acquisition date.
Acquisition costs incurred are expensed and included in general and administrative expenses.
Any contingent consideration to be transferred by the acquirer will be recognized at fair value at the acquisition date. Subsequent changes to the fair
value of the contingent consideration, which is deemed to be an asset or liability, will be recognized in profit or loss. If the contingent consideration is
classified as equity, it is not re-measured until it is finally settled within equity.
Acquisition of non-controlling interests are accounted for as an equity transaction.
Investments in joint ventures
As at December 31, 2021, Materialise has no investments in joint ventures.
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Property, plant & equipment
Property, plant and equipment is stated at cost, net of accumulated depreciation and/or accumulated impairment losses, if any. Such cost includes
borrowing costs directly attributable to construction projects if the asset necessarily takes a substantial period of time to get ready for its intended use, it
is probable that they will result in future economic benefits to the Group and the cost can be measured reliably. When significant parts of property, plant
and equipment are required to be replaced at intervals, the Group recognizes such parts as individual assets with specific useful lives and depreciates
them accordingly. Likewise, when a major inspection is performed, its cost is recognized in the carrying amount of the property, plant and equipment as
a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in the income statement as incurred.
Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets as follows:
•
•
•
•
•
•
Buildings:
Machinery:
IT assets:
Fixtures & Furniture:
Vehicles:
Leasehold Building Improvements:
Land is not depreciated.
20-30 years
5-12 years
3-5 years
10-15 years
2-4 years
10 years
An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic
benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net
disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is derecognized.
The assets’ residual values, useful lives and methods of depreciation are reviewed at each financial year-end and adjusted prospectively, if appropriate.
Right-of-use assets and related liabilities
Right-of-use assets:
The Company recognizes right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use
assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost
of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, the estimated cost of any asset retirement obligation
and lease payments made at or before the commencement date less any lease incentives received. Unless the Company is reasonably certain to obtain
ownership of the leased asset at the end of the lease term, the recognized right-of-use assets are depreciated on a straight-line basis over the shorter of its
estimated useful life and the lease term:
•
Property leased Assets:
•
Leased machines:
•
Leased vehicles:
Right-of-use assets are subject to impairment.
Lease liabilities:
Lease terms up to 10 years or useful life of 10-15 years when reasonably certain that
ownership will be obtained at the end of the lease
Lease terms up to 10 years or useful life of 5-10 years when reasonably certain that
ownership will be obtained at the end of the lease
Lease terms up to 4 years or useful life of 4 years when reasonably certain that
ownership will be obtained at the end of the lease
At the commencement date of the lease, the Company recognizes lease liabilities measured at the present value of lease payments to be made over the
lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease
payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the
exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating a lease, if the lease
term reflects the Company exercising the option to terminate. The variable lease payments that do not depend on an index or a rate are recognized as
expense in the period on which the event or condition that triggers the payment occurs. In calculating the present value of lease payments, the Company
uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. After the
commencement date, the amount of lease liabilities is measured at amortized cost using the effective interest rate method.
In addition, the carrying amount of lease liabilities is remeasured when there is a change in future lease payments arising from a change in an index or
rate, if there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee, if the Group changes its
assessment of whether it will exercise a purchase, extension or termination option or if there is a revised in-substance fixed lease payment. When the
lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or
loss if the carrying amount of the right-of-use asset has been reduced to zero.
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Short-term leases and leases of low-value assets:
The Company applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (i.e., those leases that have a lease
term of 12 months or less from the commencement date and do not contain a purchase option) however this exemption is not applied for property leases.
It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered of low value (i.e., below € 5k). Lease
payments on short-term leases and low-value assets are recognized in the income statement when incurred.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of a qualified asset that necessarily takes a substantial period of time
to prepare for its intended use or sale are capitalized as part of the cost of the respective assets. All other borrowing costs are expensed in the period they
occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.
Research and development
Research and development includes the costs incurred by activities related to the development of software solutions (new products, updates and
enhancements), guides and other products.
Development activities involve the application of research findings or other knowledge to a plan or a design of new or substantially improved (software)
products before the start of the commercial use.
Development expenditures on an individual project are recognized as an intangible asset when the Group can demonstrate:
•
•
•
•
•
the technical feasibility of completing the intangible asset so that the asset will be available for use or sale;
its intention to complete and its ability to use or sell the asset;
how the asset will generate future economic benefits;
the availability of resources to complete the asset; and
the ability to measure reliably the expenditure during development.
The Group has determined that the conditions for recognizing internally generated intangible assets from proprietary software, guide and other product
development activities are not met until shortly before the products are available for sale, unless either (i) the Group has strong evidence that the above
criteria are met and a detailed business plan is available showing the asset will on a reasonable basis generate future economic benefits or (ii) the
development is done based upon specific request of the customer, it is highly likely that the Group will be able to market the product also to other parties
than the customer, the development is subject to an agreement and the substance of the agreement is that the customer reimburses the Group for a
significant portion, but not all, of the development expenses incurred. As such, development expenditures not satisfying the above criteria and
expenditures on the research phase of internal projects are recognized in the consolidated income statement as incurred. Internally generated intangible
assets from proprietary software are amortized over their useful lives, starting from the moment they are ready for use/available for sale.
Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortization and accumulated
impairment losses. Amortization of the asset begins when development is complete and the asset is available for use. It is amortized over the period of
expected future benefit, which is determined on a project-by-project basis. Amortization is recorded in research and development expenditure. During
the period of development, the asset is tested for impairment at least annually or whenever there is an indication of impairment.
Intangible assets other than goodwill and capitalized development expenditures
Intangible assets comprise acquired technology and customer portfolio, patents and licenses and technology and customers acquired in connection with
business combinations. Those intangible assets are measured on initial recognition at cost, except for the acquired technology and customers arising
from business combinations, which are measured initially at fair value. Following initial recognition, intangible assets other than goodwill are carried at
cost less any accumulated amortization and accumulated impairment losses, if any.
The useful life of the intangible assets is as follows:
•
•
•
•
•
•
Software:
Perpetual licences for ERP & front end software :
Software with subscription license :
Patents and licenses:
Acquired customers and Technology:
Order Backlog:
3 years;
10 years;
subscription term
10 years;
5-20 years;
Period over which orders will be completed.
The intangible assets with finite lives are amortized over their useful economic life and assessed for impairment whenever there is an indication that the
intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at
least at the end of each reporting period. The amortization expense on intangible assets with finite lives acquired through business combination is
recognized in the consolidated income statement in the line “net other operating income”.
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Impairment of goodwill and other non-financial assets (excluding inventories and deferred tax assets)
Impairment tests on goodwill and other intangible assets with indefinite useful economic lives, assets under construction or capitalized development
expenses which are not amortized yet, are undertaken annually at the financial year end. Other non-financial assets and goodwill are subject to
impairment tests whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Where the carrying value of
an asset exceeds its recoverable amount (i.e. the higher of value in use and fair value less costs to sell), the asset is written down accordingly.
Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the smallest Group of assets to
which it belongs for which there are separately identifiable cash flows: its cash generating units (CGUs). Goodwill is allocated on initial recognition to
each of the Group’s CGUs that are expected to benefit from the synergies of the combination giving rise to the goodwill.
The Group bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Group’s CGUs
to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of five years. For longer periods, a long-
term growth rate is calculated and applied to future cash flows projected after the fifth year.
Impairment charges are included in profit or loss, except, where applicable, to the extent they reverse gains previously recognized in other
comprehensive income. An impairment loss recognized for goodwill is not reversed.
Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation
disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in
this circumstance is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained.
Inventories and Contracts in progress
Inventories are valued at the lower of cost and net realizable value. Costs incurred in bringing each product to its present location and condition are
accounted for as follows:
•
•
Raw materials: purchase cost on a first in, first out basis; and
Finished goods and work in progress: cost of direct materials and labor and a proportion of manufacturing overheads based on the normal
operating capacity, but excluding borrowing costs.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary
to make the sale.
A write-off of inventories is estimated based on an ageing or rotation analysis.
Work in progress relates to production of inventory for which a customer has not yet been secured, while contracts in progress are contract assets that
relate to production for specific customers in performance of a signed contract. We refer also to the accounting policy on revenue recognition.
Financial assets
Trade receivables and debt instruments issued are initially recognized when they are originated. All other financial assets are initially recognized when
the Group become a party to the contractual provisions of the instrument.
Financial assets are classified at initial recognition, and subsequently measured either at amortized cost, either fair value through other comprehensive
income (OCI), and fair value through profit or loss. The classification of financial assets at initial recognition depends on the financial asset’s contractual
cash flow characteristics and the Group’s business model for managing them.
With the exception of trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient,
the Group initially measures a financial asset at its fair value plus transaction costs, in the case of a financial asset not at fair value through profit or loss.
Trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient are measured at the
transaction price.
For purposes of subsequent measurement, financial assets are classified in four categories:
•
•
•
Financial assets at amortized cost;
Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments);
Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity
instruments); and
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•
Financial assets at fair value through profit or loss.
Financial assets measured at amortized cost
This category is the most relevant to the Group. The Group measures financial assets at amortized cost if both of the following conditions are met:
•
•
The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on
the principal amount outstanding.
Financial assets, trade and other receivables, cash and cash equivalents at amortized cost are subsequently measured using the effective interest rate
(EIR) method and are subject to impairment. Gains and losses are recognized in profit or loss when the asset is derecognized, modified or impaired.
Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments)
The Group currently does not have financial assets at fair value through OCI with recycling of cumulative gains and losses.
Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments)
The Group has irrevocably elected at initial recognition to classify the minority equity investments in the non-listed companies Essentium Inc. and
AM-Flow BV, as disclosed in Note 10 and Note 20, as financial assets designated at fair value through OCI as this measurement is most representative
of the business model for these assets. Gain and losses on these financial assets are never recycled to profit and loss. Equity instruments designated at
fair value through OCI are not subject to impairment assessment.
Financial assets measured at fair value through profit or loss
The Group has the following financial assets classified as financial assets at fair value through profit or loss:
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derivatives, also including the option acquired by the Group to purchase all shares of Link3D as disclosed in Note 4 and Note 10;
convertible loan granted to the company Fluidda as disclosed in Note 10.
Those financial assets are carried in the statement of financial position at fair value with changes recognized in the income statement in the lines
financial income/expense.
Derecognition
A financial asset is derecognized when:
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•
The rights to receive cash flows from the asset have expired, or
The Group has transferred its rights to receive cash flows from the assets.
The Group has a factoring agreement in place with one subsidiary whereby its rights to receive the cash flows from the trade receivables are transferred
to the factor on a non-recourse basis. The related trade receivables are derecognized at the moment that the cash is received from the factor.
Impairment of financial assets
Further disclosures relating to impairment of financial assets are also provided in Note 3 Significant accounting judgments, estimates and assumptions.
The Group recognizes an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss.
For trade receivables and contract assets, the Group applies a simplified approach in calculating ECLs. A loss allowance is recognized at each reporting
date based on lifetime ECLs. The Group established a provision matrix that is based on its historical loss experience, adjusted for forward-looking
factors specific to the debtors and the economic environment.
For all other receivables, ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows
that the Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows
from the sale of collateral held or other credit enhancements that are integral to the contractual terms. ECLs are recognized in two stages. For credit
exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from
default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase
in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the
timing of the default (a lifetime ECL). When determining whether the credit risk has increased significantly since initial recognition, the group considers
reasonable and supportable information that is relevant and available with undue cost or effort, including both quantitative and qualitative information
and analysis, based on the Group’s historical experience and informed credit assessments, that includes forward-looking information. The Group
assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due. An event of default takes place when the
debtor is unlikely to pay its credit obligations to the Group in full or when the financial asset is more than one year past due.
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Financial liabilities
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction
costs.
The Group’s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts and derivative financial instruments
including written put options over non-controlling interests.
Financial liabilities at amortized cost
The trade and other payables, and loans and borrowings are classified as financial liabilities at amortized cost.
Those financial liabilities are measured at amortized cost using the effective interest rate method. Gains and losses are recognized in the income
statement when the liabilities are derecognized as well as through the effective interest rate method amortization process.
Financial liabilities at fair value through profit and loss
The derivative financial instruments are classified as financial liabilities at fair value through profit and loss except for the written put options on
non-controlling interests which is disclosed below.
Written put options on non-controlling interest
The Group recognizes a financial liability for the written put options on non-controlling interest. The written put options have a variable redemption
price based on a formula as specified in the contract (see Note 13).
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•
•
•
The financial liability is initially recognized at fair value and the fair value is reclassified from non-controlling interest and, for any amount
higher than the non-controlling interest, from consolidated reserves.
The fair value is determined as the present value of the redemption amount.
Any change in the fair value as a result of a change in the estimated redemption price is recognized directly in consolidated reserves. Any
unwinding effect of the present value of the redemption price is recognized directly in profit and loss (financial cost).
No share of profit is allocated to the non-controlling interest.
Upon exercise of the written put option, the carrying value will be offset with the cash payment received. When the written put option is
not exercised, the carrying value of the financial liability is derecognized against non-controlling interest with the difference going to
consolidated reserves.
Compound financial instruments
The Group has issued convertible debt which is accounted for as a compound financial instrument. For those instruments, the Group determines the
carrying amount of the liability component by measuring the fair value of a similar liability (including any embedded non-equity derivative features)
that does not have an associated equity component. The carrying amount of the equity instrument is then determined by deducting the fair value of the
financial liability from the fair value of the compound financial instrument as a whole. Directly attributable transaction costs are apportioned between
the liability and equity components of the convertible debt instrument, based on the allocation of proceeds to the liability and equity components when
the instruments are initially recognized. Subsequent to initial recognition, the liability component of a compound financial instrument, is measured at
amortized cost using the effective interest method. The equity component of a compound financial instrument is not remeasured.
Derecognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.
Offsetting
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial position if there is a currently
enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities
simultaneously.
Share capital
Financial instruments issued by the Group are classified as equity only to the extent that they do not meet the definition of a financial liability or
financial asset. The Group’s ordinary shares are classified as equity instruments.
Provisions
Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of
resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
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Pensions benefits
The Group has a defined contribution obligation where the Group pays contributions based on salaries to an insurance company, in accordance with the
laws and agreements in each country.
The Belgian defined contribution pension plans are by law with variable minimum returns based on the Belgian government bonds, with a minimum of
1.75% and a maximum of 3.75%, effective for contributions paid as from 2016. For contribution paid until 2015, the minimum guaranteed return is
3.25% on employer contributions and 3.75% on employee contributions.
These plans qualify as defined benefit plans. Contributions are recognized as expenses for the period in which employees perform the corresponding
services. Outstanding payments at the end of the period are shown as other current liabilities.
Those plans are not accounted for as a defined benefit plan as they are considered to be not material.
Share based payments
Directors and employees (including senior executives) of the Group receive remuneration in the form of share-based payments, whereby employees
render services as consideration for equity instruments (equity-settled transactions). The Group currently has only warrants and share-appreciation rights
as share-based payments.
Equity-settled transactions
Equity-settled share-based payments to employees and others providing similar services are measured, indirectly, at the fair value of the equity
instruments granted. The cost of equity-settled transactions is recognized, together with a corresponding increase in other capital reserves in equity, over
the period in which the performance and/or service conditions are fulfilled. The cumulative expense recognized for equity-settled transactions at each
reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity
instruments that will ultimately vest. The income statement expense or credit for a period represents the movement in cumulative expense recognized at
the beginning and end of that period and is recognized as employee benefits expense.
The Group does currently only have equity-settled share-based payments that have service-based vesting conditions and no instruments with market
vesting conditions.
No expense is recognized for awards that do not ultimately vest.
When the terms of an equity-settled award are modified, the minimum expense recognized is the expense as if the terms had not been modified, if the
original terms of the award are met. An additional expense is recognized for any modification that increases the total fair value of the share-based
payment transaction, or is otherwise beneficial to the employee as measured at the date of modification.
When an equity-settled award is cancelled, it is treated as if it vested on the date of cancellation, and any expense not yet recognized for the award is
recognized immediately. This includes any award where non-vesting conditions within the control of either the entity or the employee are not met.
However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and
new awards are treated as if they were a modification of the original award, as described in the previous paragraph.
Cash-settled transactions
The Group has cash-settled share-based payment transactions for certain employees in certain countries due to legal requirements (in the form of share-
appreciation rights). The cost of cash-settled transactions is measured initially at fair value at the grant date. This fair value is expensed over the period
until the vesting date with recognition of a corresponding liability. The liability is remeasured to fair value at each reporting date up to, and including the
settlement date, with changes in fair value recognized in employee benefits expense.
Revenue from contracts with customers
The Group’s revenue, which is presented net of sales taxes, is primarily generated by the sale of our software and 3D printed products and services.
Software revenue is comprised of perpetual and periodic licenses, maintenance revenue and software development service fees. Perpetual license
holders may opt to take an annual maintenance contract, which leads to annual fees. Periodic licenses entitle the customer to maintenance, support and
product updates without additional charge. Revenue from prototypes and end products involving 3D printing technology is derived from our network of
production centers and may include support and services such as pre-production collaboration prior to the actual production.
The Group sells its products and software through its direct sales force and through authorized distributors.
Software license revenue, maintenance and/or software development service fees may be bundled in one arrangement, or may be sold separately.
The Group recognizes revenue for goods including software based on the five-step model per the requirements of IFRS 15.
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•
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•
Identify the contract(s) with a customer;
Identify the performance obligations in the contract;
Determine the transaction price;
Allocate the transaction price to the performance obligations in the contract; and
Recognize revenue when (or as) the entity satisfies a performance obligation.
Revenue from contracts with customers is recognized when control of the goods or services are transferred to the customer at an amount that reflects the
consideration to which the Group is expected to be entitled in exchange from those goods and services.
If the consideration in a contract includes a variable amount, the Group estimates the amount of consideration to which it will be entitled in exchange for
transferring the goods to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a
significant revenue reversal in the amount of cumulative revenue recognized will not occur when the associated uncertainty with the variable
consideration is subsequently resolved. Variable consideration is mainly related to quantities sold, volume (step-based) rebates and development time
spent.
Prototypes and end products involving 3D printing technology
The Group recognizes revenue on the sale of goods to the customer or distributor at a point in time when control of the asset is transferred, generally
upon shipment or delivery taking into account the shipment terms (usually Ex-works or FOB Time of Shipment Incoterms (International Commercial
Terms)).
Perpetual licensed software
The sale and/or license of software products is deemed to have occurred at a point in time, i.e. when a customer either has taken possession of or has the
ability to take immediate possession of the software and the software key.
Most of the perpetual software licenses include one year maintenance and support services as a separate performance obligation. The Company sells
these maintenance services also on a stand-alone basis and is therefore capable of determining their stand-alone selling price. On this basis, the amount
of the embedded maintenance is separated from the fee for the perpetual license and is recognized ratably over the period to which they relate.
Time-based licensed software
The time-based license agreements include the use of a software license for a fixed term and maintenance and support services during the same period.
The Company does not sell time-based licenses without maintenance and support services and therefore revenues are satisfied over time for the entire
arrangements and are recognized ratably over the term.
Maintenance and support services
Maintenance and support services are satisfied over time and as such, the Group recognizes this revenue ratably on a straight-line basis over the term
that the maintenance service is provided. In general, maintenance services are not automatically renewed.
A maintenance and support contract may include a reinstatement for previous years when the customer did not have a maintenance and support contract
previously. Revenue from reinstatements are recognized immediately when the maintenance and support services commence.
Software development services (SDS)
SDS include customized development of software components for customers. Revenue from SDS agreements when distinct from other performance
obligations is satisfied over time or at a point in time, depending whether one of the IFRS 15.35 criteria for performance obligations to be satisfied over
time is met or not. In case of recognition over time, revenue is recognized either on time and material basis or on the stage of completion of each service
when the percentage of completion can be measured reliably.
The Company determines the percentage-of-completion by comparing labor hours incurred to-date to the estimated total labor hours required to
complete the project. The Company considers labor hours to be the most reliable available measure of progress on these projects. Adjustments to the
Company’s estimates of the time to completion are made when facts resulting in a change become known. When the estimate indicates that a loss will be
incurred, such loss is recognized immediately.
In case of recognition at a point in time revenue is recognized when control over the product is transferred to the customer.
Contracts with multiple performance obligations
The Group has entered into a number of contracts with multiple performance obligations, such as when selling perpetual licenses that may include
maintenance and support (included in the price of perpetual licenses) and time-based licenses (that include embedded maintenance and support, both of
which may be sold with software development services, training, and other product sales). In some cases, the Group delivers software development
services bundled with the sale of the software.
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The Group evaluates whether each performance obligation is distinct from each other, i.e. the customer can benefit from the good or service on its own,
or with readily available resources. Certain development services significantly modify and/or enhance the software license and as such are not
considered distinct and combined with the software license.
In those contracts, whether sold to end-customers or to collaboration partners, the Group uses either price list, historical pricing information or
management’s best estimate of selling prices (e.g. also using a cost-plus method) to determine the stand-alone selling price for each distinct performance
obligation, including software and software-related services such as maintenance and support. In general, elements in such arrangements are also sold on
a stand-alone basis and stand-alone selling prices are readily available. If the stand-alone selling price of one or more goods or services in such
arrangements is highly variable or uncertain, the Group estimates the stand-alone selling price with reference to the total transaction price less the sum
of the observable stand-alone selling prices of other goods or services promised in the contract.
Revenue is allocated to each distinct performance obligation (“PO”) based on the relative percentage of the stand-alone selling price for each PO
compared to the total of stand-alone selling prices for all PO over the total transaction price and is recognized when the revenue recognition criteria
described above are met.
Contracts with collaboration partners in the medical segment also include multiple elements such as software, maintenance and support services,
training, software development services, 3D printed products and royalties. Revenue from those contracts is determined and recognized consistent with
other multiple element arrangements.
For certain contracts with collaboration partners, the Company receives up-front fees, paid by customers for certain exclusivity rights, which may be
bundled with transfer of title, rights and ownership of certain software products and maintenance and support services. In case the up-front fees do not
relate to already delivered good or services, the Group includes the up-front fees in the total transaction price which is then allocated to all the distinct
performance obligations. Other contracts with collaboration partners include prepaid fees to purchase a maximum number of “Plan Only” cases or case
‘bundles’ during a 12-month period. In this case, the prepaid fees are recognized over the period of 12 months based on the expected number of cases
that will be purchased.
Contract assets
A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Group performs by transferring goods
or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognized for the earned consideration
that is conditional. Contract assets are only contracts in progress that are disclosed with the line inventory and contracts in progress in the statement of
financial position. We refer to our accounting policies regarding Inventories and Contracts in Progress.
Contract liabilities
A contract liability is the obligation to transfer goods or services to a customer for which the Group has received consideration (or an amount of
consideration is due) from the customer. If a customer pays consideration before the Group transfers goods or services to the customer, a contract
liability is recognized when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognized as revenue when the
Group performs under the contract. Contract liabilities are presented as deferred income in the statement of financial position.
Contract costs
The Group does not have significant costs to obtain contracts and those costs are expensed as incurred.
