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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
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
For the fiscal year ended December 31, 2023
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
OR
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)
Carla Van Steenbergen, 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
Name of each exchange on which registered
The Nasdaq Stock Market LLC
MTLS
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.
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The number of outstanding shares of each of the issuer’s classes of capital or common stock as of December 31, 2023 was: 59,067,186
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. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based
compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
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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TABLE OF CONTENTS
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 16J.
ITEM 16K.
ITEM 17.
ITEM 18.
ITEM 19.
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
Insider Trading Policies
Cybersecurity
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, (v) “Link3D” are to Link3D Inc., which we acquired an option to buy in 2021, which
we exercised in 2022, and which we subsequently merged into our U.S. subsidiary, Materialise USA, LLC, and (vi) “Identify3D” are to
Identify3D, Inc., which we acquired in 2022 and subsequently merged into Materialise USA, LLC.
Our trademark portfolio contained 185 registered trademarks and 3 pending trademark application as of December 31, 2023. 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 armed conflict in Ukraine, and other geopolitical tensions how our business, results of operations, and financial condition could
be impacted during the year 2024 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:
● the global political, economic, and macroeconomic climate, whether within our industry in general, or among specific
types of customers or within particular geographies, including but not limited to, the impacts related to labor shortages,
supply chain disruptions, actual or perceived instability in the global banking system, the results of local and national
elections, a potential recession, inflation, and rising interest rates;
● our ability to enhance and adapt our software, products and services to meet changing technology and customer needs;
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● fluctuations in our revenue and results of operations;
● impacts on our business, financial conditions and results of operations from the armed conflicts in Ukraine, Israel and the
Middle East;
● impacts on our business, financial conditions and results of operations from increased geopolitical tensions, including the
ongoing tensions between the United States and China;
● 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;
● 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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PART I
ITEM 1.
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
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 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.
● 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 and related 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.
● Inflation has had and may continue to have an adverse effect on our results.
● Demand for additive manufacturing generally and our additive manufacturing software solutions, products and services in
particular may not increase adequately, or at all.
● 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.
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● The dominant software subscription model in the industrial sector is changing, and we may not be successful in developing
and deploying a cloud-based platform to offer our software.
● We may not be able to successfully adapt our software offering to the changing needs of the additive manufacturing
market.
● 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, our supporting operations in Kyiv are expected to continue to be subject to
continuous reorganization, uncertainty and instability.
● Our international operations pose currency risks, which may adversely affect our results of operations and net income.
● 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.
● Our failure to adequately address current and emerging sustainability risks, including environmental, social and governance
(ESG) matters, could have a material adverse effect on our business, financial condition and results of operations.
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 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.
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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.
Risks Related to the American Depositary Shares (ADSs)
● 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 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.
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 (including the manufacturing of end use 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:
● maintain and enhance the market share of our current products, services and technologies;
● enhance our existing products, 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 use 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.
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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 the 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.
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We rely on collaborations with users of our additive manufacturing and related 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 Enovis), or Enovis, Limacorporate Spa, or Lima, Mathys AG, or Mathys (which is now part of the same group as
Enovis), 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 and other 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.
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:
● 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 licenses or maintenance contracts for our software, including from customers refusing to
transition from perpetual to annual licensing models for our software or disruptions related to our deployment of cloud-
based software solutions;
● 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;
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● 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 macroeconomic and industry conditions that affect end-user demand and end-user levels of product design and
manufacturing, including the adverse effects of global macroeconomic uncertainties including those related to the armed
conflicts in Ukraine, Israel and the Middle East and the ongoing geopolitical tensions between the United States and China;
and
● changes in accounting rules and tax laws.
Inflation has had and may continue to have an adverse effect on our results.
Inflationary pressures negatively impacted our operating margins and net income in fiscal 2022 and 2023, including increasing the costs
of labor, energy, materials, and freight. We implemented price increases on many of our products and services in 2022 and 2023. In an
effort to mitigate the effects of higher costs related to inflation. However, not all cost increases could be entirely offset, in part due to the
delayed effect of price increases in multi-year agreements to which we are a party, where price increases can only be implemented at the
renewal date. In addition, in Belgium, the salaries of our employees are indexed to inflation increases by law and, as a result, in can be
difficult to keep our sales prices aligned with increases in our labor costs. If these inflationary pressures continue, our revenue, gross and
operating margins and net income may be impacted in fiscal 2024 as well, which would harm our results of operations.
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 for the production of end use parts does not
gain more mainstream market acceptance, the pace by which additive manufacturing technology gains market acceptance does not
accelerate 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.
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/aerospace and orthopedic/cranio-maxillofacial segments within such industries, respectively, and we expect additional
growth to come from certain other specific markets, such as the 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:
● potential shortages of some key consumables or other components;
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● 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, and there is an increasing trend of consolidation among our existing suppliers, the increase 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 and
deploying 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 Software as a Service, or SaaS, 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, through our CO-AM and Mimics Flow platforms
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 software offering may differ significantly from the perpetual and annual licensing models that we have offered
until recently. 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, the SaaS and cloud-based software products we offer reside upon and are 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.
We may not be able to successfully adapt our software offering to the changing needs of the additive manufacturing market.
While the current proto-typing market that we serve with our software solutions (in particular the Magics 3D Print Suite) is not expected
to disappear, the main growth in additive manufacturing is expected to come from the use of 3D printing for the production of end use
parts. While we are investing significantly in the expansion of our current software product portfolio to also serve the needs of this new
and growing market (in particular, with the development of our CO-AM platform), there can be no certainty that our new software
offering will adequately serve the needs of this new market, will be operational in time to address these market needs, will be well
received by the market or will effectively compete with other players in this market.
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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 the current macroeconomic environment or 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.
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:
● 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, pandemics and epidemics;
● 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;
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● 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 global 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 conflicts in Ukraine, Israel and
the Middle East and the ongoing geopolitical tensions between the United States and China;
● 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, export controls, trade barriers and other regulatory or contractual limitations on our ability to sell or develop our
products in certain foreign markets.
As a result of the armed conflict in Ukraine, our supporting operations in Kyiv are expected to continue to be subject to continuous
reorganization, uncertainty and instability.
We have an office in Kyiv, Ukraine where more than 400 of our collaborators are mainly engaged in engineering, software development
and IT support, as well as other staff functions. The invasion of Ukraine by the Russian Federation on February 24, 2022, has impacted
our operations in Kyiv significantly.
Although our operations in Kyiv nearly ceased in the first quarter of 2022, we have since been able to gradually reorganize the internal
services provided from that region through a combination of measures, including Ukrainian collaborators who have fled to other regions
in their country now working from home, support provided by existing (and often enlarged) Materialise teams in other regions, the
relocation of a number of Ukrainian collaborators outside of Ukraine, and, circumstances permitting, services provided from our Kyiv
office, which we have re-opened and accommodated to try to cope with the challenges resulting from the continuous military strikes on
key infrastructure in the country.
While our people in Ukraine have shown, and continue to show, incredible resilience and professionalism, the situation in Ukraine
remains unstable and uncertain and is expected to continue to have an impact on our operations, both financially and operationally. We
expect that, as long as the armed conflict continues (and possibly for a period thereafter), this impact will continue and may even worsen,
depending on the developments both geo-politically and in Ukraine. The ongoing additional mobilization for the Ukrainian army may
also impact our operations. Although we are presently determined to continue to flexibly support our operations in Kyiv and at present
do not see any reason to revise that strategy, we constantly monitor and evaluate the situation. Any change in strategy may have an
additional negative impact on our results of operations and financial condition.
We are unable to predict how the armed conflict in Ukraine will evolve and what the further political and economic repercussions will
be. As a result, we are unable to assess with certainty its future 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 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 fiscal 2024, this discussion should be
considered as uncertain. While we expect to suffer adverse effects, the severity is currently impossible to assess.
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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, 2023, 66% of our revenue was generated, and approximately 77% of our total costs were
incurred in euros. As we continue to expand internationally, our exposure to currency risks may 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 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.
In the past, we have acquired or invested 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 us, and we intend to continue evaluating
opportunities to do so.
In connection with acquisitions or investments, we may:
● 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 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:
● 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;
● 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;
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● 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 enter into collaborations, in-licensing arrangements, joint ventures, strategic alliances or
partnerships to develop proposed products or services and to pursue new markets. 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. 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, 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 or perceived failure in 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.
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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, application centric attacks, peer-to-peer attacks, phishing, backdoor trojans and distributed denial of service
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.
As noted above, any security compromise that causes an apparent privacy violation could also result in legal claims or proceedings;
liability under various laws and regulations that regulate the privacy, security, or breach of personal information; and related regulatory
penalties. See “—We face potential liability related to the privacy and security of personal information we collect.” below for more
information. Moreover, the landscape of laws, regulations, and industry standards related to patient health and other private information,
data privacy and cybersecurity is evolving globally. We may be subject to increased compliance burdens by regulators and our customers
and the patients that we and our customers serve, as well as additional costs to oversee and monitor security risks. Many jurisdictions
have enacted laws mandating companies to inform individuals, shareholders, regulatory authorities, and others of security breaches. For
example, the SEC recently adopted cybersecurity risk management and disclosure rules, which require the disclosure of information
pertaining to cybersecurity incidents and cybersecurity risk management, strategy, and governance. In addition, certain of our customer
agreements may require us to promptly report security breaches involving their data on our systems or those of subcontractors processing
such data on our behalf. This mandatory disclosure can be costly, harm our reputation, erode customer trust, and require significant
resources to mitigate issues stemming from actual or perceived security breaches.
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 as well as to host our SaaS and cloud-based software applications.
If these providers are unable to handle current or higher volumes of use, experience any interruption in operations or cease 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. Moreover, breaches of our customers’ data
caused by errors, omissions or hostile acts of third parties within the third party hosted environment are beyond our control, yet we
would remain responsible for such data security incidents from a regulatory standpoint, in some instances. 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.
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.
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We develop and offer online software services through our SaaS and cloud-based software applications where we manage data we
receive from our customers, and a cybersecurity breach of these online services could harm our customers and our reputation, expose
us to liability, and adversely impact our business, financial condition and results of operations.
We are in an ongoing transition from distributing desktop software applications to developing and distributing online software services
through our SaaS and cloud-based software applications. This transition comes with a shift in cybersecurity responsibilities from the
customer to us, since we manage data we receive from our customers and may be responsible to our customers for breaches of their data.
This shift in responsibilities requires us to implement appropriate internal changes and to invest in additional cybersecurity capabilities
(including training, tooling, and processes). However, cybersecurity incidents and malicious internet-based activity continue to increase
generally, and providers of cloud-based services have frequently been targeted by such attacks. We may be unable to anticipate or
prevent techniques used to obtain unauthorized access or to sabotage systems because they change frequently and often are not detected
until after an incident has occurred. If sensitive customer information is lost, improperly disclosed or threatened to be disclosed, our
reputation could be harmed, we could incur significant costs associated with remediation and the implementation of additional security
measures, we may incur significant liability and financial loss, and we may be subject to regulatory scrutiny, investigations, proceedings,
and penalties. In addition, certain of our customers are large and highly regulated, and if any of them were to conclude that our systems
and procedures are insufficiently rigorous, they could terminate their relationships with us, and our financial condition, results of
operations and business could be adversely affected.
In addition, the SaaS and cloud-based software applications business is a highly dynamic market with rapidly evolving regulatory
requirements, and we need to continually improve our cybersecurity controls to ensure continued compliance. We are investing in
information security and privacy certifications to meet these evolving requirements. However, given the rapidly evolving nature of the
regulatory landscape (e.g., the Cybersecurity Maturity Model Certification program of the U.S. Department of Defense, the EU-wide
NIS2 directive, the upcoming EU-wide Cyber Resilience Act), we may be unable to ensure timely compliance with these requirements,
which may adversely impact our business, financial condition and results of operations.
We may not be successful in our artificial intelligence and machine learnng initiatives, which could adversely affect our business,
reputation or financial results.
We have recently begun incorporating generative artificial intelligence (or AI) and machine learning (or ML) into our programs and
platforms, particularly in the Materialise Medical segment. As with many innovations, AI and ML present risks, challenges and
unintended consequences that could impact our successful ability to incorporate the use of AI and ML in our business. For example, our
algorithms may be flawed and not achieve sufficient levels of accuracy or contain biased information. In addition, our competitors or
other third parties may incorporate AI and ML solutions into their platforms more successfully than us, and their AI and ML solutions
may achieve higher market acceptance than ours, which may result in us failing to recoup our investments in developing ML and AI-
powered offerings. We have made and expect to continue to make significant investments in our AI and ML technology. Our ability to
employ AI and ML, or any ability of our competitors to do so more successfully, may negatively impact our business, impair our ability
to compete effectively, result in reputational harm and have an adverse impact on our operating results.
Moreover, our use of AI and ML may give rise to litigation risk, including potential intellectual property or privacy liability. Because AI
is an emerging technology, there is not a mature body of case law construing the appropriateness of certain of its uses of data – whether
through the employment of large language models or other models leveraging data found on the internet – and the evolution of this law
may limit our ability to exploit artificial intelligence tools, or expose us to litigation. Further, AI and ML presents emerging ethical issues
and if our use of AI and ML algorithms draws controversy due to their perceived or actual impact on society, we may experience brand
or reputational harm, competitive harm or legal liability.
In addition, given the complex nature of AI and ML technology, we face an evolving regulatory landscape and significant competition
from other companies, some of which have longer operating histories and significantly greater financial, technical, marketing,
distribution, professional services, or other resources than us. For example, the European Union’s Artifical Intelligence Act (or the AI
Act) – the world’s first comprehensive AI law – is anticipated to enter into force in the spring of 2024 and, with some exceptions,
become effective 24 months thereafter. This legislation imposes significant obligations on providers and deployers of high risk AI
systems, and encourages providers and deployers of AI systems to account for E.U. ethical principles in their development and use of
these systems. If we develop or use AI or ML systems that are governed by the AI Act, it may necessitate ensuring higher standards of
data quality, transparency, and human oversight, as well as adhering to specific and potentially burdensome and costly ethical,
accountability, and administrative requirements. Any of the foregoing could adversely affect our business, reputation, or financial results.
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If businesses do not continue to adopt our platform for any of the reasons discussed above or for other reasons not contemplated, our
sales would not grow as quickly as anticipated, or at all, and our business, operating results, and financial condition would be adversely
affected.
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. In addition, extreme weather and other natural disasters may become more intense or more frequent as a result of climate
change. 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.
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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:
● 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;
● 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 macroeconomic 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 across regions. 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 could have a wide-ranging and prolonged impact on the general business environment, which could also
adversely affect us. Current macroeconomic events that could impact us include, but are not limited to the following:
● geopolitical instability resulting from, among other factors, the armed conflicts in Ukraine Israel and the Middle East and
the ongoing geopolitical tensions between the United States and China;
● the risk of potential recessions, continued rising interest rates, inflation and labor shortages in Europe and the United
States;
● actual or perceived instability in the global banking system;
● disruptions caused by global health crises, pandemics and epidemics and related responses thereto in certain economies and
markets; and
● in general, the economic and political challenges faced by, among others, China, certain Eurozone countries and the United
States.
We cannot predict the likely duration and severity of these economic and political developments, which could affect us in numerous
ways, many of which we cannot predict. For example, the existence of inflation in certain economies has resulted in, and may continue to
result in, rising interest rates and capital costs, supply shortages, increased costs of labor, components, manufacturing and freight costs,
as well as weakening exchange rates and other similar effects. As a result of inflation, we have experienced and may continue to
experience cost increases. Although we take measures to mitigate the effects of inflation, if these measures are not effective, our
business, financial condition, results of operations and liquidity could be materially adversely affected. Even if such measures are
effective, there could be a difference between the timing of when those beneficial actions impact our results or operations and when the
cost of inflation is incurred.
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In addition, political and economic developments, including as a result of political elections, could also result in changes to legislation or
reformation of government policies, rules and regulations that adversely impact our business, such as changes in policies, rules and
regulations related to taxation or 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
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 addition, in our Materialise
Software segment, we collect, transmit, process and store large amounts of proprietary or other sensitive data from our customers through
our SaaS and cloud-based software applications, some of which are highly regulated.
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, we are subject to data privacy and cybersecurity laws such as the
California Consumer Privacy Act, or CCPA, as amended and expanded by the California Privacy Rights Act, or CPRA. The CCPA, as
amended by the CPRA, 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 are undertaking appropriate steps
to modify our data processing practices and policies to comply with data privacy and cybersecurity laws and expect to incur substantial
costs and expenses in an effort to comply with such laws, including in connection with our development and deployment of SaaS and
cloud-based software solutions.
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. On July 10, 2023, the European Commission adopted its
adequacy decision for the E.U.-U.S. Data Privacy Framework. The decision concludes that the United States ensures an adequate level of
protection – comparable to that of the European Union – for personal data transferred from the European Union to U.S. companies under
the new framework. On the basis of the new adequacy decision, personal data can flow safely from the European Union to U.S.
companies participating in the E.U.-U.S. Data Privacy Framework, without having to put in place additional data protection safeguards.
The adequacy decision followed the adoption of Executive Order on “Enhancing Safeguards for United States Signals Intelligence
Activities” by U.S. President Biden on October 7, 2022, and a regulation issued by the U.S. Attorney General. These measures
introduced new binding safeguards to address the points raised by Court of Justice of the European Union in its Schrems II decision of
July 2020, ensuring that data can be accessed by U.S. intelligence agencies only to the extent necessary and proportionate and
establishing an independent and impartial redress mechanism to handle and resolve complaints from Europeans concerning the collection
of their data for national security purposes.
The safeguards that have been put in place by the U.S. government in the area of national security (including the redress mechanism)
apply to all data transfers under the GDPR to companies in the United States, regardless of the transfer mechanisms used. These
safeguards therefore also facilitate the use of other tools, such as standard contractual clauses.
We are investigating and are undertaking appropriate steps to mitigate the risks associated with these evolving data privacy laws and data
transfer requirements.
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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 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 sufficient to protect us from liability or adverse publicity relating to the
privacy and security of personal information.
Our failure to adequately address current and emerging sustainability risks, including environmental, social and governance (ESG)
matters, could have a material adverse effect on our business, financial condition and results of operations.
Our ability to ensure a resilient business that delivers long-term sustainable growth, is reliant on our ability to identify current and
emerging sustainability risks and legislative requirements that could adversely impact our business and ensure appropriate strategies are
in place to manage such risks and requirements. Some of the key risks and requirements include:
● Growing expectations of how businesses respond to and address sustainability issues from customers, non-governmental
organizations, ESG-focused investors and other stakeholders. The failure to meet these expectations can have adverse
consequences, such as: active product delisting, negative non-governmental organization campaigns, loss of market share,
omission from sustainability indices and adverse public perception or publicity;
● Increased mandatory sustainability due-diligence and non-financial reporting and disclosure obligations, requiring
businesses to take appropriate action or face regulatory penalties. This includes the SEC’s recently adopted climate
disclosure rules, as well as laws and regulations in the countries where we operate, such as the E.U. Corporate
Sustainability Due Diligence Directive, the E.U. Corporate Sustainability Reporting Directive, the German Supply Chain
Due Diligence Act, California’s Voluntary Carbon Market Disclosures Act, the Task Force on Climate Related Financial
Disclosure (TCFD) and the proposed Task Force on Nature Related Financial Disclosures (TNFD).
● Physical risks of climate change, such as increased frequency of extreme weather and natural disasters, causing damage to
physical assets within our operations and our supply chain.
Any of the above risks, together with any others which relate to our inability to address increased and emerging sustainability risks, could
have a material adverse effect on our business, financial condition and results of operations. Further, our efforts to address current and
emerging sustainability requirements could result in increased costs and divert management’s attention and resources from our business.
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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. This process has been impacted by the general lack of capacity of notified bodies properly
designated under the E.U. Medical Device Regulation, which became effective on May 26, 2021. 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.
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:
● the recall or seizure of products;
● the suspension or revocation of the authority necessary for the production or sale of a product;
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● 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 will 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, the new E.U. Medical Device Regulation became effective on May 26, 2021. The Medical Device Regulation, among other
things:
● strengthens the rules on placing devices on the market and reinforce surveillance once they are available;
● establishes explicit provisions on manufacturers’ responsibilities for the follow-up of the quality, performance and safety of
devices placed on the market;
● improves the traceability of medical devices throughout the supply chain to the end-user or patient through a unique
identification number; and
● strengthens 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 Device
Regulation may require a substantial transition effort by us. While we have taken the first steps to comply with the Medical Device
Regulation’s requirements and obtained CE Certificates of Conformity, any future failure by us to keep our quality system and regulatory
documentation in accordance with the Medical Device Regulation’s requirements could delay our further transition to compliance and
delay or prevent us from obtaining new CE Certificates of Conformity. As a result, transition from compliance with the current E.U.
regulatory framework to the Medical Device 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.
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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.
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.
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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 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. A 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. A 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:
● 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;
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● 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:
● 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;
● 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
● 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.
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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.
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.
We have been and may in the future be subject or party, directly or indirectly, to claims, negotiations or complex, protracted litigation,
arbitration or post-grant review proceedings in connection with the enforcement of our intellectual property and patent rights.
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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 behind the 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 applicants may choose to extend their filings
under the Patent Cooperation Treaty or other mechanisms, such as the European Patent Convention, or to predict the final scope of
protection that may result from pending patent applications. 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 non-
practicing entities, 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.
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 payment fee or by other means of
redress in accordance with the applicable rules, there are situations in which noncompliance can result in definitive lapse of a 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 to defend against 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, Enovis, DePuy Synthes, Lima, Mathys, Siemens, BASF 3D Printing Solutions GmbH 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 jointly 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:
● changes in macroeconomic or market conditions or trends in our industry or markets, such as inflation, recessions, the
continued rise in interest rates, ongoing supply chain shortages, actual or perceived instability in the global banking system,
the results of local and national elections, international currency fluctuations, epidemics and pandemics, corruption,
political instability and acts of war, such as the armed conflicts in Ukraine, Israel and the Middle East, or terrorism;
● 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;
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● 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;
● 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; and
● any shortfall in revenue or net income from levels expected by investors or securities analysts.
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 57.66% of our outstanding ordinary shares
(including ordinary shares represented by ADSs), as of March 26, 2024. 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 a member of our board of directors, and Hilde
Ingelaere, a member of our board of directors, who is also Mr. Vancraen’s spouse, and their three children, Linde, Sander (who is also a
member of our board of directors) 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, 2023, there were outstanding granted warrants to subscribe for an aggregate
of 423,452 ordinary shares at a weighted average exercise price of €5.39 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.
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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.
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 cash 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 cash dividends on our ordinary shares in the foreseeable future. Any recommendation by our board
of directors to pay cash 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.
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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, 2024. 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, 2023, 3% 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.
If we fail to maintain an effective system of internal control over financial reporting in the future, 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 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.
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We cannot assure you 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 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.
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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.”
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. We may also limit the exercise of rights by shareholders in
certain jurisdictions if we distribute rights in connection with other changes to our capital structure, like a distribution of rights to tender
our shares to us for redemption in connection with an issuer tender offer, resulting in such shareholders being unable to participate in
such transactions.
If rights are granted to our shareholders, as the case may be, but if by the terms of such rights offering or other transaction, 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.
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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 cash 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 application of complex U.S. federal income tax
rules concerning the classification of our assets and income, and the application of these rules is uncertain in some respects. Additionally,
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.”
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, or 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, or 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.
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.
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 € 11.8 million, € 24.8 million, and € 11.7 million for the years ended December 31, 2023, 2022,
and 2021, respectively. In 2023, our main capital expenditures were€ 2.0 million for our new metal production facility in the United
States, € 3.6 million for the expansion of our production capacity in Germany and € 1.6 million for our internal digital transformation
program. In 2022, our main capital expenditures were € 7.3 million for our new metal production facility in the United States, € 7.9
million for the expansion of our production capacity in Germany and € 2.4 million for our internal digital transformation program. In
2021, our main capital expenditures were € 1.7 million for our internal digital transformation program, € 1.6 million for a new building
in Germany and € 1.0 million for the transformation of our platform architecture which was partially impaired in 2022.
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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 tools 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 orthopedic, cranio maxillo facial, eyewear, footwear and
measurement fixtures.
As of December 31, 2023, our team consisted of 2,437 full-time equivalent employees, or FTEs, and fully dedicated consultants. Our
portfolio of intellectual property featured 476 patents and 101 pending patent applications as of December 31, 2023. For the year ended
December 31, 2023, we generated € 256.1 million of revenue, representing a 10% increase over the prior year, a net profit of € 6.7
million and an Adjusted EBITDA of € 31.4 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.”
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. Additionally, we are ISO27001 certified for the secure operational management of the production environment of our
cloud-based software for medical case management and medical image processing.
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 operates in an ISO
13485:2016-certified system for the production of medical devices, in an EN9100:2018 as well as EASA Part 21G POA certified system
for the production of plastic aerospace parts, and in an ISO 9001:2015-certified quality management system for all other markets.
Further, our 3D printing group 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.
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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 the aforementioned ISO 9001:2015
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
We offer our products and services 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
regular end-user feedback to the product development and support teams within our core competencies.
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 EOS GmbH, HP Inc., DesktopMetal, Inc., Renishaw PLC, SLM Solutions Group AG, Stratasys Ltd., Trumpf GmbH &
Co. KG, Uniontech Corporation, GE Additive 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., 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 by additive manufacturing. We have also
established connectivity between our software and the software of other providers in the broader 3D printing ecosystem like AM Flow,
PostProcess, Castor, AMT, Dyemansion, Additive Marking, Twikit and Trinkle. 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.
As of December 31, 2023, our Materialise Software segment had a team of approximately 293 FTEs and fully dedicated consultants,
with approximately 31% based at our headquarters in Belgium and the remaining employees distributed throughout our local field offices
in China, Colombia, Germany, Japan, Malaysia, Ukraine, the United Kingdom and the United States.
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 provide a number of cloud-based
solutions. Making use of, among others, our CO-AM platform, 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, 2023, 2022 and 2021, our Materialise Software
segment generated revenue of € 44.4 million, €43.7 million and €42.9 million, respectively, representing 17.4% 18.8% and 20.9%,
respectively, of our total revenue.
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Software. 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 the industry standard file formats 3MF
and STL, as well as to the enriched BREP and MeshREP data format proprietary to us, ready for additive manufacturing.
Magics’ applications include repairing and optimizing 3D models; analyzing parts; making process-related design changes
on customers’ input files; designing support structures; documenting customer projects; nesting multiple parts in a single
print run; and process planning.
Our Magics product suite 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 product suite also focuses on
automation and other productivity improvements and brings interconnectivity to machines and enterprise software
platforms.
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 product suite if
they want the full data and build preparation functionality at their disposal in one package.
● CO-AM. CO-AM is an additive workflow and digital manufacturing software platform that supports customers in major
manufacturing industries and large AM service bureaus to scale and integrate their additive manufacturing operations
across complex supply chains and IT environments. At the core of the CO-AM platform is the customers’ project data. The
CO-AM platform provides a series 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 and costing, production planning, production scheduling,
postproduction management, machine connectivity, quality management and manufacturing analytics.
● Streamics. Streamics is our legacy 3D Print planning system that we consider as the predecessor of the CO-AM platform.
We are gradually migrating Streamics functionality to our CO-AM platform. Once the Streamics functionality is fully
integrated in CO-AM, 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.
● 3-matic. 3-matic 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 mesh files. Using Materialise
consultancy services, targeted design automation solutions can be created for specific workflows.
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● 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 and the availability of a BP-SDK (Software
Development Kit) 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. This BP-SDK is available for
customers to build their own build pipelines whilst having the possibility to integrate their proprietary IP in these pipelines.
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 support
generation, optimizing the 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.
● 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 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.
● Materialise Workflow Automation. This solution enables the user to leverage the full power of the Materialise Software
technology in creating specific end-to-end workflows, which can be executed automatically and autonomously, or can be
called from other software solutions like Magics through the Workflow Automation plugin function. The workflows can be
executed in the cloud, on premise or on the user’s workstation.
● Identify3D. Identify3D is a suite of products that plugs into CO-AM and that allows customers to secure datasets
throughout the full end-to-end process of 3D printing. Securing the data means adding a digital rights management tool on
top of the part data, which protects the geometrical information of the data, but can be extended as well with process
information (e.g., the number of times a file can be printed or the exact specifications how the file must be printed). Data
security is gaining importance both because an increasing number of components are serially produced through additive
manufacturing as well as with the growing importance of decentralized additive manufacturing production.
● Layer Analysis. Layer Analysis is a Machine Learning (ML) based tool that interprets images taken during the print of
parts and looks for anomalies during the printing process. The tool combines the ML identified anomaly volumes with the
to-be 3D files, allowing users to detect immediately after finishing a print if certain printed parts may show defects. In this
way, unnecessary and expensive post-processing and (non-destructive) quality control can be avoided while it helps
customers as well in defining allowable defects that do not affect the eventual part quality.
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.
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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 use
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 CO-AM platform, Process Tuner, Workflow Automation and fit-for-purpose build processors specifically address what we believe
will be the needs of this growing end use part manufacturing market.
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 use
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.
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, 2023, our Materialise Medical segment consisted of approximately 928 FTEs and fully dedicated consultants, with
approximately 24.0% 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 of 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 2023 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, 2023, 2022, and 2021, our Materialise Medical segment generated revenue of € 101.4 million, € 84.8
million and € 73.4 million, respectively, representing 39.6%, 36.6% and 35.7%, respectively, of our total revenue.
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.
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● 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.
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, Enovis, 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.
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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.
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. We have one individual customer that represents sales larger than 10% of our total revenue
in 2023 (2022: 1; 2021: 1) from the Materialise Medical segment.
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 Enovis,
Integra, Lima, Mathys, Medtronic, Abbott and Corin. 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 and Pie Medical 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.
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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.
We are investing significantly in the development of new solutions of sub-markets other than orthopedics and CMF, including planning
tools for the cardiovascular markets in the shorter term and the respiratory markets in the longer term.
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, medtech, 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, 2023, our Materialise Manufacturing segment consisted of 784 FTEs and fully dedicated consultants, with 31%
based at our headquarters in Belgium and in Materialise Motion and RapidFit+. 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 and consulting services that mainly help our customers to find applications for
3D printing.