The Group may have costs incurred in fulfilling contracts that are accounted for as intangible assets. When those costs are not in scope of another
standards, these costs are accounted for under contracts in progress (see contract assets). For certain contracts, the Group may have significant software
development expenses that are not considered a “distinct performance obligation” which are accounted for as an intangible assets. The Group evaluates
whether those costs meet the recognition criteria for an intangible assets and when criteria are not met, expenses those costs as incurred.
Government grants
Government grants are recognized when there is reasonable assurance that the grant will be received and all attached conditions will be complied with.
When the grant relates to development costs or another expense, it is recognized as income over the grant period necessary to match the income on a
systematic basis to the costs that it is intended to compensate. When the grant relates to the construction of buildings, it is recognized as income over the
depreciation period of the related building.
Such grants have been received from the federal and regional governments and from the European Union in the forms of grants linked to certain of its
research and development programs, reduced payroll taxes and the financing of the construction of an office building in Leuven (Belgium) and in
Freiberg (Germany).
Where retention of a government grant related to assets or to income, is dependent on the Company satisfying certain criteria, it is initially recognized as
deferred income. When the criteria for retention have been satisfied, the deferred income balance is released to other operating income in the
consolidated income statement on a systematic basis over the periods in which the entity recognizes as expenses the related costs for which the grants
are intended to compensate.
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Other financial income and expenses
Other financial income and expenses include mainly foreign currency gains or losses on financial transactions and bank related expenses.
Taxes
Current income tax
Income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities. The
tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.
Current income tax relating to items that are recognized directly in equity is recognized in equity and not in the income statement. Management
periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and
establishes provisions where appropriate.
Deferred tax
Deferred tax is calculated using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and
their carrying amounts for financial reporting purposes.
Deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets are recognized for all deductible temporary differences,
carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the
deductible temporary differences or the carry forward of unused tax credits and unused tax losses can be utilized. In order for any deferred tax assets to
be recognized, and at a minimum, the respective Materialise entity should have recorded a taxable profit in the current year and it should be probable
that a taxable profit will be achieved in the subsequent year.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient
taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed at each
reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled,
based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax
liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
Sales tax
Revenue, expenses and assets are recognized net of the amount of VAT, except:
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Where the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case the sales tax is
recognized as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
Receivables and payables that are stated with the amount of sales tax included.
The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of
financial position.
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Significant accounting judgments, estimates and assumptions
The preparation of the Group’s consolidated financial statements requires management to make judgments, estimates and assumptions that affect the
reported amounts of revenue, expenses, assets and liabilities, and related disclosures. Uncertainty about these assumptions and estimates could lead to
outcomes that require a material adjustment to the carrying amount of assets or liabilities for future periods.
The Group reviews its estimates, assumptions and judgments on an ongoing basis, including those related to revenue recognition, development
expenses, share-based payment transactions, income taxes, impairment of goodwill, intangible assets and property, plant & equipment and business
combinations, provisions for expected credit losses, convertible loans, equity instruments, useful lives of certain assets and leases.
The Group has based its assumptions and estimates on the parameters that were available when the consolidated financial statements were prepared.
However, existing conditions and assumptions about future developments, may change due to market changes or circumstances beyond the Group’s
control. Such changes are incorporated into the assumptions as they occur.
Revenue recognition
Our revenue recognition policy requires management to make significant estimates. Management analyzes various factors, including an evaluation of
specific transactions, historical experience, creditworthiness of customers and current market and economic conditions. Changes in judgments based
upon these factors may affect the timing and amount of revenues and expenses recognized and, consequently, the results of operations and financial
condition. Significant estimates and judgments relate to:
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Assessing whether a performance obligation is distinct in a bundled sales transactions;
Estimation of the variable considerations and the revenue constraint;
Estimation of stand-alone selling prices for each distinct performance obligation; and
The stage of completion of our custom development of software components for customers when revenues are satisfied over time.
The Group makes significant judgments when performing the assessment of whether a performance obligation is distinct from the other performance
obligations in a contract, i.e. whether the good or service has a benefit to the customer in its own or together with readily available resources and/or
whether the good or service is highly interrelated or constitutes a significant input with another good or service provided, or whether it significantly
modifies or tailors another good or service. The relevant assessments include but are not limited to the following:
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•
Whether the software license is distinct from the 3D printed guides — in most cases with contracts with collaborative partners in the
Materialise Medical segment, the software licenses are combined with the manufacturing of the 3D printed guides, as the software license
has no benefit to the customer without the manufacturing services.
Whether the development services are distinct from other performance obligations — in most cases these performance obligations are
distinct but for certain contracts, the software license may be combined with the license and the 3D printed guides as one distinct
performance obligation.
For stand-alone selling prices, the Group uses prices from price lists or historical prices for similar transactions. However, in certain cases such
information is not readily available and in those cases the Group estimates the stand-alone selling price based on a cost plus mark-up or other estimate.
In addition, for certain performance obligations such as development services, the stand-alone selling prices also require an estimate of the time required
to complete the development. If the Group determines that the stand-alone selling price of one or more goods or services in a multiple element
arrangement is highly variable or uncertain, the Group estimates the stand-alone selling price with reference to the total transaction price less the sum of
the observable stand-alone selling prices of other goods or services promised in the contract.
Certain contracts include estimates of variable considerations within the transaction price and assessing the revenue constraint, such as:
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Quantities/volume sold at fixed prices related to, but not limited to, the manufacturing of 3D printed products, software licenses sold,
maintenance renewals;
Contractual prices may vary based on volume purchased during a given period;
FTE expenses for development or other services billed on a time and material basis; and
Volume rebates.
The method used to estimate the variable consideration depends on the number of possible scenarios and the probability of each scenario. If there are
many possible scenarios with a high probability (each less than 50%), the Group will use the expected value method, while the most likely method is
used when there is a scenario with a higher probability (more than 50%).
Variable consideration is not constrained when the Group determines, based on historical experience, a high reliable business forecast and/or the time
frame of the estimates, that there is a high probability that it will not result in a future reversal of revenue.
We determine the stage of completion for development contracts satisfied over time by comparing the labor hours incurred to date with the estimated
total labor hours required to complete the project. We consider labor hours to be the most reliable, available measure of progress on these projects.
Adjustments to estimates are made in the period when facts that give rise to a change become known. When the estimate indicates that a loss will be
incurred, the loss is recorded in the relevant period. Significant judgments and estimates are involved in determining the percentage of completion for
each contract. Different assumptions can produce materially different results.
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Development expenses
Under IAS 38, internally generated intangible assets from the development phase are recognized if certain conditions are met. These conditions include
technical feasibility, the intention to complete, the ability to use or sell the asset under development, the availability of adequate technical, financial and
other resources to complete the development, the ability to reliabily measure the expenditure attributable to the intangible asset during development and
evidence of how the asset will generate probable future economic benefits. The cost of a recognized internally generated intangible asset includes all
directly attributable costs necessary to make the asset suitable for use as intended by management. In contrast, all expenditures arising from the research
phase are expensed as incurred.
Determining whether internally generated intangible assets from development should be recognized as intangible assets requires significant judgment,
particularly in determining whether the activities are considered research activities or development activities, whether the product enhancement is
substantial, whether completion of the asset is technically feasible considering a company-specific approach, the likelihood of future economic benefits
from sale or use, including an assessment of whether FDA approval will be obtained.
The Group has determined that the conditions for recognizing internally generated intangible assets from its own software, guides and other product
development activities are not met until shortly before the products are available for sale, unless either (i) the Group has strong evidence that the above
criteria are met and a detailed business plan is available showing that the asset will generate future economic benefits on a reasonable basis or (ii) the
development is done at the specific request of the customer, the Group intends to market the product to other parties than the customer, the development
is subject to an agreement and the substance of the agreement is that the customer will reimburse the Group for a significant portion of the development
costs incurred. As such, development expenditures that do not meet the above criteria and expenditures for the research phase of internal projects are
recognized in the consolidated income statement as incurred. This assessment is monitored by the Group on a regular basis.
The Group capitalized a total of K€2,659 of development expenses during 2021 of which:
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K€1,684 related to capitalized internal development expenses of our digital transformation program; and
K€975 related to the transformation of the platform architecture to enable our software products to make the transition from desktop to
(hybrid) cloud.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees based on the fair value of the equity instruments at the date at which they are
granted, and measures the cost of cash-settled transactions based on the fair value of the equity instrument at the date of reporting. The Group has
applied the Black-Scholes valuation model to estimate fair value. The use of this model requires management to make assumptions regarding the
volatility and expected life of the equity instruments. The assumptions used to determine fair value for share-based payment transactions are disclosed in
Note 14 and are as follows:
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•
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•
Volatility is determined based on the Group’s average annualized volatility;
The estimated life of the warrant is determined up to the first exercise period, which is typically the month after the vesting;
The fair value of the shares is determined based on the Group’s share price on Nasdaq on the date of issuance. For the grants prior to the
initial public offering, the fair value of the shares was estimated based on a discounted cash flow model with 3-year cash flow projections
and a multiple of EBITDA determined based on a number of listed industry peers in the 3D printing industry; and
The dividend yield is estimated based on the Group’s historical dividend payout. It is currently estimated at zero as no dividends have been
paid since inception.
Income taxes
Deferred tax assets are recognized only to the extent that it is probable that taxable profit will be available against which the deductible temporary
difference can be utilized. Significant management judgment is required to determine the amount of deferred tax assets that may be recognized, based on
the probable timing and level of future taxable profits, together with future tax planning strategies.
In order for any deferred tax assets to be recognized, and at a minimum, the respective Materialise entity should have recorded a taxable profit in the
current year and it should be probable that a taxable profit will be achieved in the subsequent year.
As at December 31, 2021, the Group had current and non-current receivables related to tax credits for an amount of K€4,717 (2020: K€4,647; 2019:
K€3,723)
As at December 31, 2021, the Group had K€58,161 (2020: K€50,538; 2019: K€37,440) of tax losses carried forward and unused Innovation Income
Deductions, of which K€35,578 related to Materialise NV (2020: K€27,878; 2019: K€25,172). These losses relate to the parent and subsidiaries that
have a history of losses, in countries where these losses do not expire and may not be used to offset taxable income elsewhere in the Group.
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With respect to the unused tax losses and Innovative Income Deduction of Materialise NV, no deferred tax assets have been recognized in 2021, 2020
and 2019, given that in view of the Belgian Patent Income Deduction and Innovation Income Deduction there is an uncertainty to which extent these tax
losses will be used in future years. As from July 1, 2016, the Innovation Income Deduction replaced the former Patent Income Deduction. Under the
grandfathering rule the Patent Income Deduction system could still be applied until June 30, 2021. The Belgian Patent Income Deduction allows
companies to deduct 80% of the qualifying gross patent income from the taxable basis. Under the Innovation Income Deduction system, companies can
deduct up to 85% of their net innovation income from the taxable basis. According to the Group’s policy the Company has assessed that no deferred tax
asset should be accounted for with respect to its unused tax losses and unused Innovation Income Deductions carried forward in Belgium.
With respect to the unused tax losses of the other entities, no deferred tax assets have been recognized in 2021, 2020 nor 2019 except for our tax unity in
Germany where we recorded a deferred tax asset of € 0.3 million related to 2020 losses, and Materialise Motion where we recorded a deferred tax asset
of € 1.8 million against a deferred tax liability of € 2.0 million as discussed in Note 4. The Group has not recognized deferred tax assets on unused tax
losses and Innovation Income Deduction totaling K€12,033 in 2021 (2020: K€22,661; 2019: K€10,737) given that it is not probable that sufficient
positive taxable base will be available in the foreseeable future against which these tax losses and Innovation Income Deduction can be utilized.
If all deferred tax assets related to tax losses carried forward and unused Innovation Income Deduction would meet the criteria for recognition, the net
result would have improved by K€12,033 in 2021 through a deferred tax benefit. This would represent the planned recovery of K€48,648 of carried
forward tax losses and Innovation Income Deduction in future periods. Further details on taxes are disclosed in Note 22.10.
Impairment of goodwill, intangible assets and property, plant & equipment and determination of the cash-generating-unit.
The Group has goodwill for a total amount of K€18,726 as at December 31, 2021 (2020: K€18,599; 2019: K€19,607) which has been subject to an
impairment test. The goodwill is tested for impairment based on a discounted cash flow model with cash flows for the next five years derived from the
budget and a residual value considering a perpetual growth rate. The value in use is sensitive to the discount rate used for the DCF model as well as the
expected future cash-inflows and the growth rate used for extrapolation purposes.
Also, as part of the impairment analysis, the Group needs to determine the different CGUs at the lowest non-aggregated level which requires the Group
to make judgments about application of the criteria to determine the CGUs based on the facts and circumstances how the entities and business units
within the CGU and within the Group operate and are monitored. The level of CGU may also have an impact on certain assumptions to make with
regard to transfer pricing.
The key assumptions used to determine the value in use for the different CGUs are disclosed and further explained in Note 5.
The Group capitalized development expenses in 2021 for a total amount K€2,659 (2020: K€4,541; 2019: K€1,328), including external acquired licences,
which as of December 31, 2021 were not yet in the condition as intended by management and as such not amortized. Those development expenses have
been subject to an impairment test based on a discounted cash flow model with cash flows derived from the latest business plan. The value in use is
sensitive to the discount rate used for the DCF model as well as the expected commercialization date for the products and the expected future cash
inflows after commercialization. We refer to the section on development expenses above for further explanations.
When events or changes in circumstances indicate that the carrying amount of the intangible assets and property, plant and equipment may not be
recoverable, we estimate the value in use for the individual assets, or when not possible, at the level of CGUs to which the individual assets belong.
During 2021 impairment charges have been recorded for K€177 (2020: K€4,606; 2019: K€0) related to the goodwill of Aldema (Metal Belgium).
Business combinations
We determine and allocate the purchase price of an acquired business to the assets acquired and liabilities assumed as of the business combination date.
Business combinations are discussed further in Note 4. The purchase price allocation process requires us to make significant estimates and assumptions,
including
•
•
•
estimated fair value of the acquired intangible assets;
estimated fair value of property, plant and equipment; and
estimated fair value of the contingent consideration.
The contingent consideration as included in the financial statements is recorded at fair value at the date of acquisition and is reviewed on a regular basis.
The fair value of the contingent consideration is based on risk-adjusted future cash flows of different scenarios discounted using appropriate interest
rates. The structure of the possible scenarios and the probability assigned to each one of them is reassessed by management at every reporting period and
requires judgement from management about the outcome and probability of the different scenarios as well as the evolution of the variables.
While we are using our best estimates and assumptions as part of the purchase price allocation process to accurately value assets acquired and liabilities
assumed at the date of acquisition, our estimates and assumptions are inherently uncertain and subject to refinement. Examples of critical estimates in
valuing certain of the intangible assets we have acquired or may acquire in the future include but are not limited to:
•
•
•
•
future expected cash flows from customer contracts and relationships, software license sales and maintenance agreements;
the fair value of the plant and equipment
the fair value of the deferred revenue; and
discount rates.
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Table of Contents
Provision for expected credit losses of trade receivables and contract assets
The Group uses a provision matrix to calculate ECLs for trade receivables and contract assets. The provision rates are based on days past due for
groupings of various customer segments that have similar loss patterns (i.e., by legal entity).
The provision matrix is initially based on the Group’s historical observed default rates. The Group will calibrate the matrix to adjust the historical credit
loss experience with forward-looking information. For instance, if forecast economic conditions (i.e., gross domestic product) are expected to deteriorate
over the next year which can lead to an increased number of defaults, the historical default rates are adjusted. At every reporting date, the historical
observed default rates are updated and changes in the forward-looking estimates are analyzed.
The assessment of the correlation between historical observed default rates, forecast economic conditions and ECLs is a significant estimate. The
amount of ECLs is sensitive to changes in circumstances and of forecast economic conditions. The Group’s historical credit loss experience and forecast
of economic conditions may also not be representative of customer’s actual default in the future.
Convertible debt instruments
At December 31, 2021 the Group holds convertible debt instrument issued by Fluidda which is measured at fair value through profit & loss. In
determining the fair value of those convertible debt instruments, the Group considers different contractual parameters such as the repayment and
conversion scenarios and dates. In addition, the Group needs to make significant estimates such as (i) the discount rate, (ii) the probabilities for each
repayment and conversion scenario, (iii) the amount of a qualified capital increase that will determine the conversion factor and (iv) the timing for each
repayment and conversion scenario.
The convertible loan granted to Fluidda in January 2019 has a notional amount of K€2,500. The carrying value of the convertible loan as at
December 31, 2021 amounted to K€3,554 which includes a fair value adjustment of K€316 recorded in financial income during 2020. Fluidda is a
private start-up company which offers turnkey contract research services for drug development and medical device development. Fluidda is currently
loss-making. The convertible loan has a duration of 7 years with a 10% annual interest rate which are capitalized. The Group has applied a discount
factor of 12.87% that is based on the estimated WACC of Fluidda reflecting the uncertainty in relation to the success of the company and the applied
estimates by the Group.
The Group previously granted a convertible loan to AM Flow in January 2020 with a notional amount of K€300. The loan was converted into shares of
AM Flow in September 2020 at a fair value of K€306.
Equity investment held in Essentium
The Group acquired an equity investment of K$3,300 in Essentium, a non-listed US company during 2018 and 2019. The Group has elected to measure
the equity investment at fair value with changes in fair value recognized in OCI. The fair value adjustment was estimated based on available information
related to the liquidity and the fund raising process of Essentium. Based on the valuation of a recent Series B capital round, the Group estimated the fair
value of its investment at December 31, 2020 at K€3,535 and recognized a fair value adjustment in OCI of K€489 for the year ended December 31,
2020. At the end of 2021 Essentium was facing significant liquidity issues and significant uncertainty related to the fund raising process, and started a
process of restructuring its organization. As a result of these elements, and considering the Group’s subordinate position as shareholder, the Group
remeasured the fair value of its investment to zero at December 31, 2021 and recognized a K€3,443 downward fair value adjustment in OCI for the year
ended December 31, 2021.
Changes in useful life for certain assets
We review the useful life of our definite lived intangible assets and property, plant and equipment on an annual basis considering the current facts and
circumstances available. This review resulted in 2019 in a re-assessment of the useful life for certain specific assets in the categories buildings, fixtures,
vehicles and machinery. We refer to Note 7 for the impact of the change in useful lives during the year 2019.
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Table of Contents
The intangibles with indefinite useful lives are reviewed each annual reporting to determine whether events and circumstances continue to support an
indefinite useful life.
Leases IFRS 16 – estimating the discount rate and probability of exercising extension options/termination options and purchase options
The Group cannot always determine the interest rate implicit in the lease contract and therefore, the Group has to estimate the incremental borrowing
rate to measure certain lease liabilities such as buildings. The Group uses for buildings the property yield as reference to determine the incremental
borrowing rate. For other assets, the Group generally uses the interest rate implicit in the lease contract or applies the incremental borrowing rate for a
portfolio of similar assets. The incremental borrowing rate reflects what the Group “would have to pay”, which requires estimation when no observable
rates are available or when they need to be adjusted to reflect the terms and conditions of the lease.
In addition, certain lease contracts may have extension options, termination options in case of property leases and/or purchase options in case of leases.
The Group estimates whether it is reasonable certain or not, whether those options will be exercised or not, which impact the lease term in case of
extension options and termination options and the period over which the lease assets are depreciated in case of purchase options.
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Table of Contents
4 Business Combinations
Business combination after the end of the reporting period
On April 9, 2021, the Group acquired an option to buy Link3D Inc.. On November 15, 2021, Materialise provided notice to Link3D of its intention to
exercise the option. The acquisition was completed on January 4, 2022. This acquisition was effectuated through the Group’s U.S. subsidiary,
Materialise USA, LLC. As a result of this transaction, Materialise USA has become the sole shareholder of Link3D. On January 4, 2022, the Group
completed the acquisition and obtained control of Link3D Inc.. Link3D is a an additive workflow and digital manufacturing software company. The
Group acquired 100% of voting equity interests in Link3D Inc. for a total consideration of K$ 30,200.
The acquisition of Link3D is expected to strengthen and accelerate the creation of the Materialise software platform, particularly for companies that are
scaling up their additive manufacturing operations to volume production. By integrating Link3D’s additive MES (Manufacturing Execution System)
solution with the Materialise Magics software suite into a unified, cloud-based software platform, manufacturers will be able to run and continuously
improve the most efficient, repeatable, automated and controlled processes to mass-produce identical or customized products. This process extends
beyond the actual 3D printing operations and creates a closer alignment between 3D printing and conventional manufacturing, signaling the removal of
the wall between both production environments.
At the time of approval for issue of these consolidated financial statements, the initial accounting for the business combination, including the purchase
price allocation, had not yet been completed. Furthermore, the fair values of assets acquired and liabilities assumed, and the amount of goodwill to be
recognized, had not yet been determined. Therefore, the related disclosures could not yet be made.
Acquisitions in 2021
The Group did not effect any business combinations in the course of 2021.
Acquisitions in 2020
Materialise Motion
The Group executed a share purchase agreement dated November 9, 2020 and acquired the remaining 50% of the shares of Materialise Motion NV
(“Materialise Motion”, formerly RS Print) for a total purchase consideration in cash of K€5,220. The debt of previous owner of K€655 related to the
called unpaid capital was transferred to the Group. Before this transaction, the Group already had a 50% interest in Materialise Motion. The fair value of
the previously held equity method investment was valued at K€770. The corresponding gain was presented within net other operating income for the
year ended December 31, 2020 (Note 22.6).
In determining the fair value of the previously held equity method investment, a strategic discount, a minority discount and a discount for lack of
marketability were considered in relation to the consideration paid for this transaction.
Simultaneously with the share purchase agreement, Materialise Motion and RS Scan International NV (“RS Scan”), the former co-shareholder of
Materialise Motion, entered into an asset purchase agreement regarding the acquisition by Materialise Motion of certain assets of RS Scan with closing
date on 9 November 2020 for a total purchase consideration in cash of K€3,000.
Materialise Motion is a Belgian-based company that specializes in manufacturing of orthopaedic and medical insoles and the development and
commercialization of hardware and software for foot pressure measurement.
The fair value of the identifiable assets and liabilities at the date of acquisition was assessed at:
in 000€
Assets
Developed technology
Customer relations
Other intangible assets
Property, plant & equipment
Right-of-use assets
Deferred tax assets
Other non-current financial assets
Inventory
Trade receivables
Other current assets
Cash & cash equivalents
Total Assets
Liabilities
Deferred tax liabilities
Loans & borrowings
Lease liabilities
Trade payables
Payroll related payables
Other liabilities
Total Liabilities
Total identified assets and liabilities
Goodwill
Acquisition price
Carrying
value at
acquisition
date
Fair value
adjustments
Fair value
at acquisition
date
—
—
86
220
24
1,743
64
794
1,096
1,001
189
5,217
—
(1,877)
(24)
(645)
(85)
(262)
(2,893)
2,324
—
—
4,820
248
2,862
—
—
(46)
—
265
—
—
—
8,149
(2,003)
—
—
—
—
—
(2,003)
6,146
1,175
—
4,820
248
2,948
220
24
1,698
64
1,059
1,096
1,001
189
13,366
(2,003)
(1,877)
(24)
(645)
(85)
(262)
(4,896)
8,470
1,175
9,645
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Table of Contents
The cash flow from the business combination was as follows:
Cash & cash equivalents acquired
Acquisition price in cash RS Print shares
Acquisition price in cash RS Scan assets
Total cash flow
(189)
5,220
3,000
8,031
The fair values of the identifiable assets and liabilities included in our consolidated financial statements as per December 31, 2020 were provisional as
the final valuation had not been completed by the date these consolidated financial statements were approved for issue by the board of directors. As of
October 2021, we completed the fair value analysis of the Materialise Motion business combination, which resulted in corresponding adjustments to the
goodwill, consolidated reserves and deferred tax assets and deferred tax liabilities. The fair value of the identified assets and liabilities was K€1,743
higher than the provisional value at date of acquisition, with a corresponding reduction in goodwill of K€1,743. We refer to Note 2 for the detailed
impact of the retrospective adjustment resulting from the final accounting of the Materialise Motion business combination.