For the years ended December 31, 2023, 2022, and 2021, our Materialise Manufacturing segment generated revenue of € 110.3 million, €
103.5 million, and € 89.2 million, respectively, representing 43.1%, 44.6%, and 43.4% respectively, 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, Filament
Fusion, or FDM, 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. Along with this, we offer consulting services,
which we bring to the market as Mindware, which helps customers to adopt 3D printing in their business before they can even start
printing.
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.
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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 provides quotations, takes orders, 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.
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, medtech, 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 training 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. 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.
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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, we may
enter into more long-term agreements with customers.
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 Sculpteo, 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.
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, medtech 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, 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, 2023, we operated a total of 207 3D printers, five vacuum casting machines and 28 CNC
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:
Size
Manufacturer
Number
Technology
Stereolithography
DLP
PolyJet
FDM
Laser Sintering
Multi Jet Fusion
Sand Binding
Vacuum Casting
Small/Medium Size
Large Size
Mammoth
3D Systems Corporation / Other
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
Medium Size
Medium Size
Large Size
Asiga/ Stratasys
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
SCHUHL
MCP HEK GmbH
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2
15
10
4
2
16
16
14
25
25
12
4
2
1
2
17
3
Direct Metal Laser Sintering Medium Size
Large Size
EoS GmbH / GE Additive / SLM Solutions
SLM Solutions
(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.
(2)
Small size machines are machines with a build volume of less than 250×250×250 mm.
(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, 2023, 50 printers produced parts exclusively for our Materialise Medical segment, while the other 157 printers and
five vacuum casting machines produced parts for our Materialise Manufacturing segment.
As of December 31, 2023, 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.
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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.
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, Stereolithography 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, and mechanical and
biomedical engineering.
We have a long history of research and development through collaborations, which augment our internal development efforts. As of
December 31, 2023, 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, 2023, we had more than 50 active research and development projects in various stages of completion and
approximately 540 FTEs and fully dedicated consultants working on research and development in our facilities in Belgium, France,
Germany, Spain, the United Kingdom, the United States, Colombia, Ukraine and Malaysia.
Our research and development projects include (but are not limited to) the following:
1.
2.
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);
3.
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;
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4.
5.
6.
7.
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.
We also regularly apply for research and development grants and subsidies under, among other, 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.
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, 2023, our portfolio of intellectual property featured 476 issued patents and an additional 101 pending patent
applications primarily in the United States, the European Union and Japan. Of these, our issued patents expire between approximately
2023 and 2040, 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 “CO-AM,” “Mimics,” “3-
matic,” “Inspector,” “Magics,” “RapidFit+,” “Heartprint,” “ADaM,” “Surgicase,” “Enlight,” “Mindware,” “Streamics,” 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,
Enovis, DePuy Synthes, Lima, Mathys, Stryker, Corin, Siemens, Fluidda, HOYA 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.
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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.
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;
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● 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 became
applicable in the European Union and replaced the Medical Device Directive. This required us to adopt a series of measures and we will
continue to update our systems and product registrations during the provided transition period to comply with this new Regulation. 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 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.
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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, Australia, Belgium, Brazil, China, Colombia, France, Germany, Italy, India, Japan,
Malaysia, Spain, Ukraine, the United Kingdom, the United States, Poland, and South Korea. The aggregate annual lease payments for
our facilities in 2023, 2022 and 2021 were € 2.2 million, € 2.0 million and € 2.1 million, respectively. The table below provides selected
information regarding our facilities as of December 31, 2023.
Location
Leuven, Belgium
Leuven, Belgium
Beringen, Belgium
Plymouth, Michigan, United States
Ann Arbor, Michigan, United States
Lexington, KY, United States
Princeton, NJ, United States
Lafayette, CO, United States
Saint Marcel les Valence, France
Yokohama, Japan
Kawasaki, Japan
Ústí nad Labem, Czech Republic
Vienna, Austria
Gilching, Germany
Bremen, Germany
Petaling Jaya, Malaysia
Paris, France
Kyiv, Ukraine
Rozdil, Ukraine
Sheffield, United Kingdom
Southampton, United Kingdom
Shanghai, China
Medellin, Colombia
Wroclaw, Poland
Gold Coast, Australia
Milan, Italy
Milan, Italy
Freiberg, Germany
Freiberg, Germany
Bangalore, India
Rio Claro, Brazil
Seoul, South Korea
Tianjin, China
Owned
Leased
Leased
Owned
Leased
Leased
Leased
Leased
Owned
Leased
Leased
Owned
Leased
Leased
Owned
Leased
Leased
Leased
Leased
Leased
Leased
Leased
Leased
Leased
Leased
Leased
Leased
Owned
Leased
Leased
Leased
Owned
Owned
Leased
Leased
Leased
Leased
Ownership
Use
Approximate Area
Lease Expiration
Corporate headquarters;
50,614.35 sq. m.
N/A
production
Warehouse
Office; production
165 sq. m.
2,848.25 sq. m.
March 31, 2024
October 31, 2030
Office; production; parking
3.89 acres
N/A
Office; production
Office
Office
Office
Office
Office
Production
Office; production
Office
Office
Office
Office
Office
Office
Office
Office
Office
Office
Office
Office
Office
Office
Office
Office; production
Office
Office
office
Office, Production, Parking
(Land)
Office, warehouse,
production, parking (Land)
Office
Corporate Offices, R&D
Laboratory, Production
Shared workspace
Office
2,771 sq. ft.
1,872 sq. ft.
2,866 sq. ft.
2,218 sq. ft.
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.
2,532.6 sq. m.
570.4 sq. m.
1,575 sq. ft.
2,046 sq. ft.
1,200 sq. m.
248 sq. m.
64 sq. m.
190 sq. m.
59.79 sq. m.
60.31 sq. m.
2.3975 hectare
N/A
55 sq. m.
131 sq. m.
34,273 sq. m.
24,243 sq. m.
2,000 sq. ft.
4,092.27 sq. m.
N/A
129 sq. m.
April 30, 2024
August 31, 2027
March 31, 2025
February 28, 2025
N/A
March 31, 2024
May 19, 2024
N/A
December 31, 2025
December 31, 2024
N/A
May 31, 2029
May 31, 2028
February 29, 2024 under
negotiation to extend every 6
months (due to war
conditions)
February 28, 2024- lease
cancelled
No fixed end date
May 31, 2028
June 8, 2024
May 31, 2024
January 31, 2025
November 30, 2024
March 15, 2024
March 31, 2024
N/A
January 22, 2024
December 31, 2023
March 31, 2029
N/A
N/A
December 31, 2024
August 5, 2029
January 31, 2025
March 19, 2025
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.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
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 tools 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 orthopedic, cranio maxillo facial, eyewear, footwear and
measurement fixtures.
As of December 31, 2023, our team consisted of 2,437 FTEs and fully dedicated consultants. Our portfolio of intellectual property
featured 476 issued patents and 101 pending patent applications as of December 31, 2023. For the year ended December 31, 2023, we
generated € 256.1 million of revenue, representing 10% increase over the prior year, a net profit of € 6.7 million and an Adjusted
EBITDA of € 31.4 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.
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 effected by our U.S. subsidiary, Materialise USA, LLC, by exercising the call option. As a result of
this transaction, Materialise USA became the sole shareholder of Link3D, and subsequently Link3D was merged into Materialise USA.
Link3D was 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.
Identify3D Acquisition
On September 1, 2022, we acquired Identify3D, a company that develops software to encrypt, distribute and trace the flow of digital
parts across complex supply chains. This acquisition was effected by our U.S. subsidiary, Materialise USA, LLC, and subsequently
Identify3D was merged into Materialise USA. The acquisition of Identify3D is intended to strengthen the security features of our CO-
AM platform.
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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 and the CO-AM platform that we
launched in 2022 in our Materialise Software segment, the Mimics 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 further 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 strengthen the market penetration of our software platform by (i) continuing to
gradually grow the strong position of our Magics 3D Print Suite in the market for print preparation software tools, including by offering
its functionality through the cloud, and (ii) bringing our CO-AM platform to the market, offering to our customers both proprietary and
third party functionalities that focus on volume production, including manufacturing execution systems, or MES, automated workflows
for additive manufacturing and solutions such as quality analysis tools and data security. The transition to a cloud-based software
platform and associated subscription models will affect our revenue levels in the near term, but we believe it may 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, 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 the introduction of advanced front-end digital technologies, such as virtual try-on and
fitting solutions, 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.
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
to 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.
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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, 2023. 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.
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.
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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.
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.
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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.
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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 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 may not be 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 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 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.
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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.
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 ongoing COVID-19 pandemic. The second project obtained the Investigational Device Exemption, or
IDE, approval from the FDA in the first quarter of 2024. 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 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 further invested in 2023, and will continue to invest in 2024 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. It is expected 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,
2023, we capitalized €7.5 million as software and carried €0.4 million as assets under construction in respect of those projects.
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In the year ended December 31, 2021 we 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. During 2022 we continued to invest in this project and
added K€984 to the asset under construction. As of December 31, 2022, we recognized an impairment of K€672 in respect of this asset
under construction, due to an overlap with the recently acquired Link3D technology and the fact that this Link3D technology was already
in a more advanced stage. The remaining K€1,287 was transferred from assets under construction to software, and amortization on this
asset started in 2022.
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, 2023, we had current and non-current receivables related to tax credits for an amount of € 5 million (2022: € 5 million;
2021: € 5 million).
As of December 31, 2023, we had € 92 million (2022: € 88 million; 2021: € 58 million) of tax losses carried forward and Innovation
Income Deductions, of which € 47 million related to Materialise NV (2022: € 45 million; 2021: € 36 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.
Under the Belgian Innovation Income Deduction system, companies can deduct up to 85% of their net innovation income from the
taxable basis.
With respect to the tax losses carried forward and Innovation Income Deductions carried forward we recognized at December 31, 2023 a
deferred tax asset of € 0.1 million for Materialise NV (2022: € 0.2 million, 2021: € 0.0 million) and € 1.0 million for Materialise USA
(2022: € 1.6 million, 2021: € 0.0 million).
We have not recognized deferred tax assets on unused tax losses and Innovation Income Deduction totaling € 22 million as at December
31, 2023 (2022: € 19 million; 2021: € 12 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. If all deferred tax assets related to
unused tax losses carried forward and Innovation Income Deduction would meet the criteria for recognition, net result for the year would
have improved by € 22 million in 2023 through a deferred tax benefit. This would represent the planned recovery of € 88 million of
unused tax losses carried forward and Innovation Income Deduction in future periods. Further details on taxes are disclosed in Note
22.10 to our consolidated financial statements.
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Impairment of Goodwill, Intangible Assets and Property, Plant and Equipment
We have goodwill for a total amount of € 43.2 million as of December 31, 2023 (2022: € 44.2 million; 2021: € 18.7 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.
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. Total impairment charges recorded during 2023 were € 4.2 million (2022: € 0.7 million; 2021: € 0.2 million).
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 zero.
In 2022, we recorded impairment charges of € 0.7 million related to the transformation of the platform architecture to enable our
software products to make the transition from desktop to cloud-based.
In 2023, we recorded a goodwill impairment of € 4.2 million related to Materialise Motion and Engimplan. On the CGU Materialise
Motion in Belgium, it was concluded that the value in use was lower than the carrying value, which resulted in a full impairment of the
goodwill for an amount of € 1.2 million as well as a partial impairment on the intangible assets related to the partnership agreement,
customer list, and developed technology for respectively € 0.9 million, € 0.1 million, and € 1.4 million. The key elements that led to the
impairment loss for the Motion CGU was the delay in business growth versus what was initially foreseen. On the CGU Engimplan in
Brazil, it was concluded that the value in use was lower than its carrying value, which resulted in a full impairment of the intangible
assets related to customer list and trademarks for respectively € 0.4 million and € 0.1 million as well as a tangible asset 3D printer for €
0.1 million. The key elements that led to the impairment loss for the Engimplan CGU were related to a delay in business growth and to
less benefits of synergies than initially anticipated.
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;
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● 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.
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 Loan Granted to Fluidda
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 € 3.7 million at December 31, 2023. 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
13.32% 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.
Leases – 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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Results of Operations
Comparison of Years Ended December 31, 2023 and 2022
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
Profit before taxes
Income taxes
Net profit
% Change
10.4 %
7.5 %
12.7 %
1.4 %
(6.9)%
5.5 %
For the year ended December 31,
2022
232,023
(103,255)
128,768
(37,568)
(62,125)
(35,143)
3,196
(2,872)
(4,420)
6,114
(1,178)
(975)
(2,153)
2023
256,127
(110,996)
145,131
(38,098)
(57,822)
(37,068)
(6,524)
5,619
(3,865)
5,019
6,772
(78)
6,695
Revenue. Revenue increased by € 24.1 million, or 10.4%, to € 256.1 million in the year ended December 31, 2023, from € 232.0 million
in the year ended December 31, 2022.
Revenue by geographical area is presented as follows:
in 000€
Americas
Europe & Africa
Asia-Pacific
Total
For the year ended December 31,
2023
97,399
138,741
19,988
256,127
2022
86,924
125,138
19,960
232,023
Revenue generated in Europe increased by € 13.6 million, or 10.9%, in the year ended December 31, 2023, compared to the year ended
December 31, 2022, due to higher revenue from our Materialise Medical, Materialise Manufacturing and Materialise Software segments.
Revenue generated throughout the Americas increased by € 10.5 million, or 12.1%, in the year ended December 31, 2023, compared to
the year ended December 31, 2022, due to higher revenue from our Materialise Medical, Materialise Manufacturing and Materialise
Software segments. Revenue generated in Asia-Pacific remained consistent in the year ended December 31, 2023, compared to the year
ended December 31, 2022, as revenue increased within our Materialise Manufacturing segment with offsetting decreases within our
Materialise Medical and Materialise Software segments in this region.
During 2023, we saw an increased revenue in all three of our segments compared to 2022.
Revenue from our Materialise Software segment increased € 0.7 million, or 1.7%, from € 43.7 million in the year ended December 31,
2022, to € 44.4 million in the year ended December 31, 2023. Recurrent revenue, consisting of limited license fees and maintenance fees,
increased by € 2.0 million, or 7.2%, in the year ended December 31, 2023. Non-recurrent revenue, mainly consisting of perpetual fees
and services, decreased by € 1.2 million, or 7.6%, in the year ended December 31, 2023. Deferred revenue from license and maintenance
fees amounted to € 0.8 million in the year ended December 31, 2023, compared to € 2.7 million in the year ended December 31, 2022.
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Revenue from our Materialise Medical segment increased € 16.5 million, or 19.5%, from € 84.8 million in the year ended December 31,
2022, to € 101.4 million in the year ended December 31, 2023. Within our medical software department recurrent revenue from annual
and renewed licenses and maintenance fees increased by € 4.7 million, or 20.3%, reflecting the implementation of our continued strategy
focused on products with defined contractual periods. These recurrent revenues represented 87.2% of all medical software revenues in
the year ended December 31, 2023, compared to 84.8% in the year ended December 31, 2022. Our non-recurrent revenue from perpetual
licenses and services remained consistent in the year ended December 31, 2023, compared to the year ended December 31, 2022.
Deferred revenue from license and maintenance fees amounted to € 0.7 million in the year ended December 31, 2023, compared to € 5.1
million in the year ended December 31, 2022. Revenues from medical devices and services grew by € 11.9 million, or 20.6%, in the year
ended December 31, 2023, driven by growth in all of our sales channels across our different core markets. As of December 31, 2023, our
Materialise Medical segment operated 50 3D printers, as compared to 49 as of December 31, 2022.
Revenue from our Materialise Manufacturing segment increased € 6.8 million, or 6.6%, from € 103.5 million in the year ended
December 31, 2022, to € 110.3 million in the year ended December 31, 2023. Materialise Manufacturing operated 157 3D printers, 28
CNC machines and 5 vacuum casting machines as of December 31, 2023, compared to 156 3D printers, 22 CNC machines and 6 vacuum
casting machines as of December 31, 2022, respectively.
Cost of sales. Cost of sales was € 111.0 million in the year ended December 31, 2023, compared to € 103.3 million in the year ended
December 31, 2022, representing an increase of € 7.7 million, or 7.5%. This increase in cost of sales was related to increased sales
volumes, increased subcontracting volumes and prices, and the impact of inflation related to energy, materials and compensation
expenses.
Gross profit. Gross profit increased € 16.4 million from € 128.8 million in the year ended December 31, 2022, to € 145.1 million in the
year ended December 31, 2023, mainly driven by increased revenue in all three Materialise segments, partially offset by higher
production costs. The overall gross profit margin (gross profit divided by our revenue) amounted to 56.7% in the year ended December
31, 2023, compared to 55.5% in the year ended December 31, 2022.
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 € 133.0 million in the year ended December 31, 2023, compared to € 134.8 million in the
year ended December 31, 2022. R&D expenses increased from € 37.6 million to € 38.1 million, or 1.4%.S&M expenses decreased from
€ 62.1 million to € 57.8 million, or 6.9%, driven by our Materialise Software segment sales reorganization. G&A expenses increased
from € 35.1 million to € 37.1 million, or 5.5%. The G&A expenses included the roll-out of our ongoing internal digital transformation
project.
Net other operating income. Net other operating income decreased to a negative € 6.5 million, in the year ended December 31, 2023,
compared to a positive € 3.2 million net other operating income in the year ended December 31, 2022. The main drivers of this decrease
were an arbitration settlement of € 5.2 million, an impairment loss related to intangible assets of € 3.0 million, an impairment loss related
to goodwill of € 1.2 million, and an amortization expenses of acquired intangible assets, which represented an expense of € 4.0 million
for the year ended December 31, 2023, compared to € 5.1 million for the year ended December 31, 2022. These expenses were partially
offset by witholding tax exemptions (€ 3.0 million), grants received (€ 1.8 million), and R&D tax credits (€ 1.4 million).
Net financial income (financial income and financial expense). Net financial income was € 1.2 million in the year ended December 31,
2023, compared to a net income of € 1.7 million in the year ended December 31, 2022. In 2023, the net positive result was mainly due to
increased interest income on short-term deposits from higher prevailing interest rates, partially offset by increased interest expense on
our loans and borrowings.
Income taxes. Income taxes in the year ended December 31, 2023 resulted in an expense of € 0.1 million, which was a combination of
deferred tax benefits amounting to € 2.3 million and current income tax expenses of € 2.4 million.
Net profit/loss. As a result of the factors described above, net profit amounted to € 6.7 million in the year ended December 31, 2023
compared to a net loss of € 2.2 million in the year ended December 31, 2022.
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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)
Adjusted EBITDA (unaudited)
For the year ended December 31,
2022
(2,153)
975
4,420
(6,114)
22,026
—
19,154
(140)
—
—
19,014
2023
6,695
78
3,865
(5,019)
21,511
—
27,130
39
—
4,228
31,397
2021
13,145
591
4,101
(5,620)
20,516
—
32,733
(833)
413
177
32,490
(1) Share-based compensation expenses represent the cost of equity-settled and cash-settled share-based payments to employees.
(2) Acquisition-related expenses of business combinations represent fees and costs in connection with the acquisition of Link3D on
January 4, 2022.
(3) Impairments represents the impairment of goodwill of Aldema BV (€ 0.2 million) in 2021, the impairment of goodwill (€ 1.2
million) and partial impairment of the intangible assets (€ 2.4 million) of Materialise Motion NV, and the impairment of intangible
and tangible assets (€ 0.7 million) of Engimplan in 2023.
EBITDA. As a result of the factors described above, our consolidated EBITDA was € 27.1 million in the year ended December 31, 2023,
compared to € 19.2 million in the year ended December 31, 2022, an increase of € 8.0 million. During 2023, we continued to
strategically invest in our growth businesses and progressed on our transition to cloud-based annual license revenue in our Materialise
Software segment. In 2023, revenue increased by 10.4%. Our 2023 EBITDA included expenses of € 4.2 million from the impairment of
goodwill (€ 1.2 million) and partial impairment of the intangible assets (€ 2.4 million) of Materialise Motion NV and the impairment of
intangible and tangible assets (€ 0.7 million) of Engimplan. These expenses were, among others, not reflected in our Adjusted EBITDA.
Our consolidated Adjusted EBITDA was € 31.4 million in the year ended December 31, 2023, compared to € 19.0 million in the year
ended December 31, 2022, an increase of € 12.4 million.
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Comparison of Years Ended December 31, 2023 and 2022 by Segment
in 000€
For the year ended December 31, 2023
Revenues
Segment Adjusted EBITDA
Segment Adjusted EBITDA %
For the year ended December 31, 2022
Revenues
Segment Adjusted EBITDA
Segment Adjusted EBITDA %
Materialise Materialise Materialise
Medical
Manufacturing
Software
Total
segments
Unallocated (1) Consolidated
44,442
7,450
16.8 %
101,376
26,544
110,310
7,537
256,127
41,530
—
(10,133)
256,127
31,397
26.2 %
6.8 %
16.2 %
12.3 %
43,688
1,514
84,846
18,822
103,489
8,229
232,023
28,565
—
(9,551)
232,023
19,014
3.5 %
22.2 %
8.0 %
12.3 %
8.2 %
(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.
Our Materialise Software segment’s Adjusted EBITDA was € 7.5 million in the year ended December 31, 2023, compared to € 1.5
million in the year ended December 31, 2022. This segment’s Adjusted EBITDA margin (the segment’s Adjusted EBITDA divided by
the segment’s revenue) increased to 16.8% in the year ended December 31, 2023, from 3.5% for the year ended December 31, 2022. The
increase in the Adjusted EBITDA margin was the result of cost containment efforts while further investing in R&D expenses.
Our Materialise Medical segment’s Adjusted EBITDA amounted to € 26.5 million in the year ended December 31, 2023, compared to €
18.8 million in the year ended December 31, 2022. The segment’s Adjusted EBITDA margin increased to 26.2% in the year ended
December 31, 2022 from 22.2% in the year ended December 31, 2022. The increase in the segment’s Adjusted EBITDA margin was as a
result of increased revenues while keeping costs under control.
Our Materialise Manufacturing segment’s Adjusted EBITDA amounts to € 7.5 million in the year ended December 31, 2023, from € 8.2
million in the year ended December 31, 2022. The Adjusted EBITDA margin of this segment decreased to 6.8% in the year ended
December 31, 2023, from 8.0% in the year ended December 31, 2022, as a result of less favorable market conditions and continued
investments in our growth business lines.
Reconciliation of Net Profit to Segment Adjusted EBITDA
in 000€
Net profit
Income tax expense / (benefit)
Financial expenses
Financial income
Operating profit / (loss)
Depreciation and amortization
Corporate research and development
Corporate headquarters costs
Net other operating (income) expense
Impairments(1)
Segment Adjusted EBITDA (unaudited)
For the year ended December 31,
2023
2022
6,695
78
3,865
(5,019)
5,619
21,511
2,785
10,464
(3,077)
4,228
41,530
(2,153)
975
4,420
(6,114)
(2,872)
22,026
2,600
9,504
(2,693)
—
28,565
(1) Impairments represent the impairment of goodwill and intangible assets of Materialise Motion (€ 3.6 million) and the impairment of
tangible and intangible assets of Engimplan (€ 0.7 million).
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Table of Contents
Comparison of Years Ended December 31, 2022 and 2021
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
Profit (loss) before taxes
Income tax expense / (benefit)
Net profit (loss)
% Change
12.9 %
18.3 %
9.0 %
39.7 %
26.4 %
5.5 %
(6.1)%
For the year ended December 31,
2021
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
2022
232,023
(103,255)
128,768
(37,568)
(62,125)
(35,143)
3,196
(2,872)
(4,420)
6,114
(1,178)
(975)
(2,153)
Revenue. Revenue was € 232.0 million in the year ended December 31, 2022 compared to € 205.5 million in the year ended December
31, 2021, an increase of € 26.6 million, or 13%.
Revenue by geographical area is presented as follows:
in 000€
Americas
Europe & Africa
Asia-Pacific
Total
For the year ended December 31
2022
86,924
125,138
19,960
232,023
2021
75,437
110,477
19,536
205,450
Revenue generated in Europe increased by € 14.7 million, or 13.3 %, in the year ended December 31, 2022, compared to the year ended
December 31, 2021, due to higher revenue from our Materialise Medical and Materialise Manufacturing segments. Revenue generated
throughout the Americas increased by € 11.5 million, or 15.2%, in the year ended December 31, 2022, compared to the year ended
December 31, 2021. In the Americas, revenue for the Materialise Medical segment and for the Materialise Software segment increased
and revenue for the Materialise Manufacturing segment remained consistent. Revenue generated in Asia-Pacific increased by € 0.4
million, or 2.2%, in the year ended December 31, 2022, compared to the year ended December 31, 2021, as revenue increased within our
Materialise Medical and Materialise Manufacturing segment and decreased within our Materialise Software segment in this region.
During 2022, we had increased revenue in all three of our segments compared to 2021.
Revenue from our Materialise Software segment increased € 0.8 million, or 1.8%, from € 42.9 million in the year ended December 31,
2021, to € 43.7 million in the year ended December 31, 2022. Recurrent revenue, consisting of limited license fees and maintenance fees,
increased by € 4.6 million, or 19.7%, in the year ended December 31, 2022. Non-recurrent revenue, mainly consisting of perpetual fees
and services, decreased by € 3.8 million, or 19.0%, in the year ended December 31, 2022. Deferred revenue from license and
maintenance fees amounted to € 2.7 million in the year ended December 31, 2022, compared to € 1.9 million in the year ended December
31, 2021.
Revenue from our Materialise Medical segment increased € 11.5 million, or 15.6%, from € 73.4 million in the year ended December 31,
2021, to € 84.8 million in the year ended December 31, 2022. Within our medical software department recurrent revenue from annual
and renewed licenses and maintenance fees increased by € 3.9 million, or 20.8%, reflecting the implementation of our continued strategy
focused on products with defined contractual periods. These recurrent revenues represented 84.8% of all medical software revenues in
the year ended December 31, 2022, compared to 83.0% in the year ended December 31, 2021. Our non-recurrent revenue from perpetual
licenses and services increased by € 0.3 million, or 6.7%. Deferred revenue from license and maintenance fees amounted to € 5.1 million
in the year ended December 31, 2022, compared to € 2.0 million in the year ended December 31, 2021. Revenues from medical devices
and services grew by € 7.3 million, or 14.4%, in the year ended December 31, 2022, driven by growth in our CMF business line. As of
December 31, 2022, our Materialise Medical segment operated 49 3D printers, as compared to 48 as of December 31, 2021.
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Revenue from our Materialise Manufacturing segment increased € 14.3 million, or 16.0%, from € 89.2 million in the year ended
December 31, 2021, to € 103.5 million in the year ended December 31, 2022. Materialise Manufacturing operated 156 3D printers, 22
CNC machines and 6 vacuum casting machines as of December 31, 2022, compared to 153 3D printers, 23 CNC machines and 6 vacuum
casting machines as of December 31, 2021, respectively.
Cost of sales. Cost of sales was € 103.3 million in the year ended December 31, 2022, compared to € 87.3 million in the year ended
December 31, 2021, representing an increase of € 16.0 million, or 18.3%. This increase in cost of sales was related to increased sales
volumes, increased subcontracting volumes and prices, and the impact of inflation related to energy, materials and compensation
expenses.
Gross profit. Gross profit increased € 10.6 million from € 118.2 million in the year ended December 31, 2021, to € 128.8 million in the
year ended December 31, 2022, mainly driven by increased revenue in all three Materialise segments, while facing higher production
costs. The overall gross profit margin (gross profit divided by our revenue) amounted to 55.5% in the year ended December 31, 2022,
compared to 57.5% in the year ended December 31, 2021.
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 € 134.8 million in the year ended December 31, 2022, compared to € 109.4 million in the
year ended December 31, 2021. R&D expenses increased from € 26.9 million to € 37.6 million, or 39.7%, and included the accelerated
investments in our Materialise Software CO-AM business which contained the expenditures of Link3D and Identify3D since their
acquisition. S&M expenses increased from € 49.2 million to € 62.1 million, or 26.4%, driven by our Materialise Software segment,
including severance pay. G&A expenses increased from € 33.3 million to € 35.1 million, or 5.5%. The G&A expenses included the roll-
out of our ongoing internal digital transformation project.
Net other operating income. Net other operating income decreased to € 3.2 million, or 6.6%, in the year ended December 31, 2022,
compared to € 3.4 million in the year ended December 31, 2021. The main driver for this decrease were the amortization expenses of the
acquired intangible assets, which represented an expense of € 5.1 million for the year ended December 31, 2022, compared to € 2.5
million for the year ended December 31, 2021. This result for the year ended December 31, 2022 also contained an impairment loss
related to capitalized development expenditure in the Materialise Software segment. These expenses were partly offset by a COVID-19
grant received by our German subsidiaries (€ 0.7 million) and a commercial indemnity fee (€ 0.5 million). Our net other operating
income for 2021 included a € 0.2 million impairment loss on the goodwill from the acquisition of Aldema (Metal Belgium) in 2015.
Net financial income (financial income and financial expense). Net financial income was € 1.7 million in the year ended December 31,
2022, compared to a net income of € 1.5 million in the year ended December 31, 2021. In both years the net positive result was mainly
due to positive foreign exchange differences, partially offset by interest expenses on our loans and borrowings.
Income taxes. Income taxes in the year ended December 31, 2022 resulted in an expense of € 1.0 million, which was a combination of
deferred tax income amounting to € 1.0 million and current income tax expenses of € 2.0 million. This increase in current income tax
expense compared to the prior year was mainly due to the fact that mark-ups and margins applied under our consolidated group’s transfer
pricing arrangements were still temporarily waived during the first half year of 2021.
Net profit/loss. As a result of the factors described above, net loss amounted to € 2.2 million in the year ended December 31, 2022
compared to a net profit of € 13.1 million in the year ended December 31, 2021.