The accounting for the business combination resulted in fair values at date of acquisition of K€4,820 for developed technology based on the relief-from-
royalty valuation method with royalty rates between 8.00% and 10.00% (remaining useful life of 7 years), K€248 for customer relationships based on
the multi-period excess earnings method (remaining useful life of 15 years) and K€2,862 for contracts based on the multi-period excess earnings method
(remaining useful life of 7 years). A fair value adjustment was identified of K€265 for the inventory. At the same time, a deferred tax liability was
recognized of K€(2,049) on these adjusted fair values. Upon the completion of the accounting for the business combination in 2021, the deferred tax
assets were adjusted by K€1,743. The discount rate (post-tax WACC) used for the valuation was set at 15.80%. The carrying value of the acquired
receivables, the trade and other receivables approximate their fair value due to the short term character of these instruments.
There are no contingent considerations payable.
The goodwill recognized is primarily attributable to the trained and knowledgeable workforce and to the expected synergies that will be realized at the
level of development, manufacturing and the existing customer base. The goodwill is not deductible for income tax purposes.
Acquisitions in 2019
Engimplan
The Group executed a share purchase agreement dated August 6, 2019 and acquired 40% of the shares and voting interest of Engimplan Engenharia de
Implante Indústria e Comércio Ltda (referred to as “Engimplan”) for a total purchase consideration in cash of K€6,647.
As part of this transaction, the Group increased its shareholding in Engimplan to 75% with a capital increase of K€5,750 in cash in Engimplan.
The Brazilian-based company is specialist in manufacturing of orthopaedic and cranio-maxillofacial (CMF) implants and instruments.
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Table of Contents
The fair value of the identifiable assets and liabilities at the date of acquisition were:
in 000€
Assets
Software
Customer relations
Trademarks
Other intangible assets
Property, plant & equipment
Right-of-use assets
Other non-current financial assets
Inventory
Trade receivables
Other current assets
Cash from capital increase
Cash & cash equivalents
Total Assets
Liabilities
Deferred income
Loans & borrowings
Lease liabilities
Trade payables
Tax payables
Payroll related payables
Other liabilities
Total Liabilities
Total identified assets and liabilities
Goodwill
Non-controlling interest
Acquisition price
The cash flow from the business combination was as follows:
Cash & cash equivalents acquired
Cash from capital increase
Acquisition price in cash
Total cash flow
Carrying
value at
acquisition
date
214
—
—
9
2,268
633
3
2,084
1,802
391
5,750
316
13,470
(83)
(1,443)
(633)
(271)
(100)
(298)
(914)
(3,742)
9,728
—
—
—
Fair value
adjustments
Fair value
at acquisition
date
214
2,530
556
9
3,106
633
3
2,180
1,802
391
5,750
316
17,490
(83)
(1,443)
(633)
(271)
(100)
(298)
(914)
(3,742)
13,748
2,071
(3,422)
12,397
—
2,530
556
—
838
—
—
96
—
—
—
—
4,020
—
—
—
—
—
—
—
—
4,020
—
—
—
(316)
(5,750)
12,397
6,331
The fair values of the identifiable assets and liabilities included in our consolidated financial statements per December 31, 2019 were provisional as the
final valuation had not been completed by the date these consolidated financial statements were approved for issue by the board of directors. As of July
16th, 2020, we completed the fair value analysis of the Engimplan business combination, which resulted in corresponding adjustments to the goodwill,
property, plant and equipment. The fair value of the identified assets and liabilities were K€736 higher than the provisional value at date of acquisition,
with a corresponding reduction in goodwill of K€567 and increase of non-controlling interest of K€169.
The accounting for the business combination resulted in fair values at date of acquisition of K€2,530 for customer relationships, K€556 for trademarks;
to property, plant and equipment a final fair value of K€3,106 was attributed. A fair value adjustment was identified of K€96 for the inventory. The
carrying value of the acquired receivables, the trade and other receivables approximate their fair value due to the short term character of these
instruments
There are no contingent considerations payable.
The goodwill recognized is primarily attributable to the trained and knowledgeable workforce and to the expected synergies that will be realized at the
level of manufacturing and the existing customer base. The goodwill is not deductible for income tax purposes.
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Table of Contents
5 Goodwill
The goodwill has been allocated to the cash generating units (“CGU”) as follows:
As of December 31,
in 000€
CGU: MAT Software
CGU: e-Prototypy
CGU: ACTech
CGU: OrthoView
CGU: MAT NV Manufacturing (Metal)
CGU: Engimplan
CGU: Materialise Motion*
Total
2021
2020*
749
743
2019
3,241 3,241 3,241
800
8,812 8,812 8,812
4,755 4,445 4,683
—
177
— — 1,894
1,175 1,175 —
18,726 18,599 19,607
177
* The year 2020 has been adjusted retrospectively to reflect the final accounting of the business combination with Materialise Motion. See additional
information in Notes 2 and 4.
The changes in the carrying value of the goodwill can be presented as follows for the years 2021, 2020 and 2019:
in 000€
At January 1, 2019
Additions
Currency translation
At December 31, 2019
Additions
Impairment
Currency translation
At December 31, 2020*
Additions
Impairment
Currency translation
At December 31, 2021
Gross
17,595
1,864
252
19,711
1,175
—
(816)
20,070
—
—
304
20,374
Impairment
(104)
—
—
(104)
—
(1,367)
—
(1,471)
—
(177)
—
(1,648)
Total
17,491
1,864
252
19,607
1,175
(1,367)
(816)
18,599
—
(177)
304
18,726
* The year 2020 has been adjusted retrospectively to reflect the final accounting of the business combination with Materialise Motion. See additional
information in Notes 2 and 4.
The goodwill of Orthoview (UK) and e-Prototypy (PL) include respectively K€310 and K€(6) impact of currency translation in 2021.
The Group has performed an impairment test for all CGUs, estimating the Value-in-Use based on a discounted cash flow model with cash flows for the
next five years derived from the budget and a residual value considering a perpetual growth rate. The MAT Software CGU is included in the reportable
segment “Materialise Software”. The CGUs ACTech, e-Prototypy (PL), MAT NV Manufacturing (Metal) and Materialise Motion are included in the
reportable segment “Materialise Manufacturing”. The CGU Orthoview (UK) is included in the reportable segment “Materialise Medical”.
CGU: MAT Software
The goodwill allocated to the CGU MAT software relates to the goodwill from the acquisition of Cenat in 2015 and the goodwill related to the
acquisition of Marcam in 2011 (DE-3D Printing Software).
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Table of Contents
The impairment test is based on the discounted cash flows resulting from the CGU MAT Software, considering a period of five years. The main
assumptions for goodwill impairment testing include a discount rate (based on WACC) of 7.40% (8.06% pre-tax) and a perpetual growth rate of 5%.
Other assumptions include the year-on-year growth rate of the revenue, gross margin and the operating costs which has been determined by management
based on past experience. It was concluded that the value in use is higher than the carrying value of the cash generating unit of K€42,170. Based on the
sensitivity analyses performed by the Group, including analyses whereby the discount rate would increase by 100 basis points or the perpetual growth
rate would be zero, there are no reasonably possible changes in assumptions that would reduce the value in use below the carrying value of the cash
generating unit.
CGU e-Prototypy
The goodwill relates to the acquisition of the Polish entity e-Prototypy . The impairment test on the CGU e-Prototypy is based on the discounted cash
flows considering a period of five years. The main assumptions include a discount rate (based on WACC) of 9.90% (11.30% pre-tax) and a perpetual
growth rate of 2%. Other assumptions include the year-on-year growth rate of the revenue, gross margin and the operating costs which has been
determined by management based on past experience and continued investments in capex in new 3D printing equipment. It was concluded that the value
in use is significantly higher than the carrying value of the cash generating unit of K€3,519. Based on the sensitivity analyses performed by the Group,
including analyses whereby the discount rate would increase by 100 basis points or the perpetual growth rate would be zero, there are no reasonably
possible changes in assumptions that would reduce the value in use below the carrying value of the cash generating unit.
CGU ACTECH
The impairment test on the CGU ACTech is based on the discounted cash flows, considering a period of 5 years. The main assumptions include a
discount rate (based on WACC) of 6.36% (8.72% pre-tax) and a perpetual growth rate of 1%. Other assumptions include the year-on-year growth rate of
the revenue, gross margin and the operating costs which have been determined by management based on past experience. It was concluded that the value
in use is higher than the carrying value of the cash generating unit of K€25,932. Based on the sensitivity analyses performed by the Group, including
analyses whereby the discount rate would increase by 100 basis points or the perpetual growth rate would be zero, there are no reasonably possible
changes in assumptions that would reduce the value in use below the carrying value of the cash generating unit.
CGU Orthoview
The goodwill relates to the acquisition of Orthoview. The impairment test on the CGU Orthoview is based on the discounted cash flows considering a
period of 5 years. The main assumptions include a discount rate (based on WACC) of 8.05% (9.60% pre-tax) and a perpetual growth rate of 1%. Other
assumptions include the year-on-year growth rate of the revenue, gross margin and the operating costs which have been determined by management
based on past experience. It was concluded that the value in use is higher than the carrying value of the cash generating unit of K€12,460. Based on the
sensitivity analyses performed by the Group, including analyses whereby the discount rate would increase by 100 basis points or the perpetual growth
rate would be zero, there are no reasonably possible changes in assumptions that would reduce the value in use below the carrying value of the cash
generating unit.
The Orthoview business is being integrated further in the existing software business within our Materialise Medical segment. Synergies that are
expected from joined product lines are not taken into account in the current impairment review as management believes that Orthoview can still be
considered a separate cash generating unit in 2021.
CGU MAT NV Manufacturing Metal (Aldema)
The goodwill related to the acquisition of the Belgian entity Aldema BV in 2015, classified under the CGU Metal Prodution in Belgium. With the
Materialise Metal Competence Center established in Bremen, Germany, the carrying value of this asset decreased to 0 resulting in the full impairment of
the K€177 goodwill.
CGU Engimplan
The impairment test on the CGU Engimplan is based on the discounted cash flows, considering a period of 5 years. The main assumptions include a
discount rate (based on WACC) of 15.49% (18.17% pre-tax) and a perpetual growth rate of 7%, supported by an expected long term inflation rate of
3.5%, continued growth opportunities from the increase of the standard of living in Brazil (including access to medical and health care insurances), a
growing population in Brazil and export opportunities in Latin America. Other key assumptions include the year-on-year growth rate of the revenue,
gross margin and the operating costs which have been determined by local & new management based on past experience. At December 31, 2020, the
Group has recorded a full impairment of the goodwill of K€1,367 as well as a partial impairment on customer lists and trade marks for respectively
K€942 and K€207. The impairment test at December 31, 2021, did not indicate the need for a further impairment nor for a reversal of the previously
recorded impairment charges. Based on the sensitivity analysis performed by the Group whereby the perpetual growth rate would decrease by 100 basis
points, the value in use would be K€25 below the carrying value of the cash generating unit. Based on the sensitivity analysis performed by the Group
whereby the discount rate would increase by 100 basis points, the value in use would be K€194 below the carrying value of the cash generating unit.
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Table of Contents
CGU Materialise Motion
The impairment test on the CGU Materialise Motion is based on the discounted cash flows, considering a period of 5 years. The main assumptions
include a discount rate (based on WACC) of 7.40% (9.00% pre-tax) and a perpetual growth rate of 1%. Other assumptions include the year-on-year
growth rate of the revenue, gross margin and the operating costs which have been determined by management based on past experience. It was
concluded that the value in use is higher than the carrying value of the cash generating unit of K€8,103. Based on the sensitivity analyses performed by
the Group, including analyses whereby the discount rate would increase by 100 basis points or the perpetual growth rate would be zero, there are no
reasonably possible changes in assumptions that would reduce the value in use below the carrying value of the cash generating unit.
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Table of Contents
6 Intangible assets
The changes in the carrying value of the intangible assets can be presented as follows for the years 2021, 2020 and 2019:
in 000€
Acquisition value
At December 31, 2018
Additions
Acquisition of a subsidiary
Disposals
Transfer between accounts
Currency translation
Other
At December 31, 2019
Additions
Acquisition of a subsidiary
Disposals
Transfer between accounts
Currency translation
Other
At December 31, 2020
Additions
Acquisition of a subsidiary
Disposals
Transfer between accounts
Currency translation
Other
At December 31, 2021
Patents and
licenses
Software
4,294
209
38
—
(109)
1
3
4,436
378
—
(226)
75
(1)
—
4,662
660
—
(153)
272
1
—
5,442
8,241
656
214
(45)
1,601
(10)
10
10,667
3,072
—
(2,227)
47
(65)
—
11,494
70
—
(23)
162
6
—
11,709
Acquired
customers,
technology
25,579
—
3,048
(32)
—
86
—
28,681
—
7,931
—
—
(1,128)
—
35,484
—
—
—
2
386
—
35,872
Developed
technology
and
software
under
construction
1,315
1,328
9
—
(988)
20
(32)
1,652
3,168
86
(68)
(180)
—
—
4,658
3,058
—
(65)
(496)
0
—
7,155
Total
39,429
2,193
3,309
(77)
504
97
(19)
45,436
6,618
8,017
(2,521)
(58)
(1,194)
—
56,298
3,788
—
(242)
(60)
393
—
60,177
F-38
Table of Contents
in 000€
Amortization & Impairments
At December 31, 2018
Amortization charge for the year
Disposals
Transfer between accounts
Currency translation
Other
At December 31, 2019
Amortization charge for the year
Impairments
Disposals
Transfer between accounts
Currency translation
Other
At December 31, 2020
Amortization charge for the year
Impairments
Disposals
Transfer between accounts
Currency translation
Other
At December 31, 2021
Net carrying value
At December 31, 2021
At December 31, 2020
At December 31, 2019
At January 1, 2019
Patents and
licenses
Software
(2,661)
(246)
—
109
—
—
(2,798)
(465)
—
211
0
1
0
(3,051)
(392)
—
107
(1)
(1)
—
(3,337)
(5,080)
(2,582)
23
(96)
(25)
20
(7,740)
(2,223)
—
2,119
109
14
0
(7,721)
(1,831)
(231)
23
(33)
(5)
(41)
(9,839)
Acquired
customers,
technology
and
backlogs
(5,362)
(2,031)
—
—
(126)
16
(7,503)
(2,021)
(1,149)
—
0
240
0
(10,433)
(2,523)
—
—
(0)
(287)
—
(13,244)
Developed
technology
and
software
under
construction
—
—
—
—
—
—
—
—
(2,090)
(22)
0
—
0
(2,112)
—
—
—
22
—
—
(2,090)
Total
(13,103)
(4,859)
23
13
(151)
36
(18,041)
(4,709)
(3,239)
2,308
109
255
0
(23,317)
(4,746)
(231)
131
(12)
(293)
(41)
(28,510)
2,105
1,611
1,638
1,633
1,869
3,773
2,927
3,161
22,628
25,051
21,178
20,217
5,065
2,546
1,652
1,315
31,668
32,981
27,395
26,326
Patent and licenses include only the directly attributable external costs incurred in registering the patent and obtaining the license. Software relates to
purchased software for internal use and in-house developed technology. The remaining amortization period is 1.1 years for the main software purchases
and 5.6 years for the main patents and licenses.
The ‘Acquired customers and technology’ have been recognized as part of the acquisition of Materialise Motion, Engimplan, ACTech, E-Prototypy,
OrthoView, and Cenat (see Note 4). At December 31, 2021, the remaining amortization period for the acquired customers is 13.83 years for Materialise
Motion, 7.58 years for Engimplan, 15.75 years for ACTech, 2.75 years for OrthoView, fully amortized for E-Prototypy and 3.25 years for Cenat . At
December 31, 2021, the remaining amortization period for the acquired technology and contracts is 5.83 years for Materialise Motion.
The net book value of developed technology and software under construction at December 31, 2021 relates primarily to the internal digitalization
program and the transformation of our platform architecture.
The total amortization charge for 2021 is K€4,746 (2020: K€4,709; 2019: K€4,859). As from 2017 the amortization of intangible assets from business
combinations is mainly included in the line net operating income of the consolidated income statement.
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Table of Contents
7 Property, plant & equipment
The changes in the carrying value of the property, plant & equipment can be presented as follows for the year 2021, 2020 and 2019:
in 000€
Acquisition value
At January 1, 2019
Impact of adoption of IFRS 16
Additions
Acquired from business combinations
Disposals
Transfers
Currency Translation
Other
At December 31, 2019
Additions
Acquired from business combinations
Disposals
Transfers
Currency Translation
At December 31, 2020*
Additions
Disposals
Transfers
Currency Translation
At December 31, 2021
Depreciation
At January 1, 2019
Depreciation charge for the year
Acquired from business combinations
Disposals
Transfers
Currency Translation
Other
At December 31, 2019
Depreciation charge for the year
Disposals
Transfers
Currency Translation
At December 31, 2020
Depreciation charge for the year
Disposals
Transfers
Currency Translation
At December 31, 2021
Net book value
At December 31, 2021
At December 31, 2020
At December 31, 2019
At January 1, 2019
Land and
buildings
Plant and
equipment
Right-of-use
assets
Construction
in progress
Total
45,777
—
302
61
(37)
(3,360)
150
—
42,893
256
—
—
(15)
(717)
42,417
462
—
4,099
183
47,161
(6,071)
(1,199)
—
36
200
(25)
220
(6,839)
(1,223)
—
(11)
66
(8,007)
(1,344)
—
(143)
(92)
(9,586)
77,557
—
7,363
3,046
(6,091)
7,077
199
(73)
89,078
2,600
220
(2,953)
7,961
(2,486)
94,420
5,259
(3,682)
6,673
598
103,268
(33,307)
(9,162)
—
5,704
(1,551)
(190)
(34)
(38,540)
(10,205)
2,632
(3,961)
872
(49,202)
(10,590)
3,594
(1,595)
(380)
(58,173)
37,575
34,410
36,054
39,706
45,095
45,218
50,538
44,250
14,327
4,984
3,429
633
(753)
117
8
(1,099)
21,646
4,567
24
(1,657)
(4,010)
(423)
20,147
2,397
(1,191)
(1,249)
103
20,207
(8,441)
(4,058)
—
359
1,031
(2)
51
(11,060)
(3,504)
1,518
3,810
85
(9,151)
(3,640)
1,166
515
(41)
(11,151)
9,056
10,996
10,586
5,886
3,002
—
5,807
17
—
(4,338)
6
(80)
4,414
8,175
—
(38)
(3,886)
(26)
8,639
2,213
(779)
(8,296)
4
1,781
(307)
—
—
—
307
—
—
—
—
—
—
—
—
—
—
—
—
—
140,663
4,984
16,901
3,757
(6,881)
(504)
363
(1,252)
158,031
15,598
244
(4,648)
50
(3,652)
165,623
10,331
(5,652)
1,227
888
172,417
(48,126)
(14,419)
—
6,099
(13)
(217)
237
(56,439)
(14,932)
4,150
(162)
1,023
(66,360)
(15,574)
4,760
(1,223)
(513)
(78,910)
1,781
8,639
4,414
2,695
93,507
99,263
101,592
92,537
F-40
Table of Contents
The investments in property, plant & equipment and right-of-use assets in 2021 amounted to K€10,331 (2020:K€15,598). They are mainly related to
new machines and installations (K€3,635), land and buildings (K€2,224), IT equipment (K€2,126) and leased vehicles (K€769). The investments in
2020 related to new machines and installations (K€5,011), land and buildings (K€7,580), IT equipment (K€1,056) and leased vehicles (K€1,714). The
investments in 2019 related to new machines and installations (K€7,757), land and buildings (K€4,865), IT equipment (K€1,268) and leased vehicles
(K€1,119).
The Group realized a net loss on disposal of property, plant and equipment of K€210 in 2021 (2020: a net loss of K€10; 2019: a net loss of K€165).
No impairment of property, plant and equipment was recorded in 2021, 2020 and 2019.
The transfers in 2021 within property, plant and equipment are mainly related to
•
•
the transfers from construction in progress towards Land & Buildings and Plant & Equipment of K€8,296 is mainly related to the new
metal production site in Bremen.
the transfer from Right-of-Use of assets to Plant and Equipment due to the obtaining of the ownership for a net book value of K€168.
Assets under construction
Per December 31, 2021 the main assets under construction were related to our new metal production facility in USA for an amount of K€547 and a
printer for our plastic production in Belgium for K€540.
Changes in useful life for certain assets in 2019
The Group reviews the useful life for the intangible assets and property, plant and equipment on an annual basis considering the current facts and
circumstances available. This review resulted in 2019 in a re-assessment of the useful life for certain specific assets in the categories buildings, fixtures,
vehicles and machinery. The impact of the change in useful life during the year 2019 resulted in a decrease of the depreciation charges for the year
ended December 31, 2019 by K€1,147. The depreciation charge for 2020 and 2021 was calculated to decrease by K€478 and K€276 respectively. The
effect will be neutralized in 2028 for machines, in 2033 for fixtures and in 2048 for buildings.
The right of use assets can be presented as follows:
The carrying value of Right-of-Use assets at December 31, 2021 was K€9,054 (2020: K€10,996; 2019: K€10,586). Right-of-Use assets are mainly
related to buildings with a carrying value of K€4,419 at December 31, 2021 (2020: K€4,917; 2019: K€3,783) and for which depreciation of K€1,794
was recorded in 2021 (2020:K€1,620; 2019:K€1,953). New leases in 2021 amount to K€2,396 of which K€1,624 related to leased buildings
(2020:K€2,397; 2019:K€2,855).
F-41
Table of Contents
in 000€
Acquisition value
At January 1, 2020
Additions
Acquired from business combinations
Modifications
Disposals
Currency Translation
Transfers
Other
At December 31, 2020
Additions
Disposals
Currency Translation
Transfers
At December 31, 2021
Depreciation
At January 1, 2020
Depreciation charge for the year
Disposals
Transfers
Currency Translation
Other
At December 31, 2020
Depreciation charge for the year
Disposals
Currency Translation
Transfers
At December 31, 2021
Net book value
At December 31, 2021
At January 1, 2021
Buildings
Vehicles
Equipment
Total
6,488
2,397
—
—
(1,214)
(372)
275
—
7,574
1,624
(1,022)
96
(151)
8,121
(2,705)
(1,620)
1,175
446
47
—
(2,657)
(1,794)
639
(41)
151
(3,702)
4,275
1,738
—
—
(291)
(10)
(1,157)
—
4,555
710
(268)
3
(112)
4,888
(2,030)
(1,129)
272
992
4
—
(1,891)
(1,236)
257
(2)
74
(2,798)
10,883
433
24
—
(152)
(41)
(3,129)
—
8,018
62
(281)
3
(605)
7,197
(6,325)
(755)
71
2,373
33
—
(4,603)
(610)
270
2
289
(4,652)
21,646
4,568
24
—
(1,657)
(423)
(4,011)
—
20,147
2,396
(1,571)
102
(868)
20,206
(11,060)
(3,504)
1,518
3,811
84
—
(9,151)
(3,640)
1,166
(41)
514
(11,152)
4,419
4,917
2,090
2,664
2,545
3,415
9,054
10,996
The following amounts related to leases are recognized in profit & loss
(in 000€)
Depreciation expense
Interest expense on lease liabilities
Expenses related to short-term leases/ low-value assets/ variable lease payments
2021
(3,640)
(289)
(537)
The Group has negotiated several contracts with extension and termination options because of common practice in the country or for the asset.
Management has exercised significant judgments in determining whether these extension and termination options are reasonably certain to be exercised.
The potential future cash flows beyond the period following the exercise of the extension and termination option that are not included in the lease term
are presented in the following table:
(in 000€)
Potential (non-discounted) cash flows for terminations options that are not reasonably certain
to be exercised:
Potential (non-discounted) cash flows for extensions options that are reasonably certain to be
exercised
2021
3,015
1,560
Pledges
Land and buildings (including buildings under construction) with a carrying amount of K€24,451 (2020: K€25,364; 2019: K€26,270) are subject to
pledges to secure several of the Group’s bank loans. In addition, pledges have been given on machines with a total carrying amount of K€1,131 (2020:
K€2,274; 2019: K€2,884) (Note 24).
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8 Investments in joint ventures
As at December 31, 2021, Materialise has no investments in joint ventures.
The changes in the carrying value of the joint ventures can be presented as follow for the years 2021, 2020 and 2019:
in 000€
Carrying value as of December 31, 2018
Additional investment
Transfer from receivables
Share in loss
Carrying value as of December 31, 2019
Additional investment
Transfer from receivables
Share in loss of the Joint venture
Gain from remeasurement previously held equity method investment at fair value
Accounted for as Business Combination
Carrying value as of December 31, 2020
Additional investment
Transfer to receivables
Share in loss of the Joint venture
Gain from remeasurement previously held equity method investment at fair value
Accounted for as Business Combination
Carrying value as of December 31, 2021
9 Inventories and contracts in progress
Inventories and contracts in progress include the following:
in 000€
Raw materials
Work in progress
Finished goods
Contracts in progress
Total inventories and contracts in progress
—
875
(444)
(392)
39
—
—
(39)
770
(770)
—
—
—
—
—
—
—
As of December 31,
2021
2020
2019
6,246 4,974 7,400
2,383 1,766 2,806
2,171 2,554 1,995
495
11,295 10,043 12,696
495
749
Inventory written-off on the balance sheet amounted to K€1,196 for the year ended December 31, 2021 (2020: K€567; 2019: K€526). The expenses are
recorded in Cost of Sales.
The Group has contracts in progress and advances from customers. The total costs incurred is K€426 and the profit recognized is K€69 as per
December 31, 2021. Advances were received for the amount of K€11 with respect to contracts in progress per end of 2021 (2020: K€146; 2019: K€22).
F-43
Table of Contents
10 Other assets
Other non-current assets
Other non-current assets include the following:
Investments in convertible loans
in 000€
Convertible loan
Total
As of December 31,
2021
2020
2019
3,560 6,203 2,750
3,560 6,203 2,750
The Group granted a convertible loan to Fluidda in January 2019, with a notional amount of K€2,500. The convertible loan is accounted for as a
financial asset measured at fair value with changes in fair value through the income statement. The carrying value of the convertible loan amounts to
K€3,560 at December 31, 2021. The convertible loan has a duration of 7 years with a 10% annual interest rate which is capitalized. We refer to Note 3
and Note 20.
Investments in non-listed equity instruments
in 000€
Non-listed equity investments
Total
As of December 31,
2020
2021
2019
399 3,842 3,046
399 3,842 3,046
At December 31, 2021, the Group remeasured the fair value of its equity investment in Essentium, Inc. to zero, recognizing a K€3,443 fair value
adjustment in other comprehensive income. We refer to Note 3 and Note 20.
In addition, Materialise continues to hold an equity investment in AM Danube BV (holding company for AM Flow Holding BV), which had a fair value
of K€307 at December 31, 2021. We also refer to Note 3 and Note 20.
The remainder of K€92 relates to an investment in the African Drive NV, which runs the African Drive project in Benin.
Other non-current assets
in 000€
Tax credits
Guarantees and deposits
Non-current receivable on joint venture
Loan to Link3D incl capitalized interest
LT deferred charges
Other
Total
As of December 31,
2020
2021
2019
4,044 3,381 3,015
447 528 415
— — 138
2,249 — —
741 — —
38 184
27
7,519 4,093 3,595
The non-current tax credits mainly relate to Belgian R&D tax credits, recoverable between 2023 and 2027.
On February 3, 2021, the Group concluded an interim loan agreement with Link3D, Inc. (“Link3D”) for the principal amount of K$700. In connection
wih the call option entered into as of April 9, 2021, the Group has concluded an additional loan for the principal amount of K$1,800 million. The
aggregate principal amount of K$2,500, carries interest based on the Prime rate (3.25% for 2021) and has a maturity date of April 9, 2031. As set out in
Note 4, the Group completed the acquisition of Link3D on January 4, 2022.
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Table of Contents
Other current assets
Other current assets include the following:
in 000€
Deferred charges
Tax credits
Accrued income
Other tax receivables
Grants
Other non-trade receivables
Total other current assets
As of December 31,
2021
2020
2019
2,958 2,841 2,632
673 1,243 695
384 260 486
1,459 1,125 3,127
1,021 1,181 754
2,445 1,640 922
8,940 8,290 8,616
The other tax receivables included Value Added Tax (VAT) receivables and corporate tax receivables. The other non-trade receivables as at
December 31, 2021 included the value of the option purchased by the Group to acquire Link3D, for an amount of $ 2 million.
F-45
Table of Contents
11 Trade receivables
The trade receivables include the following:
in 000€
Trade receivables
Allowance for doubtful accounts
Total
As of December 31,
2021
2019
2020
42,814 32,346 42,509
(1,273) (1,475) (1,532)
41,541 30,871 40,977
Trade receivables are non-interest bearing and are generally on payment terms of 30 to 90 days.
As at December 31, 2021, trade receivables of an initial value of K€1,273 (2020: K€1,475; 2019: K€1,532) were impaired as part of the expected credit
losses analysis. Impairment is accounted for under the other operating expenses. See below for changes in the impairment of receivables.
in 000€
At January 1, 2019
Addition
Usage
Reversal
At December 31, 2019
Addition
Usage
Reversal
At December 31, 2020
Addition
Usage
Reversal
At December 31, 2021
F-46
(1,873)
(141)
131
351
(1,532)
(852)
301
608
(1,475)
(689)
259
632
(1,273)
Table of Contents
12 Cash and cash equivalents
Cash and cash equivalents include the following:
in 000€
Cash at bank
Cash equivalents
Total
2021
As of December 31,
2020
192,895 108,399 123,337
5,560
196,028 111,538 128,897
3,133
3,139
2019
For the year ended December 31, 2021, cash at banks in euro earned a negative interest (K€223), based on floating interest rates. Cash at banks in other
currencies earns interest at floating rates based on daily bank deposit rates. Cash equivalents include short-term deposits which are made for varying
periods between one day and three months, depending on the immediate cash requirements of the Group, and earn interest at the respective short-term
deposit rates.
There were no cash balances on a restricted bank account per December 31, 2021, 2020 or 2019.
F-47
Table of Contents
13 Equity
Share capital
The share capital of the parent company Materialise NV consists of 59,063,521 ordinary nominative shares at December 31, 2021 (2020: 54,169,257;
2019: 53,172,513) with no nominal but par value of €0.076 in 2021 (2020: €0.076; 2019: €0.058) for a total amount of K€4,487 at December 31, 2021
(2020:K€4,096; 2019:K€3,066).
in 000€, except share data
Outstanding at Jauary 1, 2019
Capital increase through exercise of warrants
Equity-settled share-based payments expense
Outstanding at December 31, 2019
Capital increase through exercise of warrants
Capital increase through exercise of convertible bonds
Equity settled share-based payments expense
Merger with Ailanthus NV
Cancellation treasury shares (Ailanthus NV)
Outstanding at December 31, 2020
Capital increase through exercise of warrants
Capital increase through public offering
Equity settled share-based payments expense
Outstanding on December 31, 2021
Total
number of
ordinary
shares
52,890,761
281,752
—
53,172,513
487,840
508,904
—
13,428,688
(13,428,688)
54,169,257
294,264
4,600,000
—
59,063,521
Total share-
holders’
capital
3,050
16
—
3,066
30
1,000
—
1,862
(1,862)
4,096
22
371
—
4,489
Total share-
premium
136,637
1,252
201
138,090
3,082
—
103
—
—
141,275
2,322
90,235
41
233,872
The shareholders’ capital increased by K€22 in 2021 as a result of the exercise of warrants outstanding and fully vested. The number of new shares
issued was 294,264 at an average price of €8,0 per share, including share premium.
The shareholders’ capital increased by K€371 in 2021 as a result of the capital increase through public offering. The number of new shares issued was
4,600,000 at an average price of €19.7 per share, including share premium.
Share premium
In Belgium, the portion of the capital increase in excess of par value is typically allocated to share premium.
The carrying value of the share premium is K€233,872 at December 31, 2021 (2020: K€141,275; 2019: K€138,090). The change in 2021 is the result of:
•
•
•
The capital increase via exercise of warrants of K€2,322; and
The share-based payment expense of K€41;
The public offering of K€90,235
The change in 2020 is the result of the share-based payment K€103 and the capital increase via exercise of warrants of K€3,082. The change in 2019 is
the result of the share-based payment expense of K€201 and the capital increase via exercise of warrants of K€1,252.
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Table of Contents
Other reserves
The nature and purpose of the other reserves is as follows:
in 000€
Legal reserve
Other reserves
Equity-settled share-based payment expense
Other Comprehensive Income (loss)
Other reserves
As of December 31,
2020
2021
279
279
1,987 2,574
72
2019
279
(335)
72
(9,087) (7,796) (1,394)
(6,749) (4,871) (1,378)
72
Based on the statutory result and after final result allocation approved by the annual shareholders meeting the legal reserve is increased by reserving 5%
of the yearly statutory profit until the legal reserve reaches at least 10% of the shareholders’ capital. The legal reserve cannot be distributed to the
shareholders.
The Group did not pay any dividend during 2021, 2020 and 2019.
Other comprehensive loss
Other comprehensive loss consists of the following:
in ‘000€
At January 1, 2019
Currency translation impact
At December 31, 2019
Currency translation impact
Fair value adjustment
Acquisition non-controlling interest—OCI
At December 31, 2020
Currency translation impact
Fair value adjustment
At December 31, 2021
Currency
Translation
Differences &
Other
Fair value
adjustment
equity
investments
(1,850)
456
(1,394)
(6,025)
—
(866)
(8,285)
2,152
—
(6,133)
—
—
—
—
489
—
489
—
(3,443)
(2,954)
Total OCI
attributable to
the shareholder
(1,850)
456
(1,394)
(6,025)
489
(866)
(7,796)
2,152
(3,443)
(9,087)
Non-controlling interest
In 2019 a non-controlling interest was recognized for 25% held by a third party in Engimplan for an amount of K€3,276 per end of 2019.
As of December 1, 2020, Materialise acquired the remaining 25% non-controlling interest held by a third party in Engimplan in return for the Spine
business line. The non-controlling interest with a carrying amount of K2,213 was derecognized.
As of June 22, 2021, the Group, together with Zhenyuan (Tianjin) Medical Appliances Technology Co., Ltd., incorporated a new subsidiary with the
name Tianjin Zhenyuan Materialise Medical Technology Limited Company. This entity will be responsible for all regulatory requirements regarding the
Materialise Mimics Enlight Lung Software on the Chinese market. Both Materialise and Zhenyuan will work on development and distribution, in a
collaborating manner. Materialise holds 51% of the shares, Zhenyuan 49%. In 2021, in respect of this majority-owned subsidiary, a non-controlling
interest has been recognized, which had a carrying value of K€1 at December 31, 2021.
RapidFit+
At October 8, 2021, PMV, who owned 16.66% of the shares of our subsidiary RapidFit NV, executed their put option at the redemption amount of
K€875. Prior to the execution, this put option was recognized as a financial liability and measured at the fair value of the redemption amount.
F-49
Table of Contents
14 Share-based payment plans
Share-based payment plans of the parent
The changes of the year for the warrant plans are as follows:
Outstanding at January 1
Granted
Forfeited / Cancelled
Exercised
Outstanding at December 31
Exercisable at December 31
2021
2019
—
—
(7,193) (41,443)
2020
407,722 965,052 1,318,049
—
(42,952)
(317,579) (515,887) (310,045)
82,950 407,722 965,052
78,405 123,305 296,859
The Group’s share-based payment plans are all equity-settled except for the IPO warrants that have been granted to certain employees in certain
countries due to legal requirements which are cash-settled. The outstanding amount includes stock appreciation rights (“SARs”) issued under cash-
settled share-based payment plans.
The number of outstanding warrants has been adjusted to reflect the 1-to-4 stock split decided in June 2014. The 2013 warrant plan gives a right to four
shares for each warrant, whereas under all other warrant plans one warrant gives a right to one share. For presentation purposes the tables reflect the
number of shares the warrants give right to across all plans.
Equity-settled share-based payment plans
The Group has several plans in place (2013 warrant plan, IPO warrant plan and 2015 warrant plan) which have similar terms except for the exercise
price, except for the 2015 warrant plan.
2013 warrant plan
Each warrant gives the right to the holder to four ordinary shares of the parent Company. The warrants have a contractual term of ten years and vest for
25% in the fourth year; 25% in the fifth year; 25% in the sixth year; and 25% in the seventh year. Warrants are exercisable as from the month after they
have vested and in the subsequent exercise periods. There are no cash settlement alternatives and the Group does not have a practice of cash settlement
for these warrants. The warrants have a contractual term of ten years.
Under the 2013 warrant plan 301,096 warrants were effectively granted in October 2013 and 166,800 warrants were granted to certain employees and to
certain members of our board of directors and senior management on November 28, 2013 with an exercise price ranging from €7.86 to €8.54.
The status of the 2013 warrant plan at December 31 is as follows:
Outstanding at January 1
Granted
Forfeited / Cancelled
Exercised
Outstanding at December 31
Exercisable at December 31
2019
2020
2021
— 118,376 300,040
—
—
—
(3,500)
— (116,501) (178,164)
— 118,376
—
— 15,300
—
—
(1,875)
No warrants remained outstanding under the 2013 warrant plan at December 31, 2021.
IPO warrant plan
Each warrant gives the right to the holder to one ordinary share of the parent Company. The warrants have a contractual term of 10 years and vest for
25% in the fourth year; 25% in the fifth year; 25% in the sixth year and 25% in the seventh year. Warrants are exercisable as from the month after they
have vested and in the subsequent exercise periods. There are no cash settlement alternatives and the Group does not have a practice of cash settlement
for these warrants. The warrants have a contractual term of 10 years.
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The Group granted 979,898 warrants in July 2014 and 36,151 warrants in November 2014 in the context of the initial public offering to the employees
of the Group with an exercise price of €8.81 (“IPO warrant plan”). The Group granted an additional 18,180 warrants to employees in July 2015 under
the IPO warrant plan.
The status of the IPO warrant plan at December 31 is as follows:
Outstanding at January 1
Granted
Forfeited / Cancelled
Exercised
Outstanding at December 31
Exercisable at December 31
2021
2019
—
2020
236,726 465,212 589,052
—
(3,372) (27,247) (20,252)
(179,764) (201,239) (103,588)
53,590 236,726 465,212
49,045 95,575 169,071
—
With respect to the warrants exercised in 2021, a total of 179,764 warrants representing 179,764 shares were exercised in the last quarter. The share
price at exercise date was $23.31.
Warrant plan 2015
The board of directors decided on December 18, 2015 on a new plan (“2015 warrant plan”) by which it can grant up to 1,400,000 warrants to
employees. Each warrant gives the right to the holder to one ordinary share of the parent Company. The warrants vest for 10% on the second anniversary
of the granting; 20% on the third anniversary of the granting; 30% on the fourth anniversary of the granting; and 40% on the fifth anniversary of the
granting, unless otherwise decided by the board of directors or one or more of its representatives granted powers thereto. Warrants are exercisable only
after they have vested and only during a period of (i) four weeks following the publication of the results of the parent Company of the second and fourth
quarter, or (ii) if no quarterly results are published, during the month March and the month September of every year. There are no cash settlement
alternatives and the Group does not have a practice of cash settlement for these warrants. The warrants have a term of ten years.
The Group granted 350,000 warrants in July 2016 to the employees of the Group with an exercise price of €6.45. The Group granted 2,000 warrants to
an employee in May 2018 with an exercise price of €10.08.
The status of the 2015 warrant plan at December 31 is as follows:
Outstanding at January 1
Granted
Forfeited / Cancelled
Exercised
Outstanding at December 31
Exercisable at December 31
2021
2020
2019
—
(2,000)
133,900 310,400 325,200
— —
(6,400) (14,800)
(114,500) (170,100) —
17,400 133,900 310,400
17,400 15,100 96,500
With respect to the warrants exercised in 2021, a total of 114,500 warrants representing 114,500 shares were exercised. The weighted average share
price at exercise date was $23.35.
Fair value
The fair value of the warrants is estimated at the grant date using the Black-Scholes option pricing model, taking into account the terms and conditions
upon which the warrants were granted.
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The following table provides the input to the Black-Scholes model for the 2013 warrant plan, IPO warrant plan and 2015 warrant plan:
Return dividend
Expected volatility
Risk-free interest rate
Expected life
Exercise price (in €)
Stock price (in €)
Fair value SAR (in €)
2015
(Sept 16)
0%
47%
0.24%
4.30
6.45
6.42
2.41
2015
(Nov)
0%
47%
1.17%
5.50
8.81
8.08
3.30
IPO 2014
(Nov)
IPO 2014
(June)
0%
50%
1.12%
5.50
8.81
8.67
3.94
0%
46%
1.70%
5.50
8.81
8.81
3.83
2013
(Dec) *
0%
50%
2.56%
5.50
8.54
18.09
12.23
2013
(Oct) *
0%
53%
2.43%
5.50
7.86
18.09
12.77
(*)
Exercise price, stock price and fair value are not adjusted for the 1 to 4 stock-split completed in June 2014.
The above input for the Black-Scholes model have been determined based on the following:
•
•
•
•
•
The dividend return is estimated by reference to the historical dividend payments of the Group. Currently, this is estimated to be zero as no
dividends have been paid since inception;
Expected volatility is estimated based on the average annualized volatility of the volatility of the Group’s stock (until September 2016: of a
number of quoted peers in the 3D printing industry and the volatility of the Group’s stock);
Risk-free interest rate is based on the interest rate applicable for the 10Y Belgian government bond at the grant date;
Estimated life of the warrant is determined to be until the first exercise period which is typically the month after vesting; and
Fair value of the shares is determined based on the share price of the Group on Nasdaq at the date of valuation. For the grants prior to the
initial public offering, the fair value of the shares was estimated based on a discounted cash flow model with 3-year cash flow projections
and a multiple of EBITDA determined based on a number of quoted peers in the 3D printing industry.
The expense arising from share-based payment transactions for the warrant plans mentioned above was K€41 (2020: K€102; 2019: K€401)
The weighted average remaining estimated life of the warrants outstanding as of December 31, 2021 is 3.13 years (2020: 4.31 years; 2019: 5.20 years).
The weighted average fair value for the warrants outstanding at the end of 2021 was €3.39 (2020: €3.29; 2019: €4.48). The weighted average exercise
price for the warrants outstanding at the end of 2021 was €8.07 (2020: €7.92; 2019: €7.88).
Cash-settled share-based payment plans
The Group has issued 215,688 SARs in July 2014 towards certain employees in certain countries due to legal requirements with similar terms and
conditions as the IPO warrant plan except that the SAR will be settled in cash. The exercise price of the SAR is €8.81.
The status of this plan is as follows:
Outstanding at January 1
Granted
Forfeited / Cancelled
Exercised
Outstanding at December 31
Exercisable at December 31
2021
2019
2020
37,096 71,064 103,757
— — —
(1,821) (5,921)
(4,400)
(23,315) (28,047) (28,293)
11,960 37,096 71,064
11,960 12,630 15,988
The SAR plan grants the bearer the right to a cash payment equal to the difference between the exercise price and the stock price at the exercise date.
This plan is considered a cash settled share based payment and is as such recorded as a liability (see Note 16).
The SARs have a contractual term of ten years and vest for 25% in the fourth year; 25% in the fifth year; 25% in the sixth year and 25% in the seventh
year. SARs are exercisable as from the month after they have vested and in the subsequent exercise periods.
The fair value of the SAR is estimated at each reporting date using the Black-Scholes option pricing model, taking into account the terms and conditions
upon which the warrants were granted.
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The following table lists the input used for the Black-Scholes model:
Return dividend
Expected volatility
Risk-free interest rate
Expected life
Exercise price (in €)
Stock price (in €)
Fair value SAR (in €)
2021
2020
0%
80%
0.18%
0.25
8.81
21.05
12.26
0%
84%
-0.34%
0.25
8.81
44.20
35.38
2019
0%
49%
0.10%
0.25
8.81
16.32
7.52
The expense arising from share-based payment transactions for the SARs plan was K€(874) in 2021 (2020: K€1,242; 2019: K€ -11). The carrying value
of the liability at December 31, 2021 amounts to K€147 (2020: K€1,223; 2019: K€574). The total intrinsic value of the liability for warrants currently
exercisable at December 31, 2021 amounts K€147 (2020: K€447; 2019: K€120).
Share-based payment plans of RapidFit+
The subsidiary RapidFit+ has issued a warrant plan on August 23, 2013 where a maximum of 300 warrants can be offered to management with an
exercise price of €553.90. In January 2014, a total of 199 warrants were granted and accepted.