Other Financial Information
EBITDA. As a result of the factors described above, our consolidated EBITDA was € 19.2 million in the year ended December 31, 2022,
compared to € 32.7 million in the year ended December 31, 2021, a decrease of € 13.6 million. During 2022, we prioritized the
sustainability of our revenue growth over the maximization of short term EBITDA. In 2022, revenue increased by 13% and deferred
revenues grew by 22%. We continued to strategically invest in our growth businesses despite significant inflationary pressures on labor,
energy and materials costs and accelerated the consolidation of both Link3D and Identify3D, as a basis for our future cloud-based annual
license revenue in our Materialise Software segment. These added expenses in addition to certain one-time items weighed on the overall
profitability of our Adjusted EBITDA for the year, with Adjusted EBITDA decreasing to € 19.0 million.
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Comparison of the Years Ended December 31, 2022 and 2021 by Segment
in 000€
For the year ended December 31, 2022
Revenues
Segment Adjusted EBITDA
Segment Adjusted EBITDA %
For the year ended December 31, 2021
Revenues
Segment Adjusted EBITDA
Segment Adjusted EBITDA %
Materialise Materialise Materialise
Medical
Manufacturing
Software
Total
segments
Unallocated (1) Consolidated
43,688
1,514
84,846
18,822
103,489
8,229
232,023
28,565
—
(9,551)
232,023
19,014
3.5 %
22.2 %
8.0 %
12.3 %
8.2 %
42,902
15,705
73,368
20,669
89,180
6,275
205,450
42,649
—
(10,159)
205,450
32,490
36.6 %
28.2 %
7.0 %
20.8 %
15.8 %
(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.
Our Materialise Software segment’s Adjusted EBITDA was € 15.7 million in the year ended December 31, 2021 compared to € 1.5
million in the year ended December 31, 2022, a decrease of € 14.2 million. This segment’s Adjusted EBITDA margin (the segment’s
Adjusted EBITDA divided by the segment’s revenue) decreased to 3.5% in the year ended December 31, 2022, from 36.6% for the year
ended December 31, 2021. The decrease in the Adjusted EBITDA margin was a result of our investments to strengthen and accelerate
the creation of the Materialise cloud based software platform.
Our Materialise Medical segment’s Adjusted EBITDA amounted to € 18.8 million in the year ended December 31, 2022, compared to €
20.7 million in the year ended December 31, 2021. The segment’s Adjusted EBITDA margin decreased to 22.2% in the year ended
December 31, 2022 from 28.2% in the year ended December 31, 2021. The decrease in the segment’s Adjusted EBITDA margin was due
to our increased investment in research and development to position ourselves for further growth.
Our Materialise Manufacturing segment’s Adjusted EBITDA increased to € 8.2 million in the year ended December 31, 2022, from € 6.3
million in the year ended December 31, 2021. The Adjusted EBITDA margin of this segment increased to 8.0% in the year ended
December 31, 2022, from 7.0% in the year ended December 31, 2021, as a result of the 16% revenue growth and improved production
capacity levels, partly offset by the effects of inflation on compensation, energy and materials expenses.
Reconciliation of Net Profit to Segment Adjusted EBITDA
in 000€
Net profit (loss)
Income tax expense / (benefit)
Financial expenses
Financial 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
Segment Adjusted EBITDA (unaudited)
70
For the year ended December 31,
2022
2021
(2,153)
975
4,420
(6,114)
—
(2,872)
22,026
2,600
9,504
(2,693)
—
28,565
13,145
591
4,101
(5,620)
—
12,217
20,516
2,948
10,317
(3,527)
177
42,648
Table of Contents
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, 2022, 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. 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, loan reimbursements,
acquisitions and partnerships. Depending on market conditions, our liquidity requirements, contractual restrictions and other factors, we
may also repurchase some of our outstanding ordinary shares and ADSs. We believe that we will have sufficient liquidity to satisfy the
operating requirements of our business through the next 12 months.
In 2022, we entered into a credit facility agreement with KBC, which allows for a € 50 million delayed draw, that will allow funding of
potential additional acquisitions, partnerships, and capital expenditures. The credit facility provides for a first draw between October
2022 and April 2025, repayable in full in April 2030. A second draw may be made between October 2022 and June 2025, repayable in
full in June 2031. A third and final draw may be made between October 2022 and June 2026, repayable in full in June 2032.
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 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, 2023, 2022 and 2021.
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
Comparison of Years Ended December 31, 2023 and 2022
For the year ended December 31,
2022
22,288
(53,861)
(22,510)
(54,082)
2023
20,157
(11,037)
(22,368)
(13,248)
2021
25,845
(13,134)
71,156
83,867
Net cash flow from operating activities amounted to € 20.2 million in the year ended December 31, 2023 compared to € 22.3 million in
the year ended December 31, 2022, a decrease of € 2.1 million, or 9.6%. In the year ended December 31, 2023, the net cash flow from
operating activities was the result of the income statement cash result of € 32.8 million, decreased by working capital requirements of €
13.1 million, offset by increased deferred revenue of € 0.5 million.
Net cash flow used in investing activities was € 11.0 million in the year ended December 31, 2023 compared to € 53.9 million in the year
ended December 31, 2022, a decrease of € 42.8 million, or 79.5%. The decrease was mainly due to the acquisition of Link3D and
Identify3D (€ 29.3 million) in 2022 and no comparable acquisition activity occurring in 2023.
Net cash flow used in financing activities was € 22.4 million in the year ended December 31, 2023, compared to € 22.5 million in net
cash flow from financing activities in the year ended December 31, 2022. In 2022, we entered into a new credit facility with KBC, which
provides for a € 50 million delayed draw. No drawdowns were made under this new facility in 2023, while our repayment of borrowings
and leases amounted to € 20.3 million.
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Table of Contents
Comparison of Years Ended December 31, 2022 and 2021
Net cash flow from operating activities amounted to € 22.3 million in the year ended December 31, 2022 compared to € 25.8 million in
the year ended December 31, 2021, a decrease of € 3.6 million, or 14%. In the year ended December 31, 2022, the net cash flow from
operating activities was the result of the income statement cash result of € 21.3 million, decreased by working capital requirements of €
9.2 million, offset by increased deferred revenue of € 10.3 million.
Net cash flow used in investing activities was € 53.9 million in the year ended December 31, 2022 compared to € 13.1 million in the year
ended December 31, 2021, an increase of € 40.8 million, or 310%, of which € 29.3 million related to the acquisition of Link3D and
Identify3D, and € 24.8 million related to capital expenditures.
Net cash flow used in financing activities was € 22.5 million in the year ended December 31, 2022, compared to € 71.2 million in net
cash flow from financing activities in the year ended December 31, 2021. The positive cash flow in 2021 was driven by the net capital
increase € 88.1 million. In 2022, we entered into a new credit facility with KBC, which provides for a € 50 million delayed draw. No
drawdowns were made under this new facility in 2022, while our repayment of borrowings and leases amounted to € 21.1 million.
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, 2023, 2022 and 2021:
in 000€
Purchase of property, plant and equipment
Purchase of intangible assets
Total
Indebtedness
For the year ended December 31,
2022
21,608
3,165
24,773
2023
9,235
2,525
11,760
2021
7,934
3,788
11,722
As of December 31, 2023, we had loans and borrowings in the total amount of € 64.4 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€50,000 KBC credit facility
K€35,000 EIB bank loan
K€28,000 acquisition bank loan
K€17,700 secured bank loans
K€12,300 bank loans ACTech
K€5,000 other facility loan
Bank investment loans - top 20 outstanding
Bank investment loans - other
Lease liabilities
Related party loan
Total loans and borrowings
Current
Non-Current
K€50,000 KBC credit facility
2023
As of December 31,
2022
—
21,667
10,000
14,904
3,546
1,496
4,778
—
7,943
64
64,398
25,483
38,915
—
27,500
12,559
16,165
5,860
1,881
8,828
606
7,485
96
80,980
19,960
61,020
2021
—
33,333
15,604
16,592
8,160
2,248
12,852
1,569
8,621
128
99,107
21,202
77,905
In October 2022, we entered into a credit facility agreement with KBC, which allows for a € 50 million delayed draw. The credit facility
provides for a first draw between October 2022 and April 2025, repayable in full in April 2030, with an interest rate of 3.56%. A second
draw may be made between October 2022 and June 2025, repayable in full in June 2031, with an interest rate of 3.81%. A third and final
draw may be made between October 2022 and June 2026, repayable in full in June 2032, with an interest rate of 3.87%.
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Table of Contents
All loan drawings were contracted at a fixed interest rate, and a reservation cost for the 3 tranches amounts is applicable at 0.15% per
year. As of December 31, 2023, no amounts had been drawn under this facility.
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.
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€17,700 secured bank loans
The € 17.7 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 € 11.7 million, and repayments started
in June 2023. The agreement for the Polish facility financing amounts to € 6.0 million (fully drawn per end of 2020), and repayments
started 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.
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€5,000 - Other facility loan
A facility loan was contracted in 2012 for the construction of Leuven office and production facilities. The balance of this loan amounted
to € 1.5 million as of December 31, 2023. This loan has a repayment schedule of 15 years and interest rate is fixed at 4.61%.
Bank investment loans
The 20 largest of these investment loans outstanding as of December 31, 2023 amount to a balance of € 4.8 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 repayment period over seven years, and are at fixed interest rates with weighted average below 1%.
K€7,943 Lease liabilities
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 of December 31, 2023 the balance of these lease obligations amounts to € 7.9 million,
and are mostly at fixed interest rates with weighted average below 1%.
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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 on December 31, 2020, 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, 2023 were K€64 (2022: K€96; 2021:
K€128). The interest expense for the year ended December 31, 2023 was K€3 (2022: K€5; 2021: K€5).
Material Unused Sources of Liquidity
Our cash and cash equivalents as of December 31, 2023, 2022 and 2021 were € 127.6 million, € 140.9 million and € 196.0 million,
respectively. We have one undrawn line of credit at December 31, 2023, a credit facility agreement with KBC, which provides for a € 50
million delayed draw. For more information, see “—K€50,000 KBC credit facility” above.
Reservation cost for all 3 tranches amounts to 0.15% per year.
Transfers from Subsidiaries
The amount of dividends payable by our subsidiaries to us is subject to general limitations imposed by the corporate laws and certain
restrictions in the jurisdictions that we operate in. For example, China has very specific approval regulations for all capital transfers to or
from the country, certain capital transfers to and from 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, 2023, 2022 and 2021, 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, 2023, which represents contractually committed future obligations:
in 000€
Loans and borrowings
Lease Liabilities
Scheduled interest payments(1)
Purchase obligations
Total
Total
Less than 1
year
2-3 years
4-5 years
years
More than 5
56,455
7,943
3,200
31,597
99,195
22,873
2,610
1,270
22,798
49,551
18,585
2,757
1,335
8,617
31,294
7,989
1,778
441
182
10,390
7,008
798
154
0
7,960
(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, 2023 we had purchase commitments of K€9,330 related to property, plant and equipment. We did not have any
significant purchase commitments related to property, plant and equipment as of December 31, 2022 and 2021.
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.”
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D. Trend Information
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 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 operate in very difficult, uncertain and unstable circumstances.
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, from our Wroclaw office or, circumstances permitting, from our office in Kyiv, 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.
As the armed conflict with Russia continues, 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 or that a more radical, temporary shift of certain operations to other jurisdictions may
become necessary, which could impact our business and operations, results of operations, financial condition, cash flows and liquidity.
We have incurred, and will continue to incur, expenses related to hiring additional and more expensive resources outside Ukraine.
It is 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 by the ongoing armed conflict in Ukraine. As a result of such
impact, some of our anticipated product releases may be delayed, which may adversely affect our revenue.
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 tables set forth certain information with respect to the current members of our board of directors and senior management:
Directors:
Name
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
Age
62
59
61
62
33
53
61
64
47
60
Time served as director
Since 1990 (34 years)
Since 2013 (11 years)
Since 2006 (18 years)
Since 1997 (27 years)
Since 2020 (4 years)
Since 2013 (11 years)
Since 2007 (17 years)
Since 2015 (9 years)
Since 2017 (7 years)
Since 2018 (6 years)
Position
Founder & Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Senior Management and Executive Committee Members:
Name
Seaquence BV, represented by Johan Pauwels
BEspired BV, represented by Bart Van der
Schueren
Finstraco B.V. represented by Koen Berges
De Vet Management BV, represented by Brigitte
de Vet-Veithen
Level 5 BV, represented by Jurgen Laudus
SoHo services, represented by Conny Hooghe
Super Mare & Park BV, represented by Carla Van
Steenbergen
Udo Eberlein
Age
56
57
48
53
45
58
48
56
Position
Executive Vice President, Chief Operating Officer
(COO)
Chief Strategy and Technology Officer
Chief Financial Officer
Chief Executive Officer (CEO)
Vice President, Materialise Manufacturing
segment
Vice President, Human Resources
Executive Vice President, Director Corporate
Affairs
Vice President, Software Segment
The term of the directorship of each member of our board of directors will expire at the 2024 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 and Lieve Verplancke are independent under both
Belgian law and the Nasdaq Stock Market Listing Rules. The Belgian law definition of independence differs from the definition of
independence under Nasdaq Stock Market Listing Rules. In particular, under Belgian law, A Tre C CVOA (represented by Johan De
Lille) and Jos Vander Sloten are no longer deemed independent by virtue of its term of office exceeding 12 years. However, the Nasdaq
Stock Market Listing Rules do not have a similar requirement, and our board of directors has determined that A Tre C CVOA
(represented by Johan De Lille) and Jos Vander Sloten continue to be independent under the Nasdaq Stock Market Listing Rules.
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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 since founding our company in July 1990. Mr. Vancraen
previously served as our Chief Executive Officer from July 1990 until December 31, 2023. 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.
Peter Leys. Peter Leys has served as one of our directors since 2013. Mr. Leys previously served as our Executive Chairman from 2013
until December 31, 2023. 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. 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 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, and she served as Executive Vice President of Materialise until December 31, 2023. Mrs. Ingelaere continues to play an important
role in supporting our South American operations and in strategic negotiations with a focus on partnerships. 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, from Delft 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.
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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 Group NV, Itineris NV, Willemen Groep, Ghelamco NV and WDP (Euronext). In
2015, Mr. Ingels co-founded The Glue, a provider of infrastructure solutions for financial institutions. 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.
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).
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.
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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, as permanent representative of Seaquence BV, has served as an Executive Vice President and Chief
Operating Officer 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 Strategy and Technology Officer since 2016. In February 2022 he also assumed the position of Vice President of the Materialise
Software segment. As permanent representative of BEspired BV, Mr. Van der Schueren serves as Chief Strategy and Technology Office
since January 2024. 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 between
2022 until the end of 2023 he was 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.
Koen Berges. Koen Berges, as permanent representative of Finstraco BV, has served as our Chief Financial Officer since May 2023. Mr.
Berges brings more than 20 years of experience in financial leadership positions in various business environments ranging from large
multinational corporations to leading family holdings and to fast-growing private equity-backed services companies. Mr. Berges joined
Materialise from Cheops Technology NV, a managed service provider in secure IT infrastructures and cloud computing, where he served
as Chief Financial Officer and where he was also a member of the Executive Committee from May 2019 until April 2023. Mr. Berges
started his professional career at PwC Consulting and subsequently also held various international finance leadership roles at
ExxonMobil and investment group Alcopa. Mr. Berges holds a Master of Science in Business Engineering, International Management
from the University of Antwerp.
Brigitte de Vet-Veithen. Brigitte de Vet-Veithen has represented De Vet Management BV and has served as our Chief Executive Officer
since January 2024. Prior to that Ms. De Vet-Veithen served as Vice President of the Materialise Medical segment 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, as permanent representative of Level 5 B.V., 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.
Conny Hooghe. Conny Hooghe represented SoHo Services as our Vice President of Human Resources 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.
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Carla Van Steenbergen. Carla Van Steenbergen, as permanent representative of Super Mare & Park BV, has served as our Executive
Vice President and Director, Corporate Affairs, supporting the company’s legal and procurement department and M&A and partnership
transactions since January 2024. Prior to that, Ms. Van Steenbergen 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.
Udo Eberlein. Udo Eberlein, has served as our Vice President of Software, since November 2023. Prior to that, in February 2021 Mr.
Eberlein co-founded Goldn, an online working space for cosmetic creators and suppliers and he also works in Chemovator supporting
startups in their business journey. Mr Eberlein is a seasoned software technology executive with successfully building and leading large
and mid-scale technology organizations in complex global markets. Throughout his career, he has acquired a diverse range of skills and
accomplishments spanning various fields, such as internet services, digital transformation, digital media software, IoT, SaaS,
marketplaces, corporate development, strategic advisory, and venture capital, among others. He holds a degree in Logistics and Business
Administration from Stuttgart University.
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 Disclosures
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 for each of the years ended December 31, 2022 and 2023.
Country of Principal Executive Offices:
Foreign Private Issuer
Disclosure Prohibited under Home Country Law
Total Number of Directors
Board Diversity Matrix
Belgium
Yes
No
10
Part I: Gender Identity
Directors
Part II: Demographic Background
Underrepresented Individual in Home Country Jurisdiction
LGBTQ+
Did Not Disclose Demographic Background
Female
Male
Non-Binary
2
8
0
Did Not
Disclose
Gender
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, 2023, only the directorships of Mr. De Lille, Mr. Vander Sloten, Mr. Ingels, Mr. Luyten, Ms. Verplancke, Mr. Sander
Vancraen and Mr. Hammes were remunerated. The directorships of Mr. Wilfried Vancraen, Mr. Leys and Ms. Ingelaere were not
remunerated because these individuals were remunerated in their capacity as senior management. During the year ended December 31,
2023, Mr. De Lille, Mr. Vander Sloten, Mr. Ingels, Mr. Luyten, Ms. Verplancke, Mr. Sander Vancraen and Mr. Hammes each received
annual remuneration equal to € 11,000. In addition, Mr. De Lille, Mr. Vander Sloten, Mr. Ingels, Mr. Luyten, Ms. Verplancke, Mr. Sander
Vancraen and Mr. Hammes each received a remuneration of € 1,375 per physical board meeting that he or she attended and € 687.5 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 € 8,250. Each independent member (including the
Chairman) of the Audit Committee or the Remuneration and Nomination Committee received a remuneration of € 1,375 for each
physical committee meeting that he or she attended, and € 687.5 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 2023, the aggregate total gross compensation of our senior management amounted to € 2.6 million, which included base salary, bonus
payments, company car allowance and other benefits. This amount also includes the compensation for the members of the Executive
Committee. During 2023, the directorships of Mr. Wilfried Vancraen, Mr. Leys and Ms. Ingelaere were not remunerated.
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.
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;
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● 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.
As from January 1, 2024, our board of directors entrusted the daily management of the company to De Vet Management BV, represented
by Brigitte de Vet-Veithen, our Chief Executive Officer, in conformity with article 7:121of the Belgian Companies and Associations
Code. Until December 31, 2023, this position was held by Wilfried Vancraen.
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);
● 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
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● 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
Verplancke. As from January 1, 2024, Hilde Ingelaere has replaced Wilfried Vancraen as a member of our Remuneration and Nomination
Committee. 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. Due to the war in Ukraine, some private entrepreneurs have been
relocated to Poland, though they continue to 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.
Total
Segments:
Materialise Software
Materialise Medical
Materialise Manufacturing
Additional staff
2023
2,437
At December 31,
2022
2,439
2021
2,332
293
928
784
432
339
888
760
452
281
861
752
438
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, for each member of our board of
directors and senior management as of March 26th, 2024:
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 (6)
Lieve Verplancke
Hilde Ingelaere (3)
Bart Luyten
Volker Hammes (7)
Johan Pauwels (8)
Bart Van der Schueren (9)
Conny Hooghe
Jurgen Laudus (10)
Carla Van Steenbergen (11)
Brigitte de Vet - Veithen (12)
Koen Berges (13)
Udo Eberlein
*
Less than 1%
Ordinary Shares Beneficially
Owned as of 26 March 2024
Percent(2)
Number(2)
33,325,821
320,459
—
—
—
12,000
—
33,325,821
—
2,500
151,545
143,346
—
45,145
28,635
27,793
2,780
—
56.42
*
—
—
—
*
—
56.42
—
—
*
*
—
*
*
*
*
—
(1) Except as otherwise indicated, the address for each of the persons named above is Technologielaan 15, 3001 Leuven, Belgium.
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(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 March 26, 2024, 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. (iii) 30,858,964 ordinary shares and 2,171,497 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 and (iv) 20,000 ADSs jointly
held (directly) by Mr. Vancraen and Ms. Ingelaere.
(4) Consists of (i) 320,459 ADSs and ordinary shares held by Peter Leys. 307,419 of these ADS and ordinary shares are subject to
shared voting and investment power and are owned by: Mountain View (maatschap) as 75,000 ADS and 101,781 ordinary shares.
(ii) Riverside (maatschap) holds 22,862 ADSs and (iii) Els Kindt, the spouse of Peter Leys, holds 4,215 ADS and 103,561 ordinary
shares. Both Mountain View and Riverside are jointly controlled by Peter Leys and Els Kindt.
(5) The address for A Tre C CVOA is Timmermansstraat 32, 8340 Damme, Belgium.
(6) Consists of 12,000 shares held by Mr. Vander Sloten.
(7) Consists of 2,500 ADSs held by Mr. Hammes.
(8) Consists of (i) 40.000 ordinary shares held by Mr. Pauwels (ii) 100,000 ordinary shares held by Sorelle, a civil partnership that is
controlled and managed by Mr. Pauwels and Ms Van Muylder (iii) 1,000 ADS in an investment account in the name of Sorelle and
(iv) 10,545 ADS held by Mr. Pauwels.
(9) Consists of 143,346 ordinary shares held by Mr. Van der Schueren.
(10) Consists of 45,145 ADSs held by Mr. Laudus.
(11) Consists of 28,635 ordinary shares held by Ms. Van Steenbergen.
(12) Consists of 27,793 ADSs held by Ms. de Vet-Veithen.
(13) Consist of 2,780 ADS held by Mr. Berges.
F. Disclosure of a registrant’s action to recover erroneously awarded compensation
Not applicable.
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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 March 26, 2024, 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)
Number(2)
Ordinary Shares Beneficially
Owned as of March 26, 2024
Percent(2)
56.42
56.42
6.08
33,325,821
33,325,821
3,592,979
(1) Except as otherwise indicated, the address for each of the persons named above is Technologielaan 15, 3001 Leuven, Belgium.
(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 March 26, 2024, 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 2,171,497 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 10, 2023 by ARK Investment Management LLC or 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
3,592,979 ADSs; (b) shared voting with respect to 71,296 ADSs; and (c) sole dispositive power with respect to 3,415,360 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 March 26, 2024, there were 30 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
March 26, 2024, 53.60% of our outstanding ordinary shares were held directly by 30 holders of record, and we believe that at least 23 of
such shareholders (representing 53.60% of our outstanding ordinary shares), are residents of Belgium. As of March 26, 2024, assuming
that all of our ordinary shares represented by ADSs are held by residents of the United States, approximately 46.39% of our outstanding
ordinary shares were held in the United States by one holder of record, the Bank of New York Mellon, depositary of the ADSs. At such
date, there were outstanding 27,399,403 ADSs, each representing one of our ordinary shares, and in the aggregate representing
approximately 46.39% 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, 2023, 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.
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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. This activity was also transferred from Ailanthus NV to Lunebeke NV as a result of Ailanthus’s
demerger. In 2023, we incurred K€97 of rent expense to Lunebeke NV.
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 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.
In May 2023, the Belgian Center for Arbitration and Mediation issued a decision in the arbitration proceedings filed by Zimmer Biomet
against Materialise, pursuant to which we were ordered to pay an amount of € 5,0000,000 plus interest to Zimmer Biomet. No amounts
had been accrued for this loss contingency.
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 cash
dividends in the foreseeable future. Any recommendation by our board of directors to pay cash 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.
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.
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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.
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.
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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.
On December 28, 2022, 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 € 65,71 (excluding an issuance premium of 7,554.94) and €
212.70 (excluding an issuance premium of € 17.847,30) against the issuance of 865 and 2,800 new ordinary shares, respectively.
On October 25, 2023, the board of directors adopted a new Warrant Plan, our 2023 Warrant Plan, and issued 500,000 warrants, which
warrants are exercisable for 500,000 new ordinary shares. As of December 31, 2023, 350,000 warrants were granted.
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.
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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, double tax treaties and regulatory interpretation thereof.
In addition to the assumptions mentioned above, it is also assumed in this discussion that for purposes of the 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.
Belgian Dividend Withholding Tax
As a general rule, a Belgian dividend 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 double 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 paid-up capital made in accordance with the Belgian Code of Companies and
Associations is in principle partly considered to be a dividend distribution from a Belgian tax perspective stemming from the existing
taxed reserves (irrespective whether incorporated into the capital or not) and/or the tax-free reserves incorporated into the capital. The
proportion of the deemed dividend distribution for tax purposes is determined on the basis of the ratio between (A) the sum of (i) certain
taxed reserves and (ii) tax-free reserves incorporated into the capital on the one hand and (B) the aggregate of such reserves and the fiscal
paid-up capital on the other hand. In principle, fiscal paid-up 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
paid-up capital represented by the redeemed shares) will be treated as a dividend which in certain circumstances may be subject to a
Belgian dividend withholding tax of 30%, subject to such relief as may be available under applicable domestic or double tax treaty
provisions. In case of a liquidation of our Company, any amounts distributed in excess of the fiscal paid-up capital will be subject to a
30% dividend withholding tax, subject to such relief as may be available under applicable domestic or double tax treaty provisions.
For non-residents, the Belgian 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.
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Relief of Belgian Dividend Withholding Tax
Under the Belgium-United States Double Tax Treaty (the “Treaty”), there is a reduced Belgian dividend 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 dividend withholding tax rate is further reduced to 5%. No Belgian dividend withholding tax
is however applicable if the Qualifying Holder, is: (i) a company that is a 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, i.e. 30% (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 Double Tax 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 attributed. U.S. holders should consult their own tax advisors in
Belgium as to whether they qualify for reduction in Belgian withholding tax upon payment or attribution of dividends, and as to the
procedural requirements for obtaining a reduced Belgian withholding tax upon the payment of dividends or for making claims for
reimbursement.
Withholding tax is also not applicable, pursuant to Belgian 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 dividend 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 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 dividend withholding tax exemption is available, pursuant to Belgian 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.
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Capital Gains and Losses
Pursuant to the Belgium-US Double Tax 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 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 wealth and the capital gain is obtained or received in Belgium, the gain will in principle be taxable at 33% in
Belgium if and to the extent that such private individual is actually subject to Belgian non-resident personal tax based on Belgian
domestic tax law. The Official Commentary to the Belgian Income Tax Code 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 wealth.
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% in Belgium 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).
Capital gains realized by a Holder upon the redemption of ADSs or upon our liquidation will generally be taxable as a dividend. See
section “Belgian Dividend Withholding Tax.”
Belgian 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” in French / “taks op de beursverrichtingen” in Dutch) 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 for ordinary shares in principle 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.
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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.
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. A 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; (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, etc. The average value is calculated by taking the average of the securities
accounts values on December 31, March 31, June 30 and September 30.
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 a rebuttable presumption of tax abuse applies in the
following situations (non-exhaustive list): (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); and (iii) transferring a securities account to a foreign legal entity which then transfers the securities to a foreign
securities account, etc.
Prospective Holders should consult their own tax advisors as to whether they are subject to the new annual tax on securities accounts.
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Proposed EU 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”).
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. 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. In June 2023, the European Commission stated that “the prospects of reaching an agreement on the FTT in the future
are limited given that the last substantial discussions took place under the Portuguese Council Presidency in 2021” adding there was
“little expectation that any proposal would be agreed in the short term.”
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 claimed as a credit against your U.S. federal income tax liability if you elect not to take a deduction for any non-U.S.
income taxes for that taxable year otherwise, such Belgian withholding tax may 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.
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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.
Passive Foreign Investment Company
We believe that we were not a PFIC for the tax year ended December 31, 2023, 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, 2024, or for the foreseeable future. However, 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, 2023 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 form filing 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.
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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.
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.
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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.
I.
Subsidiary Information
Not applicable.
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.
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Foreign Exchange Rate 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, 2023, 2022 and 2021, 34%, 39%, and 35% 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 € 0.9 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 € 0.8 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 U.S. dollar, we have entered into currency rate swaps. As of December
31, 2023, we had hedge agreements in place for $ 11.2 million, all maturing before year-end 2024. Refer to note 20 to our consolidated
financial statements for the related fair value of these derivatives.
Additionally, we are exposed to credit risk, liquidity risk and challenges related to capital management.
Inflation Risk
We transact business globally and are subject to risks associated with fluctuating inflation. The risk exists that, if inflation increases our
costs of remuneration, materials, services, energy, and capital expenditures, we may not be able to offset such costs fully by increasing
our selling prices. As such, in a high inflationary environment, our results of operations and financial condition may be adversely
affected.
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. At December 31, 2023, we had cash and cash equivalents of € 127.6
million, while € 25.5 million of our € 64.4 million gross debt was short term. At December 31, 2023, we had an undrawn line of credit of
€ 50 million, as more fully described in Note 15 to our consolidated financial statements.
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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, 2023, 2022 and 2021.
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.
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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)
Issuance of ADSs,
resulting
including
distribution of ordinary shares or rights or other property
issuances
from a
For:
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
As necessary
the deposited securities
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.
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
PART II
None.
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.
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, 2023. 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, 2023, that our disclosure controls and procedures were
effective.
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.
Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2023 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 effective as of December 31, 2023.
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c) Attestation Report of the Registered Public Accounting Firm
The effectiveness of internal control over financial reporting as of December 31, 2023 has been audited by KPMG Bedrijfsrevisoren BV
/ KPMG Réviseurs d’Entreprises SRL, our independent registered public accounting firm. Their audit report, including their opinion on
management’s assessment of internal control over financial reporting, is included with our consolidated financial statements in this
annual report.
d) Changes in Internal Control over Financial Reporting
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.
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.
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 under the “Investors” section, “Governance – Documents”. 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.
ITEM 16C.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
KPMG Bedrijfsrevisoren BV / KPMG Réviseurs d’Entreprises SRL (PCAOB ID No. 1050, with registered address at Luchthaven
Brussel Nationaal 1K, 1930 Zaventem, Belgium) acted as our independent auditor for the fiscal years ended 31 December 2023, 2022
and 2021. The following table sets forth by category of service the total fees for services provided by KPMG Bedrijfsrevisoren BV /
KPMG Réviseurs d’Entreprises SRL and its affiliates to us during 2023 and 2022.
in 000€
Audit Fees
Audit-Related Fees
All Other Fees
Total
Audit Fees
For the year ended December 31
2023
2022
1,162
15
—
1,177
1,284
12
—
1,296
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 the quarterly attestation reports for EIB.