The changes for the year for the RapidFit+ warrant plan are as follows:
Outstanding at January 1
Granted
Forfeited / Cancelled
Exercised
Outstanding at December 31
Exercisable at December 31
The following table lists the input to the Black-Scholes model for the RapidFit+ warrant plan:
Return dividend
Expected volatility
Risk-free interest rate
Expected life
Exercise price
Fair value option
2021 2020 2019
186 186 199
— — —
— — (13)
— — —
186 186 186
186 186 184
2014
0%
50%
2.29%
5.5
553.9
262.7
The expense arising from share-based payment transactions for RapidFit+ warrant plan was K€2 in 2021 (2020: K€2; 2019: K€2)
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15 Loans and borrowings
The loans and borrowings include the following:
in 000€
K€35,000 EIB bank loan
K€28,000 acquisition bank loan
K€18,000 secured bank loans
K€12,300 bank loans ACTech
K€9,050 other facility loans
Bank investment loans—top 20 outstanding
Bank investment loans—other
Lease liabilities
Institutional loan
Convertible bonds
Related party loan
Total loans and borrowings
Current
Non-Current
2019
2021
As of December 31
2020
33,333 35,000 35,000
15,604 18,621 21,612
16,592 17,013 17,429
8,160 10,470 11,850
2,248 2,910
3,599
12,852 17,280 22,132
4,429
1,569 2,681
9,876
8,621 10,624
824
—
353
1,000
— —
187
158
99,107 115,110 127,938
21,202 17,523 16,838
77,905 97,588 111,100
128
K€35,000 EIB bank loan
On December 20, 2017 the Group entered into a finance contract with the European Investment Bank, or EIB, to finance future research and
development programs. As part of a first tranche, an amount of K€10,000 was drawn in the course of 2018. The agreement foresees a first two-year
period without loan reimbursements. Loans under the contract are made at a fixed rate, based on the Euribor rate at the time of the borrowing, plus a
variable margin. The interest rate for this loan is 2.40%. The contract contains customary security, covenants and undertakings. A second tranche of
K€25,000 was drawn in the course of 2019 with an interest rate of 2.72%. A pledges have been given on moveable assets as well as a pledge over the
shares.
On June 29, 2020, the European Investment Bank temporarily waived the compliance obligation of the covenants “Total gross Debt to Adjusted
EBITDA” (until December 31, 2022), and “Adjusted EBITDA to Net financial charges” (until 31 December 2020) under the condition that the covenant
“Total net debt to Adjusted EBITDA” will be met for the period. In addition, the European Investment Bank agreed not to recalculate the interest rate
until January 3, 2022 for the first tranche and until January 17, 2022 for the second tranche. Finally, the European Investment Bank waived “the
subsidiary financial indebtedness” covenant for the calculation period ending on June 30, 2020. For the periods thereafter this covenant has been eased.
These covenants were waived in order to allow the Group to continue investing in its growth programs, even under stressed COVID-19 scenarios. At
December 31, 2021, The Group was in compliance with all debt covenants including those that have been waived, as a result of the additional capital
raised during 2021, the solid Adjusted EBITDA, and the decrease of our gross debt position.
During 2021 a first reimbursement of K€1,666 was made.
K€28,000 Acquisition loan
This bank loan has been concluded in October 2017 to finance the acquisition of ACTech. The loan includes a portion of K€18,000 reimbursable
monthly during seven years, and a bullet portion of K€10,000, reimbursable at once in October 2024. The interest rate is fixed for the duration of the
loan, and amounts to 1.1% on average for both portions. The bank loans are secured with a business pledge mandate, a share pledge on Materialise
Germany GMBH, and debt covenants.
K€18,000 secured bank loans
The K€18,000 loan has been concluded in 2016 in two agreements to finance the construction of new facilities in Leuven (Belgium) and in Poland, both
maturing in 2032. The agreement for the Belgian facility financing amounts to K€12,000; and with reimbursements only starting in December 2022. The
agreement for the Polish facility financing amounts to K€6,000, and reimbursements have started in June 2019. The average interest rate of both
agreements amounts to 1.2%. The bank loan is secured with a mortgage mandate on the Belgian facility buildings.
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Table of Contents
K€12,300 bank loans
In March 2018, three bank loans originating from the acquired ACTech Group were refinanced entirely for the amount of K€9,300, with adjusted
maturity to May 2025 and first reimbursements in August 2020. The interest rate has been fixed at approximately 1.6%, and pledges including a
K€4,650 mortgage on ACTech’s facilities and a guarantee of Materialise NV. In addition, a new investment credit of K€3,000 was obtained in June
2018, repayable as from January 2019 and with a fixed interest rate of 1.5%.
K€9,050 - Other facility loans
Three facility loans were contracted in 2005, 2006 and 2012 for the construction of Leuven office and production facilities (K€2,000, K€300 and
K€5,000, respectively) and another loan for the Czech Republic offices in 2008 (K€1,750). The balance of the four loans amounts to K€2,248 per
December 31, 2021. All loans have a repayment schedule of 15 years and interest rates are fixed between 4.3% and 5.4% for the four loans.
Miscellaneous investment loans
The 20 largest of these loans outstanding as at December 31, 2021 amount to a balance of K€12,852. They have been agreed in 2020 and in the years
before to finance various investments in machinery, printers, equipment, and software tools. The vast majority of the loans have a reimbursement period
over seven years, and are at fixed interest rates with weighted average below 1%.
K€8,621 Lease liabilities included lease with related party
The Group has several lease obligations mainly with financial institutions and related to the financing of buildings and various other items of plant and
equipment such as 3D printers. As at December 31, 2021 the balance of these lease agreements amounts to K€8,621, and are mostly at fixed interest
rates with weighted average below 2%.
The total cash outflow from the lease liabilities amounts to K€3,775 in 2021, K€3,640 in 2020 and K€5,283 in 2019.
K€2,000 institutional loan
This loan was contracted with a governmental institution in Germany to finance the production operations of Materialise Germany for a maximum
amount of K€2,000. The loan is repayable over a four year period, starting as of September 2017 with a fixed interest rate of 0.25% payable per quarter.
As at December 31, 2021 no balance remains outstanding under this loan.
K€1,000 convertible bond with related party
On October 9, 2020, 1,000 convertible bonds with a related party for a total amount of K€1,000 were converted to 509,904 shares.
Related party loan
Lunebeke NV, a related party of the Group as discussed in Note 26, has granted the Group a loan of K€400 at fixed interest rate of 4.23% that matures in
2025. The purpose of the loan is to finance the purchase of a building in France. The amount outstanding as of December 31, 2021 is K€128 (2020:
K€158; 2019: K€187). The interest expense for the year ended December 31, 2021 is K€5 (2020:K€7; 2019:K€9).
Changes of liabilities for financing activities:
The following table presents the changes of the liabilities for financing activities:
in 000€
At January 1,
Proceeds from loans & borrowings
Repayment of loans & borrowings
New leases
Repayment of leases
Loans acquired from business combination
Net foreign exchange movements
At December 31,
F-55
2021
For the year ended December 31
2019
2020
115,110 127,938 106,038
— — 29,000
(14,277) (13,736) (12,126)
4,626
2,355
8,326
(5,283)
(3,775)
(3,640)
2,076
— —
(92)
(78)
99,107 115,110 127,938
(306)
Table of Contents
16 Other non-current liabilities
The other non-current liabilities consist of the following:
in 000€
Advances received on contracts
Provisions
Other
Total
As of December 31,
2021 2020 2019
1,500 — —
667 318 122
— 80 574
2,167 398 696
The increase of the provision relates to a provision for the potential of reclassification of our self-employed workers into employees within Engimplan
(K€541).
The advances received on contracts were paid by a client in the context of a long term contract for medical devices.
The impact of the accounting treatment of the Belgian contribution plans with a minimal guarantee is not material as the number of beneficiaries is
limited. No provisions have been recognized as of December 31, 2021, 2020 and 2019. As such, no further disclosures have been provided.
17
Tax payables
The tax payables amount to K€783 as per December 31, 2021 (2020:K€974; 2019:K€3,363).
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Table of Contents
18 Deferred income
Deferred income consists of the following:
in 000€
Deferred maintenance & license
Deferred (project) fees
Deferred government grants
Total
current
non-current
As of December 31
2021
2020
2019
34,287 30,242 27,667
3,537 4,555 4,647
358
38,259 34,882 32,672
33,307 29,554 27,641
4,952 5,328 5,031
435
85
The deferred maintenance and license revenue consists of maintenance and license fees paid up-front which are deferred and recognized in earnings over
either the maintenance period or the duration of the license. The deferred (project) fees consist of one-time and advance payments received which are
deferred in accordance with the revenue accounting policies. The deferred government grants are recognized as income under “other operating income”.
We refer to Note 22.1.2 for more detail on the contract liabilities.
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Table of Contents
19 Other current liabilities
Other current liabilities include the following:
in 000€
Payroll-related liabilities
Non-income tax payables
Accrued charges
Advances received
RapidFit+ amounts payable to former shareholders
Derivatives
Cash settled share-based payment plan
Other current liabilities
Total
The non-income tax payables mainly relate to VAT payables and payroll taxes.
F-58
As of December 31
2020
2021
2019
11,836 11,152 10,281
2,058 3,018 2,262
995 1,080
1,170
715
404
276
875
875
—
118
478
140
147 1,223 —
888 1,995
367
15,972 18,695 17,686
Table of Contents
20
Fair value
Financial assets
The carrying value and fair value of the financial assets as of December 31, 2021, 2020 and 2019 are as follows:
in 000€
Financial assets
Financial assets measured at amortized cost
Trade receivables (current)
Other financial assets (non-current)
Other current non-trade receivables
Cash & cash equivalents
Total financial assets measured at amortised cost
Financial assets at fair value through profit or loss
Derivatives
Convertible loan
Total financial assets measured at fair value through profit and loss
Financial assets at fair value through OCI
Non-listed equity investments
Total financial assets at fair value through OCI
2021
Carrying value
2020
2019
2021
Fair value
2020
2019
2,696
1,696
41,541 30,871 40,977 41,541 30,871 40,977
580
580
1,676
1,676
196,028 111,538 128,897 196,028 111,538 128,897
241,961 144,739 172,130 241,961 144,739 172,130
712
1,618
712
1,618
2,696
1,696
1,770
3,560
5,330
23
6,203
6,226
9
2,750
2,759
399
399
3,842
3,842
3,046
3,046
The fair value of the financial assets has been determined on the basis of the following methods and assumptions:
•
•
•
•
•
•
•
•
The carrying value of the cash and cash equivalents and the current receivables approximate their fair value due to their short term
character;
The fair value of the derivatives has been determined based on a mark-to-market analysis prepared by the bank based on observable market
inputs (level 2 inputs);
Other current non-trade receivables are being evaluated on the basis of their credit risk and interest rate. Their fair value is not different
from their carrying value on December 31, 2021, 2020 and 2019
Other non-current financial assets are being evaluated on the basis of their credit risk and interest rate which are considered as level 2
inputs. Their fair value is not considered different from their carrying value given the related interest rate is revised on a regular basis.
The non-listed equity investments, mainly representing the investment AM Flow (via an investment in AM Danube, one of the
shareholders of AM Flow) for K€307, are measured at fair value. As of December 31, 2021, management considers that currently the cost
is an appropriate estimate of fair value (level 2 input) because a recent capital increase indicated that the market valuation of AM Flow has
not changed and because of the followings reasons:
•
•
•
•
AM Flow is a non-listed entity;
The Group only has an insignificant interest in AM Flow BV (approx. 5% of the shares indirectly);
The Group has no representatives in the Board of Directors of AM Flow BV; and
Insufficient more recent information is available to measure fair value;
For the non-listed equity investment in Essentium, as of December 31, 2021, Materialise recorded a remeasurement of fair value to zero
through OCI (K€3,443).
The derivatives include the option acquistion for Link3D for $ 2 million, discussed further in Note 4. The fair value is not different from
the carrying value on December 31, 2021, and was determined based on level 3 inputs.
The convertible loan granted to Fluidda was measured at fair value. As of December 31, 2021, management determined the fair value
based upon level 3 inputs as follows:
•
The Group determined that the fair value of the convertible loan as at December 31, 2021 amounted to K€3,560. Fluidda is a private
start-up company which offers turnkey contract research services for drug development and medical device development. Fluidda is
currently loss-making. The convertible loan has a duration of 7 years with a 10% annual interest rate which are capitalized. The
Group has applied a discount factor of 12.87% that is based on the estimated WACC of Fluidda reflecting the uncertainty in relation
to the success of the company and the applied estimates by the Group.
In assessing the fair value, the Group has made significant estimates with regard to the discount rate, the probability of each repayment and
conversion scenario and related timing, the amount of the qualified capital increase. Changes in the significant assumptions may lead to a
significant increase/decrease in the fair value of the convertible loan. A increase/decrease in the applied discount rate for Fluidda by 1% would
lead to a change in fair value by K€(46) / K€48.
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Table of Contents
Financial liabilities:
The carrying value and fair value of the financial liabilities as of December 31, 2021, 2020 and 2019 can be presented as follows:
in 000€
Financial liabilities measured at amortized cost
Loans & Borrowings including lease liabilities
Trade payables
Other liabilities excl. written put option on NCI
Total financial liabilities measured at amortized cost
Financial liabilities measured at fair value
Contingent consideration
Cash settled share based payments
Written put option on NCI
Derivatives
Total financial liabilities measured at fair value
Total non-current
Total current
2021
Carrying value
2020
2019
2021
Fair value
2020
2019
99,108 115,110 127,939 100,417 116,843 128,930
20,171 17,698 18,517 20,171 17,698 18,517
3,187
119,764 134,084 149,643 121,073 135,816 150,634
1,275
3,187
1,276
485
485
— — — — — —
147
—
118
265
1,223 —
875
478
1,353
79,905 98,543 112,549
40,124 37,779 38,447
875
140
2,238
The fair value of the financial liabilities has been determined on the basis of the following methods and assumptions:
•
•
•
•
•
The carrying value of current liabilities approximates their fair value due to the short term character of these instruments;
Loans and borrowings are evaluated based on their interest rates and maturity date. Most interest bearing debts have fixed interest rates and
their fair value is subject to changes in interest rates and individual creditworthiness. Their carrying value approximates their fair value;
The fair value of the derivatives has been determined based on a mark-to-market analysis prepared by the bank based on observable market
inputs (level 2 inputs);
The fair value of the written put option on non-controlling interest has been determined based on the present value of the redemption
amount (level 3 inputs);
The fair value of the cash-settled share based payments has been determined based on a Black-Scholes model using inputs that are level 1
(stock-price and risk-free interest rate) as well as level 2 (e.g. volatility). We refer to Note 14.
Fair value hierarchy 3 evolution
Convertible Loans Ditto & Fluidda
in 000€
As at 1 January
Addition
Remeasurement
Capitalized interests
Reimbursement Ditto convertible loan
As at 31 December
Fair value hierarchy
Written Put Option on NCI RapdFit+
in 000€
As at 1 January
Remeasurement
Payout put-option PMV
As at 31 December
F-60
Fair Value Evolution
2020
2021
2019
6,203
—
—
—
(2,643)
3,560
2,750
2,830
316
307
—
6,203
—
2,500
—
250
—
2,750
Fair Value Evolution
2020
2021
875
—
(875)
—
875
—
—
875
2019
845
30
—
875
Table of Contents
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
•
•
•
Level 1: quoted (unadjusted) prices in active markets for identical assets and liabilities;
Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or
indirectly; and
Level 3: techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.
The Group has the following financial instruments carried at fair value in the statement of financial position on December 31, 2021, 2020 and 2019: the
derivatives related to interest rate and foreign currency swaps as included in the above tables, a call option and written put option on non-controlling
interest and the non-listed equity investments.
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Table of Contents
21
Segment information
For management purposes, the Group is organized into segments based on their products, services and industry and has the following three reportable
segments:
•
•
•
The Materialise Medical segment, which develops and delivers medical software solutions, medical devices and other related products and
services;
The Materialise Manufacturing segment, which delivers 3D printed products and related services; and
The Materialise Software segment, which develops and delivers additive manufacturing software solutions and related services.
The measurement principles used by the Group in preparing this segment reporting are also the basis for segment performance assessment and are in
conformity with IFRS. The Chief Executive Officer of the Group acts as the chief operating decision maker. As a performance indicator, the chief
operating decision maker controls the performance by the Group’s revenue and adjusted EBITDA.
The following table summarizes the segment reporting for each of the reportable periods ending December 31. Corporate research and development,
headquarters’ function, financing and income taxes are managed on a Group basis and are not allocated to operating segments. As management’s
controlling instrument is mainly revenue-based, the reporting information does not include assets and liabilities by segment and is as such not available
per segment.
in 000€
For the year ended December 31, 2021
Revenues
Segment Adjusted EBITDA
Segment Adjusted EBITDA %
For the year ended December 31, 2020
Revenues
Segment Adjusted EBITDA
Segment Adjusted EBITDA %
For the year ended December 31, 2019
Revenues
Segment Adjusted EBITDA
Segment Adjusted EBITDA %
Materialise
Software
Materialise
Medical
Materialise
Manufacturing
Total
segments
Unallocated
Consolidated
42,902
15,705
73,368
20,669
89,180
6,275
205,450
42,649
36.6%
28.2%
7.0%
20.8%
39,054
13,383
61,729
13,915
69,635
2,548
170,418
29,846
34.3%
22.5%
3.7%
17.5%
41,654
13,812
60,808
10,774
94,156
12,154
196,618
36,740
33.2%
17.7%
12.9%
18.7%
—
(10,159)
—
31
(9,468)
—
61
(10,084)
—
205,450
32,490
15.8%
170,449
20,378
12.0%
196,679
26,656
13.6%
The segment Adjusted EBITDA is reconciled with the consolidated net profit (loss) for the year as follows:
in 000€
Segment Adjusted EBITDA
Depreciation, amortization and impairment
Corporate research and development
Corporate headquarter costs
Other operating income (expense)
Fair value adjustment 50% Materialise Motion
Impairments
Operating (loss)/ profit
Financial expenses
Financial income
Income taxes
Share in loss of joint venture
Net profit (loss) for the year
For the year ended December 31,
2019
2020*
2021
36,740
42,649
29,847
(19,278)
(19,775)
(20,516)
(1,859)
(2,824)
(2,948)
(11,077)
(11,719)
(10,317)
2,410
3,668
3,527
—
770
—
—
(4,606)
(177)
6,936
(4,639)
12,217
(3,682)
(5,995)
(4,101)
2,452
5,620
1,377
(2,595)
1,028
(591)
(392)
(39)
—
1,644
(7,193)
13,145
*
The year 2020 has been retrospectively adjusted to reflect the final accounting of the business combination with Materialise Motion. See
additional information in Notes 2 and 4.
F-62
Table of Contents
The Group has 1 individual customer that represents sales larger than 10% of the total revenue in 2021 (2020: 0; 2019: 0). The total amount of revenues
from this customer for the year 2021 was K€ 26,772, and these revenues are reported within the Medical segment.
Entity-wide disclosures
The revenue by geographical area is as follows:
in 000€
United States of America
Americas other than USA
Belgium
Germany
France
Switzerland
United Kingdom
Italy
Netherlands
Other Europe
Asia Pacific
Total
As of December 31,
2020
47,266
5,297
7,048
17,087
11,586
12,587
7,725
5,876
6,943
31,518
17,516
2019
56,235
3,395
7,917
31,185
20,110
14,907
13,804
6,707
5,825
17,329
19,265
205,450 170,449 196,679
2021
69,140
6,297
6,947
20,442
12,964
13,643
8,836
6,520
7,310
33,816
19,535
The total revenue realized in the country of domicile (Belgium) in 2021 amounts to K€6,947 (2020: K€7,048; 2019: K€7,917).
The total non-current assets, other than financial instruments, deferred tax assets, by geographical area are as follows:
in 000€
United States of America (USA)
Americas other than USA
Belgium
Germany
Poland
Rest of Europe
Asia-Pacific
Total
2021
4,237
3,276
As of December 31,
2020
3,441
3,454
2019
4,194
8,374
67,865 62,810 49,426
55,712 58,305 57,918
12,756 13,437 15,506
9,087 10,410
10,019
2,658
2,052
1,739
155,604 152,586 148,486
The totals of the above table include goodwill, intangible assets and property, plant & equipment and Right-of-Use Assets as disclosed in the
consolidated statements of financial position.
F-63
Table of Contents
22
Income and expenses
22.1 Revenue
22.1.1 Disaggregated revenue information
in 000€
Geographical markets
United States of America (USA)
Americas other than USA
Europe (without Belgium) & Africa
Belgium
Asia Pacific
Total revenue from contracts with customers
Type of goods or service
Software revenue (non-medical)
Software revenue (medical)
Medical devices and services
Manufacturing
Other
Total revenue from contracts with customers
Timing of revenue recognition
Goods/Services transferred at a point in time
Goods/Services transferred over time
Total revenue from contracts with customers
in 000€
Geographical markets
United States of America (USA)
Americas other than USA
Europe (without Belgium) & Africa
Belgium
Asia Pacific
Total revenue from contracts with customers
Type of goods or service
Software revenue (non-medical)
Software revenue (medical)
Medical devices and services
Manufacturing
Other
Total revenue from contracts with customers
Timing of revenue recognition
Goods/Services transferred at a point in time
Goods/Services transferred over time
Total revenue from contracts with customers
Materialise
Software
Materialise
Medical
Materialise
Manufacturing
Total
segments Unallocated Consolidated
For the year ended December 31, 2021
11,981
501
18,749
235
11,436
42,902
38,507
4,576
22,098
1,177
7,010
73,368
42,902
—
—
—
—
42,902
—
22,856
50,512
—
—
73,368
18,652
1,220
62,683
5,535
1,090
89,180
69,140
6,297
103,530
6,947
19,536
205,450
—
—
—
89,180
—
89,180
42,902
22,856
50,512
89,180
—
205,450
19,832
23,070
42,902
54,355
19,013
73,368
85,448
3,732
89,180
159,635
45,815
205,450
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
69,140
6,297
103,530
6,947
19,536
205,450
42,902
22,856
50,512
89,180
—
205,450
159,635
45,815
205,450
Materialise
Software
Materialise
Medical
Materialise
Manufacturing
Total
segments Unallocated Consolidated
For the year ended December 31, 2020
11,939
533
15,702
112
10,768
39,054
28,173
4,504
20,781
2,335
5,936
61,729
39,054
—
—
—
—
39,054
—
19,808
41,921
—
—
61,729
7,153
260
56,840
4,570
812
69,635
47,265
5,297
93,323
7,017
17,516
170,418
—
—
—
69,635
—
69,635
39,054
19,808
41,921
69,635
—
170,418
15,536
23,518
39,054
46,286
15,443
61,729
66,824
2,811
69,635
128,646
41,772
170,418
F-64
—
—
—
31
—
31
—
—
—
—
—
31
31
—
31
47,265
5,297
93,323
7,048
17,516
170,449
39,054
19,808
41,921
69,635
—
170,449
128,677
41,772
170,449
Table of Contents
The revenue per type of good or service including the previous years is as follows:
in 000€
Software revenue (non-medical)
Software revenue (medical)
Medical devices and services
Manufacturing
Other
Total
22.1.2 Contract balances
For the year ended December 31
2020
39,054
19,808
41,921
69,635
31
2019
41,654
19,407
41,401
94,156
61
205,450 170,449 196,679
2021
42,902
22,887
50,481
89,180
—
The following table provides information about receivables, contracts in progress (contract assets) and deferred income (contract liabilities) from
contracts with customers.
in 000€
Trade receivables, included in ‘trade and other receivables’
Contract assets / contracts in progress
Contract liabilities / deferred income/advances received on contracts
2021
As of December 31,
2020
42,814 32,346
749
495
39,324 34,797
We refer to Note 18 for a detail of the deferred income. Note 18 includes a split of the deferred income in current and non-current. Non-current deferred
income, representing mainly maintenance contracts with terms more than one year and certain contracts with up-front fees which are allocated to
performance obligations that will be satisfied over more than one year, may be recognized as revenue between one to three years. Total revenue
recognized during 2021 that was included in the contract liability at the beginning of the year amounts to K€34,797. There is no revenue recognized
during 2021 from performance obligations that were satisfied in the previous years.
The relation between the timing of satisfaction of the performance obligations and the timing of billing resulting in contract assets and liabilities is as
follows:
•
•
•
Maintenance services: maintenance services are typically billed at the beginning of the maintenance period resulting in deferred income
that is recognized on a straightline basis over the maintenance period.
Software licenses: certain software licenses may have been billed prior to the delivery of the software key or time-based software licenses
may have been billed up-front resulting in a deferred income balance.
Certain agreements in the medical segment include up-front fees such as step-in fees or milestone payments which are billed at inception
of the contract but which are allocated to performance obligations which are satisfied at a later time in the contract term or which have not
been recognized considering the revenue constraint (i.e. may have to be credited when customer achieves certain volume targets). In
addition, certain contracts include prepaid fees for volume “Plan Only” purchases for which the purchased services are only delivered
during a one year period. Those fees result in deferred income which are recognized as revenue when services/products are delivered and
revenue is not constrainted.
•
Certain development services are satisfied while the services can only billed at certain pre-defined points in time or when the services are
fully satisfied resulting in contracts in progress / contract assets.
22.2 Cost of sales
Cost of sales includes the following selected information:
in 000€
Purchase of goods and services
Amortization and depreciation
Payroll expenses
Work in Progress
Total
F-65
2019
For the year ended December 31
2021
2020
(38,691) (31,725) (37,870)
(11,296) (11,788) (10,917)
(38,499) (32,438) (37,715)
1,208
(550)
(87,278) (76,446) (87,052)
(495)
Table of Contents
22.3 Research and development expenses
Research and development expenses include the following selected information:
in 000€
Purchase of goods and services
Amortization and depreciation
Payroll expenses
Other
Total
22.4 Sales and marketing expenses
Sales and marketing expenses include the following selected information:
in 000€
Purchase of goods and services
Amortization and depreciation
Payroll expenses
Other
Total
22.5 General and administrative expenses
General and administrative expenses include the following selected information:
in 000€
Purchase of goods and services
Amortization and depreciation
Payroll expenses
Other
Total
F-66
For the year ended December 31
2020
(2,788)
(1,746)
(20,368)
(2,202)
(27,104)
2021
(3,770)
(1,821)
(21,300)
—
(26,891)
2019
(2,583)
(1,483)
(19,219)
(63)
(23,348)
For the year ended December 31
2020
(5,960)
(1,946)
(36,521)
(209)
(44,636)
2021
(6,704)
(1,892)
(40,555)
—
(49,151)
2019
(9,228)
(1,346)
(42,055)
(360)
(52,989)
For the year ended December 31
2020
(8,933)
(2,437)
(18,104)
137
(29,337)
2021
(11,248)
(2,987)
(19,080)
—
(33,315)
2019
(9,856)
(3,630)
(18,078)
(222)
(31,786)
Table of Contents
22.6 Net other operating income
The net other operating income can be detailed as follows:
in 000€
Government grants
Amortization intangibles purchase price allocation
Allowance for doubtful debtors
Capitalized expenses (asset construction)
Tax Credits
Personnel related income
Fair value adjustment Materialise Motion
Impairment Engimplan
Impairment Metal Belgium (Aldema)
Other
Total
For the year ended
December 31
2020*
2021
4,466
(2,521)
(58)
223
746
—
—
—
(177)
723
3,402
4,473
(1,857)
(244)
316
1,198
—
770
(2,516)
—
295
2,436
2019
5,263
(2,013)
210
166
665
37
—
—
—
1,104
5,432
*
The year 2020 has been adjusted retrospectively to reflect the final accounting of the business combination with Materialise Motion.
The Company has received government grants from the Belgian federal and regional governments and from the European Community in the forms of
grants linked to certain of its research and development programs and reduced payroll taxes.
22.7 Payroll expenses
The following table shows the breakdown of payroll expenses for 2021, 2020 and 2019:
in 000€
Short-term employee benefits
Social security expenses
Expenses defined contribution plans
Other employee expenses
Total
Total registered employees at the end of the period
22.8 Financial expenses
Financial expenses includes the following selected information:
in 000€
Interest expense
Foreign exchange losses
Other financial expenses
Total
22.9 Financial income
Financial income includes the following selected information:
in 000€
interest income
Foreign exchange gains
Other finance income
Total
F-67
2021
(93,850)
(17,076)
(1,250)
(7,259)
For the year ended December 31
2020
(82,135)
(15,691)
(1,150)
(8,455)
2019
(87,775)
(15,647)
(1,033)
(12,612)
(119,435) (107,431) (117,067)
2,177
2,332
2,162
For the year ended December 31
2020
(2,299)
(2,999)
(697)
(5,995)
2021
(2,435)
(1,258)
(408)
(4,101)
2019
(2,146)
(832)
(704)
(3,682)
For the year ended
December 31
2020
2021
2019
658
418
4,904 1,668
366
386
955
36
5,620 2,452 1,377
58
Table of Contents
22.10 Income taxes and deferred taxes
Current income tax
The following table shows the breakdown of the tax expense for 2021, 2020 and 2019:
in 000€
Current income tax
Deferred income taxes*
Total income taxes for the period
As of December 31,
2020*
2021
(1,252)
661
(591)
4
1,024
1,028
2019
(2,926)
331
(2,595)
*
The year 2020 has been adjusted retrospectively to reflect the final accounting of the business combination with Materialise Motion. See
additional information in Notes 2 and 4.
The current tax expense is equal to the amount of income tax owed to the tax authorities for the year, under the applicable tax laws and rates in effect in
the various countries.
Deferred tax
Deferred tax is presented in the statement of financial position under non-current assets and non-current liabilities, as applicable. The following table
shows the breakdown of the deferred tax assets, deferred tax liabilities and the deferred tax expense for 2021, 2020 and 2019:
in 000€
Tax losses, notional interest deduction and other tax credits
Amortization development assets and other intangible assets
Depreciation property, plant & equipment
Leases
Other items
Total deferred tax assets
Property, plant & equipment
Intangible assets
Investment grants
Inventory valuation
Other items
Total deferred tax liabilities
Netting
Total deferred tax assets, net
Total deferred tax liabilities, net
Total deferred tax income (expense)
Asset/(liability)
2020*
Income/(expense)
2020*
2019
2021
2021
(850)
75
125
77
2,662 2,100
(209)
2019
2,162 1,823 — — — —
38 — — —
136
55
70 — — —
35 — — — — —
84 — — —
274
192 26
9 (124)
(403) — — —
(5,757) (6,414) (4,937) — — —
(301) — — —
(227)
(199)
(89) — — —
—
(31)
(17) — — —
— —
(6,806) (6,881) (5,747) (687) (1,033) 455
2,435 1,899 — — — —
227 201 192 — — —
(4,371) (4,982) (5,747) —
— —
— — — (661) (1,024) 331
*
The year 2020 has been adjusted retrospectively to reflect the final accounting of the business combination with Materialise Motion. See
additional information in Notes 2 and 4.
The Group has unused tax losses and unused Innovation Income Deduction in an amount of K€48,648 for 2021 (2020: K€43,172; 2019: K€32,615) of
which K€35,578 for 2021 (2020: K€27,878; 2019: K€21,878) relating to Materialise NV.
F-68
Table of Contents
With respect to the unused tax losses of Materialise NV, no deferred tax assets have been recognized given that in view of the Belgian Patent Income
Deduction and Innovation Income Deduction there is an uncertainty to which extent these tax losses and unused Innovation Income Deduction will be
used in future years. As from July 1, 2016, the Innovation Income Deduction replaced the former Patent Income Deduction. Under the grandfathering
rule the Patent Income Deduction system could still be applied until June 30, 2021. The Belgian Patent Income Deduction allows companies to deduct
80% of the qualifying gross patent income from the taxable basis. Under the Innovation Income Deduction system, companies can deduct up to 85% of
their net innovation income from the taxable basis. Based on its analysis, in 2021 the Group determined that no deferred tax assets should be recognized
in respect of the tax losses or the unused Innovation Income Deduction carried forward at the level of Materialise NV at December 31, 2021.
With respect to the unused tax losses of the other entities, no deferred tax assets have been recognized in 2021, 2020 nor 2019 except for our tax unity in
Germany where we recorded a deferred tax asset of € 0.3 million related to 2020 losses and Materialise Motion where we recorded a deferred tax asset
of € 1.8 million against a deferred tax liability of € 2.0 million. The deferred tax liability of K€6,806 as at December 31, 2021 mainly relates to the
intangibles that have been recognized in connection with business combinations (ACTech and Materialise Motion).
Relationship between Tax Expense and Accounting Profit
in 000€
Profit (loss) before taxes
Income tax at statutory rate of 25% (2019: 29.58%)
Effect of different local tax rate
Tax adjustments to the previous period
Non-deductible expenses
Research and development tax credits
Patent income deduction / innovation income deduction
Non recognition of deferred tax asset
Recognition of deferred tax assets on previous year’s tax losses
Non-taxable income
Use of previous year’s tax losses and tax credits for which no
deferred tax assets was recognized
Taxes on other basis
Other
Income tax benefit (expense) as reported in the consolidated income statement
2021
For the year ended December 31
2019
2020*
13,736 (8,221) 4,239
(3,432) 2,045 (1,254)
63
(367)
(554)
179
2,847 — —
(723) (1,579)
119
925
— —
503
12
88
(354)
398
529
(231)
(584)
375
(407)
350
135 —
163
(993) —
(71)
(127)
(28)
(185)
(591) 1,028 (2,595)
*
The year 2020 has been adjusted retrospectively to reflect the final accounting of the business combination with Materialise Motion. See
additional information in Notes 2 and 4.
F-69
Table of Contents
23 Earnings per share
Basic earnings per share amounts are calculated by dividing the net profit (loss) for the year attributable to ordinary equity holders of the parent
company by the weighted average number of ordinary shares outstanding during the year.
Diluted earnings per share amounts are calculated by dividing the net profit (loss) attributable to ordinary equity holder of the parent company by the
weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on
conversion of all warrants and the weighted average number of ordinary shares that would be issued on conversion of the convertible debt. If there is a
net loss after taxes, the number of diluted shares is equal to the basic shares.
The net profit (loss) for the year used for the basic and diluted earnings per share are reconciled as follows:
in 000€
Net profit (loss) attributable to ordinary equity holders of the parent for basic
earnings
Interest on convertible bonds
Net profit (loss) attributable to ordinary equity holders of the parent adjusted for
the effect of dilution
For the year ended December 31
2020*
2021
2019
13,154
—
(7,044)
—
1,586
50
13,154
(7,044)
1,636
*
The year 2020 has been adjusted retrospectively to reflect the final accounting of the business combination with Materialise Motion. See
additional information in Notes 2 and 4.
The warrants are dilutive at December 31, 2021. The convertible bond has been converted in shares as per October 9, 2020. We refer to Note 13. The
convertible bonds and the warrants are dilutive as per December 31, 2021 and 2019 and are anti-dilutive as per December 31, 2020.
The following reflects the share data used in the basic and diluted earnings per share computations:
in 000
Weighted average number of ordinary shares for basic earnings per share
Effect of dilution:
Warrants
Convertible loan
Weighted average number of ordinary shares adjusted for effect of dilution
The earnings per share are as follows:
Earnings per share attributable to the owners of the parent
Basic
Diluted
F-70
For the year ended December 31
2020
53,364
2021
56,685
2019
52,915
158
—
56,843
—
—
53,364
563
509
53,987
For the year ended December 31
2019
2020
2021
0.23
0.23
(0.13)
(0.13)
0.03
0.03
Table of Contents
24 Commitments and contingent liabilities
Mortgages and pledges
The Group has several loans secured by a mortgage on the building. The carrying value of related property, plant & equipment (including buildings
under construction) is K€25,582 (2020: K€27,638; 2019: K€29,154). The total outstanding mortgages and pledges are K€103,685 in 2021 (2020:
K€105,610; 2019: K€77,849).
Included in the above, the Group also has pledges on the business goodwill (“fonds de commerce”) of the Company for a total amount of K€69,300 in
2021 (2020: K€69,300; 2019: K€36,992) and pledges on other fixed assets for a total amount of K€1,399 (2020: K€3,290; 2019: K€3,301).
Other commitments
The Group has outstanding non-cancellable contracts with a future commitment of K€7,043 at December 31, 2021 (2020: K€6,384; 2019: K€11,640),
mainly related to purchase commitment for raw materials. For property, plant & equipment, we have no committed expenditures as per December 31,
2021 (2020: K€0; 2019: K€0).
Contingent liabilities
On September 21, 2021, the Brussels Court of Appeal issued a judgment regarding the termination of a supply agreement that we entered into with
Dentsply Implants NV in 2010. In its judgment, the Court of Appeal overruled the judgment issued by the court of first instance (which had previously
ruled in favor of Dentsply Implants NV), and fixed the amount of the financial compensation to Dentsply Implants NV at an amount, which, increased
with legal interests and costs, resulted in a total amount payable by us to Dentsply Implants NV of € 866,909.74. This judgment of the Brussels Court of
Appeal is final and payment was made on November 25, 2021.
On November 15, 2021, we received a written notice from counsel for Zimmer Biomet, informing us of Zimmer Biomet’s decision to file a request for
arbitration with the Belgian Centre for Arbitration and Mediation. Zimmer Biomet believes that we have a contractual obligation pursuant to the terms
of our collaboration to indemnify Zimmer Biomet for the expenses it incurred as a result of its settlement with Conformis, Inc. of a patent dispute related
to certain joint replacement devices. We believe there are meritorious defenses to Zimmer Biomet’s claim and intend to contest it vigorously. However,
an adverse resolution of this arbitration could have an adverse effect on our results of operations, financial condition or cash flows in the period in which
the arbitration is resolved. No amounts have been accrued for this loss contingency.
On June 1, 2021, we entered into a settlement agreement with Osteoplastics, LLC in connection with a patent infringement lawsuit filed by
Osteoplastics, LLC on March 20, 2020, as described in our Annual Report on Form 20-F for the year ended December 31, 2020. Pursuant to the
settlement agreement, we agreed to file documents seeking to withdraw or terminate all petitions for review (the “IPR Procedure”) of seven asserted
patents owned by Osteoplastics, LLC with the Patent Trial and Appeal Board of the United States Patent and Trademark Office (the “PTAB”). On June
3, 2021, we filed a Motion to Dismiss with the PTAB regarding the IPR Procedure, and in a decision dated June 4, 2020, the PTAB granted our Motion
to Dismiss. Other than external counsel fees and PTAB fees, there is no financial impact incurred in relation to this matter or the settlement agreement.
Apart from the cases set out above, the Group is currently not a party to any other legal or arbitration proceedings, which, in the opinion of the
management, is likely to have or could reasonably possibly have a material adverse effect on the business, financial position or results of operations..
F-71
Table of Contents
25 Risks
The Group is mainly exposed to liquidity risk, interest rate risk and credit risk.
Foreign exchange risk
The Group transacts business globally and is subject to risks associated with fluctuating foreign exchange rates. The geographic areas outside of the
Eurozone to which it sells its products and services are generally not considered to be highly inflationary. In the years ended December 31, 2021, 2020
and 2019, 35%, 35% and 29% of our revenue, respectively, were derived from sales in a currency different from the euro. Receivables denominated in a
foreign currency are initially recorded at the exchange rate at the transaction date and subsequently re-measured in euro based on period-end exchange
rates. Transaction gains and losses that arise from exchange rate fluctuations are charged to income.
The Group has primarily exposure to the USD, GBP, BRL, PLN and JPY as foreign currency. The exposure on MYR and CZK is limited. There is only
a limited portion of turnover in local currency.
If the U.S. dollar (rate for €1) would have appreciated by 10%, the net result would have been € 1.2 million higher, excluding the effect of the cash and
term accounts held in U.S. dollars. If the U.S. dollar (rate for €1) would have depreciated by 10%, the net result would have been € 1.0 million lower,
excluding the effect of the cash and term accounts held in U.S. dollars.
To limit the exposure to foreign currency rate fluctuations on GBP and JPY, the Group has entered into currency rate swaps. As of December 31, 2021
the Group had hedge agreements in place for K GBP 1,350 and million JPY 160.0. We refer to note 20 for the related fair value of these derivatives.
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Liquidity risk
The liquidity risk is that the Group may not have sufficient cash to meet its payment obligations. This risk is countered by day-by-day liquidity
management at the corporate level. The Group has historically entered into financing and lease agreements with financial institutions to finance
significant projects and certain working capital requirements.
On December 20, 2017, the European Investment Bank (EIB) and Materialise entered into a finance contract to support Materialise’s ongoing research
and development programs for growth from 2017 to 2020. The contract provides a credit of up to € 35.0 million drawable in two tranches. The first
tranche could not exceed € 25.0 million and could be drawn during the first year of the contract. The Group actually has drawn € 10.0 million of this
first tranche in the course of 2018. The second tranche of € 25.0 million was drawn in July 2019. The duration of the loan will be between six to eight
years starting from the disbursement of the respective tranches, and includes a two-year loan reimbursement grace period. Loans under the contract are
made at a fixed rate, based on the Euribor rate at the time of the borrowing, plus a variable margin. The interest rate for the first tranche is initially equal
to 2.4% . The interest rate for the second tranche is initially 2.72% and varies in function of certain EBITDA levels and debt ratios. The contract
contains customary security, covenants and undertakings.
The range of contracted obligations are as follows (incl. interest) :
in 000€
At December 31, 2021
Loans & borrowings
Lease liabilities
Trade payables
Other current liabilities
Total
At December 31, 2020
Loans & borrowings
Lease liabilities
Trade payables
Other current liabilities
Total
At December 31, 2019
Loans & borrowings
Lease liabilities
Trade payables
Other current liabilities
Total
Interest rate risk
Less than
1 year
2 to 3 years
4-5 years
More than
5 years
Total
19,081
3,496
20,171
750
43,498
41,590
3,790
—
—
45,380
19,587
946
—
—
20,533
14,901
1,102
—
—
16,003
95,159
9,334
20,171
750
125,414
Less than
1 year
2 to 3 years
4-5 years
More than
5 years
Total
15,335
3,831
17,698
3,798
40,662
36,819
4,850
—
—
41,669
34,928
1,570
—
—
36,498
23,565
1,420
—
—
24,985
110,647
11,671
17,698
3,798
143,814
Less than
1 year
2 to 3 years
4-5 years
More than
5 years
Total
14,300
3,685
18,517
4,063
40,565
33,034
4,907
—
—
37,941
41,672
1,040
—
—
42,712
34,447
720
—
—
35,167
123,453
10,352
18,517
4,063
156,385
Although the Group mainly has loans outstanding with a fixed interest rate, some of the loans have been contracted with variable interest rates. The most
significant loans with variable interest rates have been secured by means of a variable to fixed interest rate swap. We therefore believe that the Group is
not subject to immediate changes in interest rates.
Credit risk
Credit risk is the risk that third parties may not meet their contractual obligations resulting in a loss for the Group. The Group is exposed to credit risk
from its operating activities (primarily trade receivables) and from its financing activities, which are mainly deposits with financial institutions. The
Group limits this exposure by contracting with credit-worthy business partners or with financial institutions which meet high credit rating requirements.
In addition, the portfolio of receivables is monitored on a continuous basis.
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Trade receivables and contracts in progress
Customer credit risk is managed by each business unit subject to the Group’s established policy, procedures and controls relating to customer credit risk
management.
An impairment analysis is performed at each reporting date per company and using a provision matrix per company to measure expected credit losses.
The provision rates are based on days past due for groupings of various customer segments with similar loss patterns (i.e., by legal entity).
The calculation reflects the probability-weighted outcome, the time value of money and reasonable and supportable information that is available at the
reporting date about past events, current conditions and forecasts of future economic conditions. Generally, trade receivables are written-off if past due
for more than one year and are not subject to enforcement activity. The maximum exposure to credit risk at the reporting date is the carrying value of
each class of financial assets at amortized cost or fair value through OCI as disclosed in Note 20. The Group does not hold collateral as security.
The Group evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries
and operate in largely independent markets.
Set out below is the information about the credit risk exposure on the Group’s trade receivables using a provision matrix:
in 000€
December 31, 2021
December 31, 2020
December 31, 2019
Capital management
Total
41,541
30,871
40,977
Non-due
34,002
25,707
31,528
Less than
30 days 31-60 days 61-90 days
426
1,634
4,199
423
858
3,176
733
2,094
4,924
91-180
days
611
327
981
More than
181 days
669
380
717
The primary objective of the Group’s shareholders’ capital management strategy is to ensure it maintains healthy capital ratios to support its business
and maximize shareholder value. Capital is defined as the Group shareholder’s equity.
The Group consistently reviews its capital structure and makes adjustments in light of changing economic conditions. The Group made no changes to its
capital management objectives, policies or processes during the years ended December 31, 2021, 2020 and 2019.
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26 Related party transactions
The compensation of key management personnel of the Group is as follows:
in 000€
Short-term employee benefits
Post-employment benefits
Total
Warrants granted
Warrants outstanding
For the year ended December 31
2019
2021
2,394
2,832
85
93
2,925
2,479
— — —
4,545 108,905 359,266
2020
2,302
93
2,395
The amounts disclosed in the table are the amounts recognized as an expense during the reporting period related to key management personnel (senior
management and executive committee members). In the year ending December 31, 2021 the compensation to key management by means of share based
payments amounts to K€132.
The following table provides the total amount of transactions that have been entered into with related parties for the relevant financial year:
Purchases
from Depreciation
Interest
expense
Right-of-Use
Assets
Receivables
Lease
liabilities
Other
liabilities
in 000€
Non-executive directors of the Group
2021
2020
2019
Shareholders of the Group
2021
2020
2019
Joint ventures
2021
2020
2019
Non-controlling interests
2021
2020
2019
Related party – Lunebeke NV / Ailanthus NV
Sale of
goods to
—
—
—
—
—
—
122
85
128
30
2
113
—
419
1,431
—
—
—
—
—
—
—
—
—
—
—
—
—
28
37
—
—
—
6
7
9
—
—
—
—
—
—
—
—
26
—
—
9
—
—
—
—
—
—
—
—
—
—
—
617
—
—
—
—
—
—
58
—
1,053
77
29
—
—
—
—
60
158
131
—
—
1,279
—
—
—
—
—
—
—
—
—
—
—
652
—
—
—
Lunebeke NV is owned by a shareholder and director of the Group and was established on December 29, 2020 following a partial demerger of Ailanthus
NV (a former related party of the Group that merged with Materialise NV subsequent to a partial demerger). The activities taken over by Lunebeke NV
through the partial demerger of Ailanthus NV were taken over from Ailanthus NV with retro-active effect as of October 1st, 2021. The Group rents
apartments on a regular basis from Lunebeke NV in order to host our employees from foreign subsidiaries who are visiting our headquarters in Leuven.