All Other Fees
No non-audit related fees were paid to KPMG Bedrijfsrevisoren BV / KPMG Réviseurs d’Entreprises SRL or its affiliates for the fiscal
years ended December 31, 2023 and 2022.
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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, 2023 and 2022 were pre-approved under the pre-
approval policies of the Audit Committee.
ITEM 16D.
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
None.
ITEM 16E.
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
None.
ITEM 16F.
CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
Not applicable.
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. The Belgian law definition of independence differs from the definition of
independence under the Nasdaq Stock Market Listing Rules.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.
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● 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. In lieu of the Nasdaq Stock Market Listing Rule 5635(c), we have historically 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 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.
ITEM 16H. MINE SAFETY DISCLOSURE
Not applicable.
ITEM 16I.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable
ITEM 16J.
INSIDER TRADING POLICIES
Not applicable.
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ITEM 16K.
CYBERSECURITY
Our board of directors recognizes the critical importance of maintaining the trust and confidence of our customers, clients, shareholders,
business partners, and employees. While everyone at Materialise plays a part in managing our cybersecurity risk management strategy,
primary cybersecurity oversight responsibility is shared by our board of directors, and members of our senior management as part of our
Executive Committee, as supported by our Governance Bureau. The Executive Committee is actively involved in oversight of the
Materialise risk management program and supports our board of directors in the development and continual improvement of our
information security management system. Our cybersecurity policies, standards, processes, and practices are fully integrated into our
operational processes and are based on recognized frameworks established by the International Organization for Standardization
(including ISO 27001 and 27701) and other applicable industry standards (including TISAX). We address cybersecurity risks through a
comprehensive, cross-functional approach that is focused on safeguarding the confidentiality, integrity, and availability of our products
and services, our customers’ and our own data, and our supporting IT infrastructure. We apply the principle of “defense in depth” and
focus both on preventing the occurrence of cybersecurity incidents, and providing an effective response to cybersecurity incidents when
they do occur.
Risk Management and Strategy
As one of the critical elements of our overall corporate risk management approach, the information security program is focused on the
following key areas:
● Governance: As discussed in more detail under the heading “Governance,” our board of directors’ oversight of
cybersecurity risk management is supported by our Executive Committee which consists of eight members.The Executive
Committee is also supported by our Governance Bureau, which consists of our Chief Executive Officer, Chief Operating
Officer, and the Director of Internal Audit, and regularly invites the Chief Information Security Officer and other members
executive management to closely follow up on open cybersecurity risks.
● Defense in depth: We have implemented a comprehensive, cross-functional approach to identifying, preventing, and
mitigating cybersecurity threats and incidents, while also implementing controls and procedures that provide for the prompt
escalation of certain cybersecurity incidents so that decisions regarding the public disclosure and reporting of such
incidents can be made by management in a timely manner.
● Technical Safeguards: We deploy technical safeguards that are designed to protect our information systems and online
environments from cybersecurity threats, including firewalls, intrusion prevention and detection systems, anti-malware
functionality and access controls, which are evaluated and improved through vulnerability assessments and cybersecurity
threat intelligence.
● Incident Response and Recovery Planning: We have established and we maintain incident response procedures and
recovery plans to ensure our ability to timely respond to and recover from a cybersecurity incident. These procedures and
plans are tested and evaluated on a regular basis. Cybersecurity incidents are assessed and handled according to risk-based
priority levels.
● Third Party Risk Management: We maintain a comprehensive risk-based approach to identifying and overseeing
cybersecurity risks presented by third parties, including vendors, service providers, and third-party systems that could
adversely impact our business in the event of a cybersecurity incident affecting those third-party systems.
● Education and Awareness: Materialise provides continual training and awareness for personnel regarding cybersecurity
threats to equip personnel with effective tools to address those threats, and to communicate evolving information security
policies, standards, processes, and practices.
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We engage in the periodic assessment and testing of policies, implemented standards, processes, and practices that are designed to
address cybersecurity threats and incidents. These efforts include a wide range of activities, including internal audits, assessments,
vulnerability scanning, security testing and disaster recovery exercises focused on evaluating the effectiveness of our cybersecurity
measures and planning. We regularly engage third parties to perform assessments on our cybersecurity measures, including phishing
simulations, security penetration testing, and external compliance audits. The results of such assessments, audits, and reviews are
handled according to our internal nonconformity and risk management processes and reported to the Executive Committee or
Governance Bureau. We continually improve our cybersecurity policies, standards, processes, and practices as necessary based on the
information provided by these assessments, audits, and reviews.
Governance
The Executive Committee, in coordination with the Governance Bureau, oversees the corporate management system, which includes
information security management. Twice a year, the Executive Committee receives an update from the relevant members of senior
management as part of the corporate management review, including recent developments of relevant cybersecurity risks, evolving
standards, the threat environment, technological trends and information security considerations arising with respect to Materialise’s
customers and peers. The Governance Bureau also receives prompt and timely information regarding any rapidly evolving cybersecurity
risks or incidents that meet established reporting thresholds, as well as ongoing updates regarding any such topics until they have been
addressed. The Executive Committee, provides updates to the board of directors with respect to cybersecurity risks, which address a wide
range of topics, including recent developments, evolving standards, vulnerability assessments, third-party and independent reviews, the
threat environment, technological trends and information security considerations arising with respect to the Company’s peers and third
parties. Further, on an annual basis, the corporate information security roadmap is updated to account for the evolving threat landscape
and strategic cybersecurity priorities for Materialise and its customers and presented to the Governance Bureau for approval.
Moreover, the CISO, in coordination with the Governance Bureau and Executive Committee, works collaboratively across the company
to implement a program designed to protect Materialise’s information systems from cybersecurity threats and to promptly respond to any
cybersecurity incidents in accordance with established incident response and recovery plans. Through ongoing communications with
these teams, the CISO monitors the prevention, detection, mitigation, and remediation of cybersecurity threats and incidents, and reports
such threats and incidents to the Governance Bureau when appropriate.
The CISO has served in various roles in product security and information security management for over 15 years. The CISO holds
undergraduate and graduate degrees in computer science and has a Ph.D. in secure software engineering.
Although we are subject to ongoing and evolving cybersecurity threats, we are not aware of any material risks from cybersecurity threats
in 2023, including as a result of any previous cybersecurity incidents, that have materially affected or are reasonably likely to affect us,
including our business strategy, results of operations or financial condition. If we were to experience a material cybersecurity incident in
the future, such incident may have a material effect, including on our business strategy, operating results, or financial condition. For more
information regarding cybersecurity risks that we face and potential impacts on our business related thereto, see the risk factors
disclosures in Item 3 of this Annual Report on Form 20-F titled “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”, “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” and “We develop and offer online software services through our SaaS and cloud-based
software applications where we manage data we receive from our customers, and a cybersecurity breach of these online services could
harm our customers and our reputation, expose us to liability, and adversely impact our business, financial condition and results of
operations.”
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ITEM 17.
FINANCIAL STATEMENTS
Not applicable.
ITEM 18.
FINANCIAL STATEMENTS
PART III
See our consolidated financial statements beginning on page F-1 of this annual report.
ITEM 19. EXHIBITS
1.1
2.1
2.2
2.3
4.1
4.2
4.3
4.4
4.5*
4.6
4.7
4.8
4.9
4.10
8.1*
12.1*
12.2*
13.1**
13.2**
Restated Articles of Association of Materialise NV (English translation incorporated by reference to Exhibit 1.1 to the
Company’s Annual Report on Form 20-F for the year ended December 31, 2022).
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)).
Warrant Plan 2023 (English translation incorporated).
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 Materialise 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).
Subsidiaries of Materialise NV.
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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.
109
Table of Contents
23.1*
Consent of KPMG Bedrijfsrevisoren BV / KPMG Réviseurs d’Entreprises SRL, independent registered public accounting
firm.
97.1*
Compensation Recovery Policy.
101.INS
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE
104
*
**
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.
110
Table of Contents
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.
Signatures
MATERIALISE NV
/s/ Brigitte de Vet-Veithen
By:
Name:Brigitte de Vet-Veithen
De Vet Management BV
Title: Chief Executive Officer
Date: April 12, 2024
111
Table of Contents
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements for the Years Ended December 31, 2023, 2022 and 2021
Report of Independent Registered Public Accounting Firm
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-1
F-2
F-4
F-5
F-6
F-8
F-9
F-11
Table of Contents
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
Materialise NV:
Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting
We have audited the accompanying consolidated statements of financial position of Materialise NV and subsidiaries (the Company) as of
December 31, 2023, 2022 and 2021, 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 three-year period ended
December 31, 2023 and the related notes (collectively, the consolidated financial statements). We also have audited the Company’s
internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the
Company as of December 31, 2023, 2022 and 2021 and the results of its operations and its cash flows for each of the years in the three-
year period ended December 31, 2023, in conformity with IFRS Accounting Standards as issued by the International Accounting
Standards Board. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting
as of December 31, 2023 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, 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 consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our
audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (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 audits to
obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error
or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements 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. 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 audits also included performing such other
procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
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.
F-2
Table of Contents
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.
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 and the Materialise Motion cash generating units
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 amounts of the Engimplan and the Materialise Motion CGUs based on the value in use using a
discounted cash flow model. As discussed in Note 5 to the consolidated financial statements, the Company recorded an impairment of
K€ 657 related to the Engimplan CGU and K€ 3,572 related to the Materialise Motion CGU at December 31, 2023.
We identified the evaluation of the impairment analysis for the Engimplan and the Materialise Motion CGUs as a critical audit matter. A
high degree of subjective auditor judgment and specialized skills and knowledge was required to evaluate the Engimplan and Materialise
Motion CGUs’ respective forecasted year-on-year growth rate of revenue and gross margin, the perpetual growth rate and the discount
rate, as changes in these assumptions could cause significant changes in the value in use of the Engimplan and Materialise Motion CGUs.
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 forecasted year-on-year growth rate of revenue and gross
margin, the perpetual growth rate and the discount rate used to determine the value in use of the Engimplan and Materialise
Motion CGUs.
— We evaluated the forecasted year-on-year growth rates of revenue and gross margins by comparing them to the CGUs’
historical performances.
— We assessed management’s ability to accurately forecast by comparing forecasts made by management in the prior year to
the actual performances of the Engimplan and Materialise Motion CGUs.
— We also involved valuation professionals with specialized skills and knowledge, who assisted in:
● evaluating the Company’s discount rates, by comparing them against discount rate ranges that were independently
developed using publicly available market data for comparable entities; and
● evaluating the Company’s perpetual growth rates, by comparing them against the CGUs’ historical performances and
to external market and industry data.
KPMG Bedrijfsrevisoren BV / KPMG Réviseurs d’Entreprises SRL
/s/ Gotwin Victor Jaak Jackers
We have served as the Company’s auditor since 2020.
Zaventem, Belgium
April 12, 2024
F-3
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
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
Notes
22.1
22.2
22.3
22.4
22.5
22.6
22.8
22.9
22.10
For the year ended December 31,
2021
2022
2023
205,450
232,023
256,127
(87,278)
(103,255)
(110,996)
118,172
128,768
145,131
(26,891)
(37,568)
(38,098)
(49,151)
(62,125)
(57,822)
(33,315)
(35,143)
(37,068)
3,402
3,196
(6,524)
12,217
(2,872)
5,619
(4,101)
(4,420)
(3,865)
5,620
6,114
5,019
13,736
(1,178)
6,772
(591)
(975)
(78)
13,145
(2,153)
6,695
6,722
(27)
(2,123)
(29)
13,154
(9)
23
23
0.11
0.11
(0.04)
(0.04)
0.23
0.23
The accompanying notes from page F-11 to page F-62 form an integral part of these consolidated financial statements.
F-4
Table of Contents
Consolidated statements of comprehensive income
in 000€
Net profit (loss) for the year
Other comprehensive income/(loss)
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, net of taxes
Total comprehensive income/(loss), net of taxes
Total comprehensive (loss)/ income attributable to:
The owners of the parent
Non-controlling interest
F-5
For the year ended December 31,
2021
2022
2023
13,145
(2,153)
6,695
1,255
(1,427)
1,565
(331)
924
7,619
7,644
(25)
(92)
(1,519)
(3,672)
(3,643)
(29)
(3,443)
(1,878)
11,267
11,276
(9)
10
Table of Contents
Consolidated statements of financial position
in 000€
Assets
Non-current assets
Goodwill
Intangible assets
Property, plant & equipment
Right-of-use assets
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
2023
As of December 31,
2022
2021
5
6
7
7
22.10
10
10
10
9
11
10
12
43,158
31,464
95,400
8,102
2,797
3,744
—
5,501
190,166
17,034
52,698
9,160
127,573
206,465
396,630
44,155
37,875
94,276
8,420
1,186
3,494
307
5,136
194,847
16,081
51,043
8,424
140,867
216,414
411,262
18,726
31,668
84,451
9,054
227
3,560
399
7,519
155,604
11,295
41,541
8,940
196,028
257,804
413,408
F-6
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
2023
As of December 31,
2022
2021
13
13
13
13
13
15
15
22.10
18
16
15
15
17
18
19
4,487
233,942
5,564
(7,346)
236,646
(53)
236,594
33,582
5,333
3,725
10,701
1,745
55,086
22,873
2,610
21,196
1,777
40,791
15,703
104,950
396,630
4,487
233,895
(1,158)
(8,268)
228,955
(28)
228,928
55,873
5,147
4,312
9,277
1,611
76,220
17,058
2,902
23,230
1,246
41,721
19,957
106,114
411,262
4,489
233,872
965
(6,749)
232,577
1
232,578
72,637
5,268
4,371
4,952
2,167
89,395
17,849
3,353
20,171
783
33,307
15,972
91,435
413,408
F-7
Table of Contents
Consolidated statements of changes in equity
in 000€
At January 1, 2023
Net profit (loss) for the year
Other comprehensive income (loss)
Total comprehensive income (loss)
Capital increase through exercise of warrants
Equity-settled share-based payment expense
At December 31, 2023
in 000€
At January 1, 2022
Net profit (loss) for the year
Other comprehensive income (loss)
Total comprehensive income (loss)
Capital increase through exercise of warrants
Equity-settled share-based payment expense
At December 31, 2022
in 000€
At January 1, 2021
Net profit (loss) for the year
Other comprehensive income (loss)
Total comprehensive income (loss)
Capital increase initial 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
Share
Share
Retained
Other
Notes capital premium earnings reserves Total
4,487 233,895
—
—
—
—
47
4,487 233,942
—
—
—
—
—
13
14
(1,158)
6,722
—
6,722
—
—
5,564
(8,268) 228,955
6,722
922
7,644
—
47
(7,346) 236,646
—
922
922
—
—
Non-
controlling
interest
Total
equity
(28) 228,928
6,695
(27)
924
2
7,619
(25)
—
—
47
—
(53) 236,594
Attributable to the owners of the parent
Share
Share
Retained
Other
Notes capital premium earnings reserves Total
Non-
controlling
interest
Total
equity
4,489 233,872
—
—
—
22
—
4,487 233,895
—
—
—
(2)
—
13
14
965
(2,123)
—
(2,123)
—
—
(1,158)
—
(1,519)
(1,519)
—
—
(6,749) 232,577
(2,123)
(1,519)
(3,642)
20
—
(8,268) 228,955
1 232,578
(2,153)
(29)
(1,519)
—
(3,672)
(29)
20
—
—
—
(28) 228,928
Attributable to the owners of the parent
Share
Share
Retained
Other
Notes capital premium earnings reserves Total
Non-
controlling
interest
Total
equity
13
13
13
14
4,096
—
—
—
371
22
141,274
(7,316)
— 13,154
—
—
— 13,154
(4,873)
—
90,235
2,322
(4,871)
—
(1,878)
(1,878)
133,183
13,154
(1,878)
11,276
— 85,733
—
2,344
—
—
—
41
4,489 233,872
—
—
965
—
—
—
41
(6,749) 232,577
F-8
— 133,183
13,145
(9)
(1,878)
—
(9)
11,267
— 85,733
2,344
—
10
—
10
41
1 232,578
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 and impairment of intangible assets
Impairment of goodwill and intangible assets from business combinations
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
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
F-9
Notes
For the year ended December 31,
2021
2022
2023
6,695
(2,153)
13,145
7
6
5; 6
14
7
22.9
22.8
8
22.10
15,065
6,504
4,228
39
(415)
(181)
499
(5,033)
3,886
(94)
—
73
(3,335)
(806)
(8,435)
(2,737)
4,206
20,157
14,940
7,628
—
(140)
347
1,781
(23)
(6,114)
4,420
(39)
—
975
(6,330)
(5,011)
12,365
(1,425)
1,067
22,288
15,574
4,975
177
(1,036)
210
99
255
(5,620)
4,101
40
—
591
(10,920)
(1,423)
6,453
(1,152)
376
25,845
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)
Convertible loan granted
Net cash flow used in investing activities
Financing activities
Repayment of loans & borrowings
Repayment of leases
Capital increase in parent company
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
F-10
Notes
For the year ended December 31,
2021
2022
2023
7
6
4
10
15
15
13
12
12
(9,235)
(2,525)
723
—
—
(11,037)
(16,723)
(3,549)
—
(1,750)
(346)
(22,368)
(13,248)
140,867
(46)
127,573
(21,608)
(3,165)
205
(29,293)
—
(53,861)
(17,708)
(3,379)
23
(1,990)
544
(22,510)
(54,082)
196,028
(1,078)
140,867
(7,934)
(3,788)
462
(875)
(999)
(13,134)
(14,277)
(3,775)
88,117
(2,326)
3,417
71,156
83,867
111,538
624
196,028
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, 2023 were approved and authorized for issue on
April 12, 2024, 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, 2023, 2022 and 2021 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 which 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.