Due to Covid, the total amount paid to Lunebeke NV for rent in 2021 was K€37 (2020: K€0; 2019: K€113).
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27
Events subsequent to the statement of financial position date
Closing of acquisition of Link3D
On April 9, 2021, the Group acquired an option to buy Link3D Inc.. On November 15, 2021, Materialise provided notice to Link3D of its intention to
exercise the option. The acquisition was completed on January 4, 2022. This acquisition was effectuated through the Group’s U.S. subsidiary,
Materialise USA, LLC. As a result of this transaction, Materialise USA has become the sole shareholder of Link3D. Link3D is an additive workflow
and digital manufacturing software company. The acquisition of Link3D is intended to strengthen and accelerate the creation of the Materialise software
platform.
Impact of the armed conflict in Ukraine
As discussed in more detail in “Item 3. Key Information—D. Risk Factors” of this annual report, we have historically maintained an office in Kyiv,
employing over 400 collaborators who are mainly engaged in engineering, software development and supporting IT and staff functions. As a result of
the armed conflict in Ukraine, our operations from our Kyiv office have come to a standstill.
To-date, most of our personnel from the office in Kyiv have continued to work for us throughout the armed conflict, either remotely from Ukraine or
other neighboring countries or from our Wroclaw office, while others remain unable to perform their work. As of the date of this annual report, we have
been able to continue servicing our customers without significant disruption or delay, as personnel with similar skills and competencies located
elsewhere in the world have increased their roles and responsibilities to assist displaced personnel.
Despite our initiating an intense relocation and support program, it is impossible to predict how much of our Ukrainian workforce will be able or willing
to continue working for us. As we are unable to predict how the armed conflict in Ukraine will evolve, we cannot exclude that delays or disruption in
certain of our services may occur, which could impact our business and operations, results of operations, financial condition, cash flows and liquidity.
Although the impact of the armed conflict in Ukraine has not had a material adverse effect on our financial results to-date, we have incurred € 0.3
million as of February 24, 2022 related to the relocation and support efforts of Ukrainian personnel. We will continue to incur expenses and we will be
affected by additional operating expenses from hiring additional and more expensive resources outside Ukraine.
It is still uncertain to what extent some of the development projects of our Materialise Software and Materialise Medical segments, and to a lesser extent
our Materialise Manufacturing segment, will be impacted. As a result of such impact, some of our anticipated product releases may be delayed, which
may adversely affect our revenue.
In addition, although only a small percentage of our historical revenues was generated in Russia, we expect that the trade sanctions that have been
imposed against Russia by, among others, the United States and the European Union, will have a negative impact on our revenue for the year ended
December 31, 2022.
As of the date of this annual report, we are unable to predict how the armed conflict in Ukraine will evolve or what the impact of any political and direct
and indirect economic repercussions will be on the global economy and our business. Indirect economic repercussions could, for example, come from
continued or further increased inflation, or currencies instability. As a result, we are unable to assess with certainty its impact on our business and
operations, results of operations, financial condition, cash flows and liquidity.
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Table of Contents
28 Overview of consolidated entities
Name
Materialise NV
Materialise SAS
Materialise GmbH
Materialise Japan K.K.
Materialise s.r.o.
Materialise USA, LLC
Materialise UK Ltd
OBL SAS
Materialise Austria GmbH
Materialise Sdn. Bhd.
Materialise Ukraine LLC
RapidFit NV
Meridian Technique Ltd
OrthoView Holdings Ltd
Materialise SA
Materialise Colombia SAS
Materialise Motion NV
Materialise Shanghai Co.Ltd
Engimplan Engenharia de Implante Industria & Comércio Ltda
Engimplan Holding Ltda
Materialise Limited
Materialise Australia PTY Ltd
Materialise S.R.L.
ACTech GmbH
ACTech Holding GmbH
ACTech, Inc.
Tianjin Zhenyuan Materialise Medical Technology Ltd
Country of
incorporation
2019
% equity interest*
2021
2020
Belgium
100% 100% 100%
France
100% 100% 100%
Germany
100% 100% 100%
100% 100% 100%
Japan
Czech Republic 100% 100% 100%
United States
99% 99% 99%
United Kingdom 100% 100% 100%
100% 100% 100%
France
100% 100% 100%
Austria
100% 100% 100%
Malaysia
100% 100% 100%
Ukraine
Belgium
100% 83% 83%
United Kingdom 100% 100% 100%
United Kingdom 100% 100% 100%
100% 100% 100%
Poland
100% 100% 100%
Colombia
100% 100% 50%
Belgium
100% 100% 100%
China
100% 100% 75%
Brazil
100% 100% 100%
Brazil
100% 100% —
South-Korea
100% 100% 100%
Australia
100% 100% 100%
Italy
100% 100% 100%
Germany
100% 100% 100%
Germany
100% 100% 100%
United States
51% —
China
—
* The overview provides the equity interest held as of 31 December of each respective year.
The entities Materialise GmbH, Gilching, Germany, ACTech Holding GmbH, Freiberg / Saxony, Germany and ACTech GmbH, Freiberg / Saxony,
Germany, have taken advantage of the exemption regulations of § 264 (3) HGB (German Commercial Code) for the financial year ending December 31,
2019, 2020 and 2021.
The entity Meridian Technique Limited (company number 03478202) has taken advantage of the exemption regulation from the requirements of the Act
relating to the audit of accounts under section 479A of the Companies Act 2006 for the financial year ending December 31, 2021.
29 Non-GAAP Measures
EBITDA and Adjusted EBITDA is used in the Note 21 Segments as one of the basis of the Segments performance measurement. We calculate EBITDA
as net profit plus income taxes, financial expenses (less financial income), depreciation and amortization, and share in loss of joint venture. Adjusted
EBITDA is determined by adding back share-based compensation expenses, acquisition-related expenses of business combinations, impairments and
fair value remeasurements due to business combinations to EBITDA.
F-77
This constitutes an unofficial English translation of the original Dutch document. The Dutch document shall govern in all respects, including interpretation
matters.
Exhibit 1.1
ARTICLES OF ASSOCIATION
1. Name - duration - registered office - object
ARTICLE 1: Name.
The company has the legal form of a public limited company and is named “MATERIALISE”.
ARTICLE 2: Duration.
The company is established for an indefinite period, starting on 28 June 1990.
The company may only be dissolved with respect for the applicable legal provisions on dissolution.
ARTICLE 3: Registered office – E-mail address.
The company’s registered office is established in the Flemish Region.
The registered office may be transferred within the Dutch language area or to the Brussels language area of Belgium without any amendment to the
articles of association, following a decision by the Board of Directors. Such decision shall be published.
Furthermore, the Board of Directors shall be authorized to record the amendment to the Articles of Association resulting from the transfer of the
registered office by notarial deed.
The email address of the company is as follows: investors@materialise.com. Any communication via this address by shareholders, members or
holders of securities issued by the Company and holders of certificates issued with the cooperation of the Company shall be deemed to have been validly
made.
ARTICLE 4: Object - objectives.
The company’s object is as follows: the research, development and commercialisation of additive manufacturing and related technologies and all
related service, engineering and holding activities, including software applications. All these activities should be interpreted in the broadest sense and for
all business sectors.
The company acts for its own account, on consignment, on commission, as an intermediary or as an agent.
The company also has the following additional object:
•
•
the purchase, sale, exchange, construction, renovation, commercialisation, furnishing, exploitation, letting, sub-letting, management, maintenance,
parcelling, horizontal division and placement under compulsory co-ownership, leasing, prospection and promotion in any form of all immovable
property or immovable property rights.
Investing in, subscribing to, taking over, placing, purchasing, selling and trading all securities issued by Belgian or foreign companies, whether or not
in the form of commercial companies, administrative offices, institutions and associations, as well as managing these investments and participations;
•
providing advice, management and any other services to all affiliated companies or companies in which the company has a participating interest, in
its capacity as director, liquidator or otherwise, as well as running or exercising control over these companies.
It may, either in cash or in kind, by means of a merger, subscription, participation, financial intervention or in any other way, acquire an interest in, or
grant loans to, all existing companies or companies to be incorporated, whether in Belgium or abroad, with an identical or similar object or an object related
to its own, or which is likely to promote the realisation of its object.
In general, the company may perform all acts of any nature whatsoever, which are directly or indirectly, whether in whole or in part, related to its
object.
The Company has a profit-sharing object. Besides, the company aims to have a real positive impact on society and the environment in general
through its business operations and economic activities.
2. Capital
ARTICLE 5: Capital and shares
The registered capital amounts to four million four hundred eighty-six thousand seven hundred seventy-two euros eight cents (4,486,772.08 EUR),
represented by fifty-nine million sixty-three thousand five hundred and twenty-one (59,063,521) shares, without designation of nominal value, each
representing an equal share in the capital.
The capital has been subscribed to and paid up in full and unconditionally.
ARTICLE 6: Authorized capital
a) By decision of the general meeting of shareholders of 5 November 2020, which will enter into force on the day of publication of the decision in the
Annexes to the Belgian Official Gazette, the Board of Directors was granted the authority to increase the share capital in one or more rounds up to a
maximum total amount equal to four million sixty-seven thousand seven hundred euro and seventy-two cents (4,067,700.72 EUR).
The Board of Directors may only exercise the powers granted to it for a period of five (5) years from the publication of this authorisation in the
Annexes to the Belgian Official Gazette.
This authorisation may be renewed in accordance with the applicable legal conditions.
The Board of Directors has not yet exercised the authority granted to it.
b) The capital increases decided upon pursuant to this authorisation may take place in accordance with the conditions to be determined by the Board of
Directors, including:
•
•
•
•
•
•
•
•
•
by means of contributions in cash or in kind within the limits permitted by the Belgian Companies and Associations Code,
through a conversion of reserves and share premiums,
with or without the issue of new securities,
through the issue of shares, with or without voting rights,
through the issue of convertible bonds, whether subordinated or not,
through the issue of subscription rights (free of charge or at a certain issue price),
through the issue of bonds to which subscription rights or other securities are attached,
through the issue of other securities, such as shares under a stock option plan,
through the issuance of shares below fractional value.
c) As far as needed and applicable, in the event of a public takeover bid for securities issued by the company, the Board of Directors shall also have a
specific authorisation to increase the capital in any form whatsoever, including a capital increase in which the shareholders’ preferential subscription right
is restricted or suspended, under the conditions provided for in Article 7:202 of the Belgian Companies and Associations Code.
This authorisation is granted for a period of three (3) years, starting from the extraordinary general meeting of shareholders held on 5 November
2020.
This authorisation may be renewed for the same period by a decision of the general meeting made in accordance with the rules set for the amendment
of the articles of association.
The capital increases decided upon in the context of this authorisation shall be imputed to the remaining part of the authorised capital as referred to in
paragraph (a).
d) Any issue premiums payable at the time of subscription to a capital increase within the framework of the authorised capital shall be booked to a separate
account under shareholders’ equity in the liabilities section of the Company’s balance sheet and shall be constituted by contributions in cash or in kind,
other than contributions in work, actually paid up at the occasion of the issuance of shares.
e) The Board of Directors shall also be authorised to restrict or cancel the preferential subscription right in the interest of the company. It may do this for
the benefit of one or more specific persons, even if they are not members of the personnel of the company or its subsidiaries, provided that, including upon
the issue of subscription rights, compliance with the relevant legal provisions is ensured. It may also decide, as appropriate, to give priority to the existing
shareholders during the allocation of new shares.
f) The Board of Directors has the power, with the possibility of subrogation, to amend the articles of association of the company in order to align them with
decisions on capital increases within the framework of the authorised capital.
On June 9, 2021, the company’s board of directors decided to increase the company’s share capital, by contribution in kind, within the framework of
the authorized capital, the first partial realization of which was adopted on June 14, 2021 at an amount for the capital increase of three hundred twenty
thousand euros (320,000.00 EUR), bringing the available amount of the authorized capital to three million seven hundred forty-seven thousand seven
hundred euros and seventy-two cents (3,747,700.72 EUR).
A second and final partial realization was established on July 6, 2021 at an amount for the capital increase of forty-eight thousand euros (48,000.00
EUR), bringing the available amount of authorized capital to three million six hundred ninety-nine thousand seven hundred euros and seventy-two cents
(3,699,700.72 EUR).
ARTICLE 7: Capital increase - preferential subscription right.
a) Subject to the possibility of a capital increase within the framework of authorized capital by decision of the Board of Directors, an increase in the share
capital can only be decided upon by an extraordinary general meeting before a notary public, in accordance with the provisions of the Belgian Companies
and Associations Code.
b) For each capital increase by means of a contribution in cash, the shareholders shall have a preferential subscription right in accordance with Article
7:188 et seq. of the Belgian Companies and Associations Code and the new shares, convertible bonds and subscription rights shall first be offered to the
existing shareholders in proportion to the part of the capital represented by their shares.
The period during which the preferential subscription right may be exercised shall be determined by the general meeting of shareholders or, as
applicable, by the Board of Directors, and may not be less than fifteen days from the date on which the subscription is opened.
The Board of Directors may decide that the total or partial non-use by the shareholders of their preferential subscription rights shall increase the
proportional share of the shareholders who have already exercised their preferential subscription rights; it shall also decide on the subscription procedure.
The Board of Directors shall also have the right, upon such terms as it shall determine, to conclude all agreements to ensure the subscription to all or part of
the shares to be issued.
If a share is encumbered with a usufruct, the preferential subscription right shall belong to the usufructuary, unless otherwise agreed. The newly
acquired shares, convertible bonds and subscription rights shall be fully owned by him, subject to a possible fee paid to the bare owner for exercising the
preferential subscription right.
In the case of pledged shares, the preferential subscription right shall exclusively belong to the owner-pledger.
In the interest of the company and with due observance of the relevant legal requirements, the general meeting of shareholders and, within the
framework of the authorized capital, the Board of Directors, may restrict or cancel the preferential subscription right.
c) The general meeting of shareholders, or the Board of Directors within the authorized capital, as appropriate, may decide to increase the capital in favour
of its employees, subject to the provisions of Article 7:204 of the Belgian Companies and Associations Code.
d) A capital increase can also be realized through the conversion of reserves. The extraordinary general meeting may grant the Board of Directors the
power to increase the capital within the limits of the authorized capital through the conversion of reserves.
ARTICLE 8: Capital reduction
A decision to reduce the capital can be made in accordance with the relevant legal provisions.
3. Shares and other securities
ARTICLE 9: Nature of the securities
The shares and other securities of the company are and will always remain registered shares. They shall bear a serial number.
A register is kept at the registered office of the company for each class of registered securities, either in original physical form or in electronic form
in accordance with the applicable legislation. The ownership of registered securities is determined by an entry in the register. If so requested, certificates of
these subscriptions shall be issued to the holders of the securities.
ARTICLE 10: Unpaid or partially paid shares— obligation to pay up
The obligation to pay up a share is unconditional and indivisible.
If shares which have not been paid up in full are jointly owned by several persons, each one of them shall be liable for the payment of the entire
amount of the duly called payments due.
Additional contributions or full payment are requested by the Board of Directors at a time to be determined by the Board of Directors. The
shareholders are notified in accordance with article 2:32 of the Belgian Companies and Associations Code, which shall mention the bank account to which
payment must be made by wire transfer or deposit, with the exclusion of all other methods of payment. The shareholder shall be deemed in default when
the time limit specified in the notice has expired and interest shall be payable to the company at the statutory rate fixed at that time, plus two percentage
points.
As long as the called payments due for a share have not been made in accordance with this provision, the exercise of the rights related thereto shall
be suspended.
Early payments on shares may not be made without the prior consent of the Board of Directors.
ARTICLE 11: Indivisibility of shares
The securities are indivisible vis-à-vis the company.
If multiple persons have a right in rem to the same security, they may exercise the rights attached to such securities only through a joint
representative.
The company may suspend the exercise of the rights attached to it until a single person has been appointed as the owner of
the security vis-à-vis the company or as their joint representative.
All convocation notices, notifications and other notices served by the company to the different persons entitled to a single security shall be validly
and exclusively given, as the case may be, either to the person designated as the owner vis-à-vis the company or to the designated joint representative.
Unless stipulated otherwise in the articles of association, a will or an agreement, the usufructuary of the securities shall exercise all rights attached to
these securities.
ARTICLE 12: Successors
The rights and obligations shall remain attached to a security, regardless of its ownership.
The heirs, creditors or other successors of the shareholder may not interfere with the management of the company, nor cause any seals to be affixed
to the goods and valuables of the company, nor claim the liquidation of the company and the distribution of its equity.
They shall act in compliance with the company’s financial statements for exercising their rights and shall observe the decisions of the general
meeting and the Board of Directors.
ARTICLE 13: Bonds, subscription rights and other financial instruments granting rights to shares
The company may issue bonds by decision of the Board of Directors, which will determine the terms of the issue.
The issue of convertible bonds or bonds redeemable in shares, subscription rights or other financial instruments which will eventually entitle the
holder to shares may be decided upon by the general meeting of shareholders or by the Board of Directors within the framework of the authorized capital
(subject to compliance with the relevant legal requirements).
The holders of shares without voting rights, profit-sharing certificates without voting rights, convertible bonds, subscription rights or certificates
which were issued with the cooperation of the company, may attend the general meeting of shareholders, but only in an advisory capacity.
3. Acquisition and disposal of own securities
ARTICLE 14: Acquisition and disposal of own securities
a) The company may acquire its own shares or profit participation certificates or certificates relating thereto, or subscribe for them, after the issue of the
corresponding shares or profit participation certificates, in accordance with the relevant legal provisions.
b) By decision of the general meeting of shareholders of 5 November 2020, the Board of Directors was authorized, in accordance with Article 7:215 et seq.
of the Belgian Companies and Associations Code and within the limits specified in this article, to acquire its own shares at a price per share that may not be
lower than 80%, and not higher than 120% of the average closing prices of the American Depository Shares representing the shares of the company during
a period of 30 calendar days prior to either the date of purchase or the date of announcement thereof.
This authorisation shall also apply to the acquisition of the company’s shares by one of its directly controlled subsidiaries, as referred to in and within
the limits of Article 7:221 of the Belgian Companies and Associations Code.
Any offer to acquire the company’s shares must be made to all shareholders under the same conditions, in accordance with Article 7:215, 1st
paragraph, 4th section of the Belgian Companies and Associations Code.
This authorisation shall be valid for a period of five years from the publication of this authorisation in the Annexes to the Belgian official gazette.
This authorisation may be extended by a decision of the general meeting and in accordance with the provisions of the Belgian Companies and
Association Code.
c) The Board of Directors may only dispose of its acquired shares, profit participation certificates or certificates relating thereto in accordance with the
relevant legal provisions and this at a price determined by the Board of Directors. Without prejudice to the foregoing, the Board of Directors is specially
authorised to alienate its acquired shares, profit participation certificates or certificates relating thereto (i) to one or more specific persons other than the
personnel (in this case, the directors who in fact represent this person or the persons associated with him, may not participate in the vote of the Board of
Directors), and (ii) to the personnel.
The foregoing also applies to the disposal of the shares of the Company by one of its direct subsidiaries in accordance with Article 7:221 of the
Companies and Associations Code.
c) By decision of the general meeting of shareholders of 5 November 2020, the Board of Directors was authorised, without further decision by the general
meeting of shareholders and in accordance with the provisions of the Belgian Companies and Associations Code, to acquire or dispose of the company’s
shares, when such acquisition or disposal is necessary to prevent serious imminent harm to the company.
This authorisation is granted for a period of three years, starting from the publication of this authorisation in the Annexes to the Belgian Official
Gazette. This authorisation may be extended for periods of three years by a decision of the general meeting and in accordance with the provisions of the
Belgian Companies and Associations Code.
4. Management and representation
ARTICLE 15: Appointment—Dismissal—Vacancy—Publication
a) The Board of Directors of the company shall consist of at least seven (7) and no more than eleven (11) directors, and at least three (3) directors must be
independent directors (within the meaning of Article 7:87 of the Belgian Companies and Associations Code).
b) As long as all the voting rights attached to the shares controlled by each of the Family Shareholders, whether directly or indirectly and jointly or
otherwise, represent 20% or more of all voting rights attached to all outstanding shares of the company, a maximum of six (6) directors shall, if a Family
Shareholder makes a simple request to that end, only be appointed on the nomination of a majority of all Family Shareholders who directly or indirectly
control at least 3% of the voting rights attached to the shares of the company on the date of the appointment. The number of candidates on the nomination
list of the Family Shareholders must be higher than the number of vacancies to be filled which are subject to the nomination right. If a director appointed
on the nomination of the Family Shareholders resigns or is dismissed, his vacancy may only be filled by a candidate nominated by the majority of the other
directors appointed on the nomination of the Family Shareholders, if any.
For the purposes of this Article, “Family Shareholders” shall include the following persons: Wilfried Vancraen, Hilde Ingelaere and their relatives
in the first degree in descending line.
c) When a legal entity is appointed as a director, it will appoint a physical person as a permanent representative who will be charged with the execution of
the assignment in the name of and on behalf of the legal entity-director.
d) The directors are appointed by the general meeting of shareholders.
In any case, the duration of their assignment may not exceed the maximum legal term of six (6) years.
Their assignment shall end when the general meeting of shareholders or the meeting of the Board of Directors deciding on their replacement is
closed.
The directors can be dismissed by the general meeting of shareholders at all times.
Retiring directors are eligible for reappointment.
e) When a director’s office becomes vacant, the remaining directors have the right to co-opt a new director under the conditions provided for by law and in
compliance with the abovementioned nomination scheme. The subsequent general meeting of shareholders must confirm the mandate
of the co-opted director; in case of confirmation, the co-opted director fulfills the mandate of his predecessor, unless the general meeting decides otherwise.
In the absence of confirmation, the mandate of the co-opted director ends at the end of the general meeting, without prejudice to the regularity of the
composition of the Board of Directors until that time.
f) The Chairman of the Board of Directors will be elected by the Board of Directors.
g) The appointment of the members of the board and the termination of their office shall be published by submitting an extract from the decision at the
Registrar’s Office of the Commercial Court in the company file, and a copy thereof for publication in the Annexes to the Belgian Official Gazette. These
documents shall in any event specify whether the persons representing the company each bind the company individually, jointly or as a body.
ARTICLE 16: Convocation of the Board of Directors
a) The Board of Directors shall be convened by its chairman as often as required in the interest of the company, and shall meet within fourteen days
following a request to that effect from two directors or from the managing director.
If the Chairman has not convened the Board of Directors within the abovementioned period of fourteen days following the request of the directors or
of the managing director to convene the Board of Directors, the requesting directors or the requesting managing director may validly convene the Board of
Directors
b) The convocation notices shall state the place, date, time and agenda of the meeting and shall be sent by letter, fax or other written (or electronic) means
at least two (2) working days before the meeting.
c) Each general meeting shall be held at the registered office of the company or in any other location in Belgium, as specified in the convocation notice.
d) The regularity of the convocation cannot be disputed if all directors are present or validly represented.
ARTICLE 17: Meeting of the Board of Directors
a) The Board is presided by the Chairman or, in his absence, by the Vice-Chairman (if one has been appointed) or by the oldest of the directors present at
the meeting.
b) The Board of Directors may only validly deliberate and decide if at least a majority of its members are present or represented at the meeting.
c) Directors who are unable to be present in person at the meeting may participate in the deliberations and vote through telecommunication tools such as
telephone or videoconference, on the condition that all participants in the meeting can communicate directly with all other participants. The persons who
participate in a meeting by such technical means shall be considered to be present in person at this meeting.
d) Each director may grant a proxy to another director to represent him at a specific meeting. Such a proxy must be given in the form of a power of attorney
bearing the signature of the director (including a digital signature insofar as allowed as written proof by the applicable legislation) and which must be
notified to the Board of Directors by simple letter, fax or any other means of written (or electronic) communication. A director may represent several
colleagues of the Board of Directors.
e) Decisions are made by a simple majority of the votes.
f) Minutes are kept of the decisions made by the Board of Directors. They are signed by the Chairman and, in his absence, by the director chairing the
meeting and at least a majority of the board members present at the meeting.
Copies and extracts shall be signed by two directors or by one managing director.
g) The decisions of the Board of Directors can be taken by unanimous written decisions of all directors in accordance with the relevant legal provisions.
ARTICLE 18: Salary
Without prejudice to the reimbursement of their expenses, the directors may be granted a fixed remuneration, the amount of which shall be
determined each year by the general meeting and shall be at the charge of the general budget of the company. In addition, the general meeting may grant
them a profit-related directors’ fee from the available profit for the financial year.
ARTICLE 19: Conflicts of interest
a) If a director has a direct or indirect financial interest which conflicts with the interest of the company as a result of a decision or transaction within the
authority of the Board of Directors, the requirements of Article 7:96 of the Belgian Companies and Associations Code must be observed by the relevant
director, as well as by the Board of Directors in its deliberations and decision-making.
b) If several directors have a conflict of interest, the decision or transaction can be validly made by the remaining directors, even if half of the directors are
no longer present or represented in this circumstance.
c) If all directors have a conflict of interest, the decision or transaction shall be submitted to the general meeting of shareholders. If the general
shareholders’ meeting approves the decision or the transaction, the Board of Directors may execute it.
ARTICLE 20: Internal governance—Restrictions—Delegation of powers
a) The company is managed by a Board of Directors. The Board of Directors is authorized to take any action which is required or useful to pursue the
company’s object, with the exception of the activities assigned exclusively to the general meeting by law.
b) Without prejudice to the obligations arising from collegial management, in particular with respect to consultation and supervision, the directors may
distribute the management tasks among themselves. Such division of tasks shall not be enforceable against third parties.
c) The Board of Directors may establish one or more advisory committees under its responsibility. The Board of Directors shall define their composition,
tasks and functioning. The members of such committees are appointed by the Board of Directors, which shall also determine the conditions of their
appointment, dismissal, remuneration and the duration of their mandate.
d) The Board of Directors may delegate day-to-day administration of the company to one or more persons.
ARTICLE 21: External powers of representation
a) The Board of Directors shall represent the company as a body in and out of court. It shall act through the majority of its members.
Notwithstanding the general representation powers of the Board of Directors as a body, the company shall also be represented in and out of court by two
directors acting jointly, of which at least one director is appointed from the list of candidates nominated by the Family Shareholders.
b) The company shall also be represented in day-to-day administration, both in and out of court by one or more representatives
entrusted with day-to-day administration, acting individually or jointly in accordance with the delegation decision of the Board of Directors.
ARTICLE 22: Special powers of attorney
The Board of Directors or the directors representing the company may appoint attorneys-in-fact of the company. Only special and limited powers of
attorney for a specific legal act or a series of specific legal acts shall be permitted. The proxy holders shall bind the company within the limits of the
authority granted to them, without prejudice to the responsibility of the directors in the event of excess of power of attorney.
ARTICLE 23: Responsibility of the directors
a) The directors are not personally bound by the commitments of the company. The directors shall
be responsible vis-à-vis the company and vis-à-vis third parties for any shortcomings in their management, in accordance with the applicable provisions of
the Belgian Companies and Associations Code.
b) The company and its shareholders ensure that the directors in their decision-making take into account the achievement of a real positive impact through
the management and economic activities of the company, in the short term and in the (medium)long term, with regard to (the interests of) third parties such
as (i) the employees, the subsidiaries and the suppliers, (ii) the customers of the company and its subsidiaries, (iii) the communities (associations,
organisations, etc.) and society in which the company, its subsidiaries and their suppliers develop their activities, (iv) the local and global environment,
(v) other potential stakeholders in the activities of the company and its subsidiaries.
None of the aforementioned parties can claim a priority over the others. The directors independently and discretionary weigh the various interests
that may serve the realisation of the aforementioned positive impact as part of the corporate interest.
Under no circumstances does this provision confer any right, either explicitly or implicitly, on stakeholders or other third parties. Nor is it intended to
infer such a right, or to give rise to stakeholders or other third parties, initiating legal proceedings against the collegial management body, individual
directors or the Company.
5. Supervision
ARTICLE 24: Appointment—authority and remuneration of the auditor
If necessary, one or more auditors shall be appointed to audit the company. They are appointed by the general meeting of shareholders for a
renewable term of three years. Under penalty of damages, they may only be dismissed for legal cause during their mandate by the general meeting.
If there is no obligation for the company to appoint an auditor, and no auditor is appointed, then each shareholder shall individually have the
investigation and audit powers of an auditor.
The remuneration of the auditor shall consist of a fixed amount, which is determined by the general meeting at the start of their mandate, without
prejudice to Article 3:65 of the Belgian Companies and Associations Code. It may be amended only by agreement of the Parties. Apart from this
remuneration, the auditor may not receive any benefit, in whatever form, from the company.
6. General meeting
ARTICLE 25: Ordinary, special and extraordinary general meetings
a) The ordinary general meeting of shareholders, which is referred to as the annual meeting, shall be convened each year on the first Tuesday of the month
of June at 10 am. If this day is a public holiday, the meeting will be held on the subsequent working day (excluding Saturdays) at the same time.
b) A special general meeting may be convened at all times to deliberate and decide on any matter which is within its competence and which does not
involve any amendment to the Articles of Association.
c) An extraordinary general meeting may also be convened at all times to deliberate and decide on any amendment to the Articles of Association, in the
presence of a notary.
d) The general meetings shall be held at the registered office of the company or in any other location, as specified in the convocation notice.
ARTICLE 26: Convocation
a) The Board of Directors and any possible auditor may convene both an ordinary general meeting (annual meeting) and a special or extraordinary general
meeting. They must convene the annual meeting on the date determined by the articles of association. The Board of Directors and any auditor shall be
obliged to convene a special or extraordinary meeting if one or more shareholders who individually or jointly represent one tenth of the share capital so
request.
Such a request must be sent by registered letter to the registered office of the company; it must state the agenda items on which the general meeting
has to deliberate and decide.
The notice convening the general meeting to be held must be given within three weeks of the request.
Other items may be added to the agenda items specified by the shareholders in the notice convening the meeting.
b) The notices convening the general meetings shall state the agenda and shall be published in accordance with the relevant legal provisions at least fifteen
(15) days in advance.
c) The agenda must contain the items to be discussed and the proposals for resolutions.
d) Any person may waive this notice and shall in any case be considered as having been invited correctly if he attends the meeting or is represented there.
ARTICLE 27: Admission to general meetings—representation
a) The right to attend the general meetings and to exercise the voting right is determined by the registration of the ownership of the shares in the name of
the shareholder on the third (3rd) business day prior to the date of the scheduled meeting by their registration in the company’s shareholders’ register.
The board of directors may make participation in the general meetings dependent on a requirement of notification by the shareholder to the company,
or to the person appointed for this purpose by the company, on a date to be determined by the board of directors before the date of the scheduled meeting,
that he intends to attend the meeting, stating the number of shares the shareholder wishes to participate with, in which case this notification must be made
as defined in the convocation notice.
b) Any shareholder who has voting rights may either attend the meeting in person or be represented by a proxy, who may or may not be a shareholder.
The power of attorney must be given in writing in the manner specified in the convocation notice.
The company has to receive the power of attorney no later than on the date determined by the Board of Directors as stated in the convocation notice.
c) Before attending the meeting, the shareholders or their proxy holders must sign the attendance list, stating (i) the identity of the shareholder, (ii) if
applicable, the identity of the proxy holder, and (iii) the number of shares they represent.
d) The holders of profit-sharing certificates, non-voting shares, bonds, subscription rights, or other securities issued by the company may attend the general
meeting of shareholders insofar as the law grants them this right and, as applicable, the right to participate in the vote. If they wish to attend, they shall be
bound by the same formalities of admission, access, form and notification for proxies as those imposed on the shareholders.
ARTICLE 28: Chairman—Committee
Each general meeting is presided by the chairman of the Board of Directors or, in his absence, by the vice-chairman (if one has been appointed) or by
the oldest member of the Board of Directors.
The chairman shall appoint a secretary and vote counter, who does not have to be a shareholder. Both roles may be performed by one person. The
chairman, secretary and vote counter shall together constitute the Committee.
The chairman may form the Committee before opening the session and this Committee may verify the powers of the participants before the opening
of the session.
ARTICLE 29: Procedure of the meeting
a) The deliberation and voting shall take place under the supervision of the chairman. The directors and any auditor(s) shall answer questions raised by
holders of registered shares, convertible bonds or subscription rights, or of registered certificates issued with the cooperation of the company, before or
during the meeting, oral or in writing and which relate to the agenda items. The directors and possible auditor(s) can, in the interest of the company, refuse
to answer questions when the communication of certain data or facts could be detrimental to the company or would be in contravention of confidentiality
commitments entered into by them or by the company.
As soon as the convocation notice has been published, the shareholders may ask the abovementioned questions (in writing
or by e-mail), provided that these shareholders meet the conditions to be admitted to the meeting and that they have submitted their questions to the
company at the latest on the third (3rd) business day prior to the date of the scheduled meeting as specified in the convocation notice.
b) During the session, the Board of Directors has the right to postpone each general shareholders’ meeting by three weeks. This adjournment shall not
affect the other decisions that have been made, unless the general meeting decides otherwise. At the next meeting, the items on the agenda of the first
meeting at which no final decision was made, will be discussed.
c) The general meeting may not validly deliberate or decide on items which at are not included in the announced agenda or are not implicitly included
therein. Items not included in the agenda may only be discussed at a meeting at which all shareholders are present or represented and on the condition that
the decision is made unanimously. The required consent will be assumed if no objection is recorded in the minutes of the meeting.
ARTICLE 30: Voting rights
Every voting share is entitled to one vote.
ARTICLE 31: Decision-making process
a) The general meeting of shareholders may validly deliberate and decide regardless of the number of shares present or represented, except in the cases
where the law requires a certain attendance quorum. Resolutions of the general shareholders’ meeting may be validly passed by a simple majority of the
votes cast, except in cases where the law requires a certain majority.
b) Minutes shall be drawn up for each general meeting, and the attendance list and any reports and proxies shall be attached thereto.
The minutes of the general meeting of shareholders are signed by the members of the Committee and by the shareholders requesting them.
Copies and extracts shall be signed by two directors or by one managing director.
c) The shareholders can make all decisions that fall within the competence of the general meeting by unanimous vote and in writing, with the exception of
decisions that must be executed by an authentic deed.
7. Inventory—financial statements—reserve—appropriation of profits.
ARTICLE 32: Financial year—financial statements—annual report
a) The financial year of the company shall commence on one January and end on thirty one December of the same calendar year.
At the end of each financial year, the accounts and records are closed and the Board of Directors draws up the inventory and the financial statements,
in accordance with the relevant legal requirements.
The directors also draw up an annual report, if applicable, in which they justify their policies.
b) Fifteen days before the ordinary general meeting, which shall meet within six months of the end of the financial year, the shareholders may examine the
annual accounts and other documents mentioned in the Belgian Companies and Associations Code at the company’s registered office.
c) Following approval of the financial statements, the general meeting shall decide by separate vote on granting discharge to the directors and auditors.
ARTICLE 33: Appropriation of profits—Reserve
The positive balance of the profit and loss account shall constitute the profits of the company.
Of these net profits, at least one twentieth is deducted in advance to constitute the legal reserve until it amounts to one tenth of the share capital.
The general meeting shall decide freely on the further allocation of the balance of the profits by simple majority vote on a proposal from the Board of
Directors.
No distribution may be made if the net assets of the company, as reported in the financial statements, have fallen or would fall as a result of the
distribution below the highest amount of the paid-up capital or the called capital, plus any reserves which may not be distributed based on a legal provision
or on the Articles of Association, and Article 7:212 of the Code of Companies and Associations must be applied in this case.
ARTICLE 34: Payment of dividends—interim dividends
a) The Board of Directors shall determine the place, time and manner in which dividends are paid.
b) The Board of Directors has the authority to pay interim dividends on the profits of the financial year, in accordance with the legal provisions applicable.
8. Dissolution—liquidation
ARTICLE 35: Dissolution
The voluntary dissolution of the company may only be decided upon by an extraordinary general meeting of shareholders, in compliance with the
relevant legal requirements.
After its dissolution, the company shall continue to exist as a legal entity until the closure of its liquidation.
ARTICLE 36: Appointment and powers of the liquidators
a) If no liquidators have been appointed, the directors in office at the time of the dissolution shall be considered liquidators by operation
of law vis-à-vis third parties, but without the powers that the law and articles of association, with regard to the transactions of the liquidation, confer on the
liquidator appointed in the articles of association, by the general meeting of shareholders or by the court.
b) If a legal person is appointed as a liquidator, the natural person representing the liquidator in the liquidation must be specified in the appointment
decision. Any change to this appointment must be published in the Annexes to the Belgian Official Gazette.
c) The liquidators shall not assume their office before the Commercial Court has confirmed their appointment following the decision of the general
meeting, insofar as the Belgian Companies and Associations Code requires the confirmation of the appointment.
d) The general meeting of the dissolved company may appoint and dismiss one or more liquidators at any time and by a simple majority vote. It shall
decide whether the liquidators, if there are several, shall represent the company alone, jointly or as a body.
ARTICLE 37: Powers of the liquidators
a) The liquidators are authorized to carry out all the transactions referred to in articles 2:87 and further of the Belgian Companies and Associations Code
without requiring prior authorization from the general meeting, unless the general meeting decides otherwise by simple majority vote.
b) In the seventh and thirteenth month after the start of the liquidation, the liquidators shall submit a detailed statement of the status of the liquidation,
drawn up at the end of the sixth and twelfth month of the first year of liquidation, to the registrar’s office of the commercial court, in accordance with the
provisions of the Belgian Companies and Associations Code. As from the second year of liquidation, the detailed statement must be submitted only once
every year.
c) Each year, the liquidators shall submit the results of the liquidation to the company’s annual general meeting, stating the reasons why the liquidation
could not be completed. They will also prepare the financial statements every year.
d) The financial statements shall be published in accordance with the relevant legal provisions.
ARTICLE 38: Liquidation method
After payment of all debts, charges and costs of the liquidation or after consignment of the necessary funds, the liquidators shall distribute the net
assets in cash or in securities among the shareholders in proportion to the number of shares they own.
The liquidators may, to the extent authorised in accordance with Article 2:88 of the Belgian Companies and Associations Code, purchase the
company’s shares, either on the stock exchange or by means of an offer or a price request addressed to the shareholders, who must all be able to participate
in the transaction.
9. General provisions
ARTICLE 39: Election of domicile:
Each member of the Board of Directors and the managing director may elect domicile at the registered office of the company for all matters relating
to the exercise of his or her mandate.
The directors, auditors and liquidators whose domicile is unknown or who are domiciled abroad, shall be deemed to have elected their domicile at the
registered office of the company, where all summons, writs and notices relating to the affairs of the company may be served.
Holders of registered securities are required to notify the company of any change in their choice of domicile. In the absence of such notification, they
shall be deemed to have made their choice of domicile at the registered office of the company where all deeds may be validly served or notified to them,
while the company has no other obligation than to keep them at the disposal of the addressee.
ARTICLE 40: Applicable law
The provisions of the Belgian Companies and Associations Code and other provisions of Belgian law shall apply to any matters which are not
expressly specified in these articles of association, or to the legal provisions from which these articles of association do not include a valid derogation.
ARTICLE 41: Personnel
Unless the context requires otherwise or unless otherwise defined in these articles of association, “personnel” for the purposes of these articles of
association has the meaning as defined in article 1:27 of the Belgian Companies and Associations Code.
SUBSIDIARIES OF MATERIALISE NV
EXHIBIT 8.1
Name
Materialise France SAS
Materialise GmbH
Materialise Japan K.K.
Materialise SRO
Materialise USA, LLC
Materialise UK Limited
OBL SAS
Materialise Austria GmbH
Materialise SDN. Bhd.
Materialise Ukraine LLC
RapidFit NV
Materialise SA
Meridian Technique Limited
OrthoView Holdings Limited
Materialise Colombia SAS
Materialise Motion NV
Materialise Shanghai Co. Ltd.
Materialise Australia PTY Ltd
Materialise S.R.L.
ACTech Holding GmbH
ACTech GmbH
ACTech North America Inc.
Engimplan Engenharia de Implante Industria E Comércio Ltda.
Engimplan Holding Ltda.
Materialise Limited
Tianjin Zhenyuan Materialise Medical Technology Ltd
Jurisdiction of Incorporation
France
Germany
Japan
The Czech Republic
United States
United Kingdom
France
Austria
Malaysia
Ukraine
Belgium
Poland
United Kingdom
United Kingdom
Colombia
Belgium
China
Australia
Italy
Germany
Germany
United States
Brazil
Brazil
South Korea
China
EXHIBIT 12.1
I, Wilfried Vancraen, certify that:
CERTIFICATION
1.
2.
3.
4.
I have reviewed this annual report on Form 20-F of MATERIALISE NV (the “company”);
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the company and have:
(a)
(b)
(c)
(d)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by
the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial
reporting; and
5.
The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):
(a)
(b)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal
control over financial reporting.
Date: April 29, 2022
By: /s/ Wilfried Vancraen
Wilfried Vancraen
Chief Executive Officer
EXHIBIT 12.2
I, Johan Albrecht, certify that:
CERTIFICATION
1.
2.
3.
4.
I have reviewed this annual report on Form 20-F of MATERIALISE NV (the “company”);
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the company and have:
(a)
(b)
(c)
(d)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by
the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial
reporting; and
5.
The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):
(a)
(b)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal
control over financial reporting.
Date: April 29, 2022
By: /s/ Johan Albrecht
Johan Albrecht
Alfinco BV
Chief Financial Officer
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE U.S. SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of MATERIALISE NV (the “Company”) on Form 20-F for the fiscal year ended December 31, 2021, as filed with
the U.S. Securities and Exchange Commission on the date hereof (the “Report”), I, Wilfried Vancraen, certify, pursuant to 18 U.S.C. section 1350, as
adopted pursuant to section 906 of the U.S. Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
(i)
the Report fully complies with the requirements of section 13(a) or 15(d) of the U.S. Securities Exchange Act of 1934, as amended; and
(ii)
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
EXHIBIT 13.1
Date: April 29, 2022
By: /s/ Wilfried Vancraen
Wilfried Vancraen
Chief Executive Officer
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE U.S. SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of MATERIALISE NV (the “Company”) on Form 20-F for the fiscal year ended December 31, 2021, as filed with
the U.S. Securities and Exchange Commission on the date hereof (the “Report”), I, Johan Albrecht, certify, pursuant to 18 U.S.C. section 1350, as
adopted pursuant to section 906 of the U.S. Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
(i)
the Report fully complies with the requirements of section 13(a) or 15(d) of the U.S. Securities Exchange Act of 1934, as amended; and
(ii)
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
EXHIBIT 13.2
Date: April 29, 2022
By: /s/ Johan Albrecht
Johan Albrecht
Alfinco BV
Chief Financial Officer
Consent of Independent Registered Public Accounting Firm
EXHIBIT 23.1
To the Board of Directors
Materialise NV:
We consent to the incorporation by reference in the registration statements on Form S-8 (No. 333-197236 and No. 333-212445) and Form F-3 (No. 333-
213649 and No. 333-258949) of Materialise NV (the Company), of our reports dated April 29, 2022, with respect to the consolidated statements of
financial position of the Company as of December 31, 2021 and 2020, the related consolidated income statements, consolidated statements of
comprehensive income, consolidated statements of changes in equity, and consolidated cash flow statements for each of the years in the two-year period
ended December 31, 2021, and the related notes (collectively, the consolidated financial statements), and the effectiveness of internal control over
financial reporting as of December 31, 2021.
Our report dated April 29, 2022 on the consolidated financial statements, refers to our audit of the adjustments that were applied to revise the 2019
consolidated financial statements to retrospectively reflect the final accounting of a business combination, as more fully described in Notes 2 and 4 to
the consolidated financial statements. However, we were not engaged to audit, review, or apply any procedures to the 2019 consolidated financial
statements of the Company other than with respect to such adjustments.
Our report dated April 29, 2022, on the effectiveness of internal control over financial reporting as of December 31, 2021, expresses our opinion that
Materialise NV did not maintain effective internal control over financial reporting as of December 31, 2021 because of the effect of material weaknesses
on the achievement of the objectives of the control criteria and contains an explanatory paragraph that states that the following material weakness has
been identified:
— Ineffective monitoring processes to assess the consistent operation of internal control over financial reporting, including due to a lack of resources.
KPMG Bedrijfsrevisoren – KPMG Réviseurs d’Entreprises BV/SRL
/s/ Gotwin Victor Jaak Jackers
Zaventem, Belgium
April 29, 2022
Consent of Independent Registered Public Accounting Firm
Materialise NV
Leuven, Belgium
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-197236 and No. 333-212445) and Form F-3
(No. 333-213649 and No. 333-258949) of Materialise NV, of our report dated April 30, 2020, relating to the consolidated financial statements which
appears in this Annual Report on Form 20-F.
EXHIBIT 23.2
/s/ BDO Bedrijfsrevisoren BV
BDO Bedrijfsrevisoren BV
Zaventem, Belgium
April 29, 2022
Document and Entity Information
(in thousands of euros)
Document type
Amendment flag
Document period end date
Document fiscal year focus
Document fiscal period focus
Trading symbol
Entity registrant name
Entity centry index key
Current fiscal year end
Entity well known seasoned issuer
Entity current reporting status
Entity filer category
Auditor Attestation Flag
Entity Emerging Growth Company
Entity Common Stock Shares Outstanding (shares)
Entity Shell Company
Document Transition Period
Document Annual report
Document Transition report
Document Shell Company Report
Entity Voluntary Filers
Entity Interactive Data Current
Security 12b Title
Data
20-F
false
2020-12-31
2020
FY
MTLS
MATERIALISE NV
0001091223
--12-31
No
Yes
Accelerated Filer
true
false
59,063,521
false
false
true
false
false
No
Yes
Ordinary shares