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 2023, but do not have a
significant impact on the consolidated financial statements of the Group.
● IFRS 17 Insurance Contracts (issued on 18 May 2017); including Amendments to IFRS 17 (issued on 25 June 2020)
● Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting
Estimates (issued on 12 February 2021)
● Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting
policies (issued on 12 February 2021)
● Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction
(issued on 7 May 2021)
● Amendments to IFRS 17 Insurance contracts: initial application of IFRS 17 and IFRS 9 – Comparative information (issued
on 9 December 2021)
● Amendments to IAS 12 Income taxes: International Tax Reform – Pillar Two Model Rules (issued on 23 May 2023)
F-11
Table of Contents
Standards and Interpretations issued but not yet effective in the current period
No amendments to standards that are issued but not yet effective are considered to materially affect the Company’s accounting policies or
any of the disclosures when applied for the first time. The Company has not early adopted any of the below.
Amendments to IAS 1 ‘Presentation of Financial Statements: Classification of Liabilities as current or non-current’ (effective
January 1, 2024), affect only the presentation of liabilities in the statement of financial position — not the amount or timing of
recognition of any asset, liability income or expenses, or the information that entities disclose about those items.
The amendments:
● clarify that the classification of liabilities as current or non-current should be based on rights that are in existence at the end
of the reporting period and align the wording in all affected paragraphs to refer to the “right” to defer settlement by at least
twelve months and make explicit that only rights in place “at the end of the reporting period” should affect the
classification of a liability;
● clarify that classification is unaffected by expectations about whether an entity will exercise its right to defer settlement of
a liability; and make clear that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets
or services; and
● clarify how conditions with which an entity must comply within 12 months after the reporting period, such as covenants,
affect the corresponding liability’s classification.
Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback (effective January 1, 2024). The amendments explain how
an entity accounts for a sale and leaseback after the date of the transaction, specifically where some or all the lease payments are variable
lease payments that do not depend on an index or rate. They state that, in subsequently measuring the lease liability, the seller-lessee
determines ‘lease payments’ and ‘revised lease payments’ in a way that does not result in the seller-lessee recognizing any amount of the
gain or loss that relates to the right of use it retains. Any gains and losses relating to the full or partial termination of a lease continue to
be recognized when they occur as these relate to the right of use terminated and not the right of use retained.
Amendments to IAS 7 ‘Statement of Cash Flows’ and IFRS 7 ‘Financial Instruments: Disclosures’1: Supplier Finance
Arrangements (effective 1 January 2024). The amendments add disclosure requirements, and ‘signposts’ within existing disclosure
requirements, that ask entities to provide qualitative and quantitative information about supplier finance arrangements.
The amendments:
● Do not define supplier finance arrangements.
● Add two disclosure objectives. Entities will have to disclose in the notes information that enables users of financial
statements to assess how supplier finance arrangements affect an entity’s liabilities and cash flows and to understand the
effect of supplier finance arrangements on an entity’s exposure to liquidity risk and how the entity might be affected if the
arrangements were no longer available to it.
● Complement current requirements in IFRSs by adding to IAS 7 additional disclosure requirements about the type and effect
of non-cash changes in the carrying amounts of the financial liabilities that are part of the arrangement and the terms and
conditions of the supplier finance arrangements; for the arrangements, as at the beginning and end of the reporting period:
o
o
o
the carrying amounts of financial liabilities that are part of the arrangement and the associated line item presented;
the carrying amount of financial liabilities disclosed under a) for which suppliers have already received payment
from the finance providers;
the range of payment due dates (for example, 30 to 40 days after the invoice date) of financial liabilities disclosed
under a) and comparable trade payables that are not part of a supplier finance arrangement.
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Amendments to IAS 21 ‘The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability’1, (effective 1 January
2025). The amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates require disclosure of information that enables
users of financial statements to understand the impact of a currency not being exchangeable.
The amendments:
● Specify when a currency is exchangeable into another currency and when it is not.
● Specify how an entity determines the exchange rate to apply when a currency is not exchangeable.
● Require the disclosure of additional information when a currency is not exchangeable.
3 Material 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.
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”.
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.
Acquisition costs incurred are expensed and included in general and administrative expenses.
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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. 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:
20-30 years
5-12 years
3-5 years
10-15 years
2-4 years
10 years
Land is not depreciated.
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 Group recognizes right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use).
Unless the Group 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:
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
Right-of-use assets are subject to impairment review whenever there is an indication that the right-of-use asset may be impaired.
Lease liabilities:
In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date. 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 a 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 Group 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.
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.
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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:
3 years;
10 years;
subscription term
10 years;
5-20 years;
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”.
Impairment of goodwill and other non-financial assets (excluding inventories and deferred tax assets)
Impairment tests on goodwill, 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 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. An impairment loss recognized for goodwill is not reversed.
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.
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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.
Except for 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
● 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 investment in the non-listed company AM-Flow
BV and Essentium, as disclosed in Note 10 and Note 20, as financial asset 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.
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:
● derivatives as disclosed in Note 10;
● a convertible loan granted to the company Fluidda as disclosed in Note 10.
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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.
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.
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.
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.
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.
Pension 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.
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.
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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.
Other long-term employee benefits
The Group’s net obligation for long-term employee benefits is equal to the value of future benefits acquired by personnel in exchange for
services rendered in the current and prior periods.
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.
Revenue from contracts with customers is recognized when control of the goods or services is 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 considering 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.
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Most of the perpetual software licenses include one year maintenance and support services as a separate performance obligation. The
Group 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 Group 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 is 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 Group determines the percentage-of-completion by comparing labor hours incurred to-date to the estimated total labor hours
required to complete the project. The Group considers labor hours to be the most reliable available measure of progress on these projects.
Adjustments to the Group’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.
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.
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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 Group 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.
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 Group 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.
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.
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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 (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.
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:
● 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.
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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:
● 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:
● 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.
Development expenses
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.
F-23
Table of Contents
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€1,577 of development expenses during 2023 (2022: K€2,438; 2021: K€1,684) related to capitalized
internal development of our digital transformation program for which a detailed business plan is available and the Group expects future
economic benefits.
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, 2023, the Group had current and non-current receivables related to tax credits for an amount of K€5,281 (2022: K€5,105;
2021: K€4,717).
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.
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€43,158 as of December 31, 2023 (2022: K€44,155; 2021: K€18,726) 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.
During 2023 impairment charges have been recorded for K€4,228 (2022: K€672; 2021: K€177) related to the impairment of goodwill,
intangible assets and PPE of Materialise Motion and Engimplan.
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.
F-24
Table of Contents
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.
Convertible debt instruments
At December 31, 2023 the Group holds a 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
of December 31, 2023 amounted to K€3,744. The convertible loan has a duration of 7 years with a 10% annual interest rate which is
capitalized. In the fair value analysis, the Group has applied a discount factor of 13.32% 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€307. Despite a fundamental restructuring program implemented in 2023,
AM Flow continues to be loss making, with no outlook on quick turnaround. Additional fund-raising and external debt were required in
2023 to avoid acute liquidity issues. 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 on December 31, 2023 and recognized a K€307 downward fair value
adjustment in OCI for the year ended December 31, 2023.
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. As a result of liquidity issues at
Essentium and considering the Group’s subordinate position as shareholder, the Group remeasured the fair value of its investment to zero
on December 31, 2021 and recognized a K€3,443 downward fair value adjustment in OCI for the year ended December 31, 2021. The
Group determined that the fair value of this equity investment remained zero at December 31, 2022. Early January 2024 the company
entered into an asset deal with Nexa3D, Inc. transferring virtually all of its assets in exchange for a stake in the common stock of
Nexa3D, Inc. Taking into account the terms and conditions of this transaction, the Group determined that the fair value of this equity
investment remained nevertheless zero at December 31, 2023.
Leases – 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.
F-25
Table of Contents
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 reasonably 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.
4
Business Combinations
Acquisitions in 2023
The Group did not effect any business combinations in the course of 2023.
Acquisitions in 2022
Materialise Link3D, Inc.
On April 9, 2021, the Group acquired an option to buy Link3D, Inc. (“Link3D”) 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 realized by the
Group’s U.S. subsidiary, Materialise USA, LLC by exercising our call option. As a result of this transaction, Materialise USA became
the sole shareholder of Link3D. On January 4, 2022, the Group completed the acquisition and obtained control of Link3D. Link3D is an
additive workflow and digital manufacturing software company. The Group acquired 100% of voting equity interests in Link3D for a
total cash consideration of K€ 26,747.
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.
On October 1, 2022, Link3D was merged into parent entity Materialise USA.
F-26
Table of Contents
The fair value of the identifiable assets and liabilities at the date of acquisition was assessed at:
in 000€
Assets
Brands and trademarks
Software
IT, Furniture & Vehicles
Right-of-use assets
Deferred tax assets
Trade receivables
Other current assets
Cash & cash equivalents
Total Assets
Liabilities
Long-term borrowings & Leases
Other non-current liabilities
Short-term borrowings & Leases
Deferred tax liability
Trade payables
Payroll-related payables
Deferred revenue
Other current liabilities
Total Liabilities
Total identified assets and liabilities
Goodwill
Acquisition price
Carrying
value at
acquisition
date
Fair value
adjustments
Fair value
at acquisition
date
—
—
21
155
2,149
768
200
1,135
4,428
(2,258)
—
(1,926)
—
(59)
(1,012)
(1,286)
(649)
(7,190)
(2,762)
—
—
1,066
6,892
—
—
121
—
—
—
8,079
—
—
—
(2,270)
—
—
449
—
(1,821)
6,258
23,251
—
1,066
6,892
21
155
2,270
768
200
1,135
12,507
(2,258)
—
(1,926)
(2,270)
(59)
(1,012)
(837)
(649)
(9,011)
3,496
23,251
26,747
The fair value of the identified assets and liabilities included in our consolidated financial statements at the acquisition date was
K€3,496. The Group acquired 100% of voting equity interests in Link3D Inc. for a total consideration of K€26,747. This is the fair value
of the identified assets and liabilities increased by a goodwill of K€23,251.
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.
The accounting for the business combination resulted in fair values at date of acquisition of K€1,066 for Brands and trademarks (useful
life of 1 year) and K€6,892 for software (useful life of 7 years). The valuation technique used to measure the fair value of brands and
trademarks, as well as software, was the relief-from-royalty method. The relief-from-royalty method considers the discounted estimated
royalty payments that the Group would be prepared to pay to license the respective asset under a contract if it did not own the asset. Key
assumptions used in the application of this valuation technique include the forecasted year-on-year growth rate of revenue, the software
royalty rate, the brands and trademarks royalty rate and the discount rate. A deferred tax liability was recognized of K€(2,270) on the
adjusted fair values. The discount rate used for the valuation was set at 14.00%. 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. Trade receivables acquired
comprised gross contractual amounts due of K€992, of which K€224 was expected to be uncollectible at the date of acquisition.
The Link3D revenue included in the consolidated financial statement between acquisition date of January 4, 2022 and merger date
October 1, 2022 amounted to K€ 2,631. The amount of revenue between the merger date and December 31, 2022 was K€993. As
integration within the Materialise Software segments started immediately it is impracticable to disclose information on profit.
There are no contingent considerations payable.
F-27
Table of Contents
Materialise Identify3D, Inc.
On September 1, 2022, the Group executed a share purchase agreement and acquired 100% of the shares of Identify3D, Inc.
(“Identify3D” or “ID3D”) for a total cash consideration of K€3,853. The acquisition was realized by the Group’s U.S. subsidiary,
Materialise USA, LLC.
With the acquisition of Identify3D the Group wants to address growing data security and integrity requirements and market interest, and
to make CO-AM the most secure software platform for distributed manufacturing. This acquisition will allow manufacturers to secure
the flow of digital parts and maintain a competitive advantage.
On December 31, 2022, Identify3D was merged into parent entity Materialise USA.
The fair value of the identifiable assets and liabilities at the date of acquisition was assessed at:
in 000€
Assets
Brands and trademarks
Software
Deferred tax assets
Cash & cash equivalents
Total Assets
Liabilities
Long-term borrowings
Deferred tax liability
Trade payables
Payroll-related payables
Total Liabilities
Total identified assets and liabilities
Goodwill
Acquisition price
Carrying
value at
acquisition
date
Fair value
adjustments
Fair value
at acquisition
date
—
—
474
172
646
(100)
—
(44)
(512)
(656)
(10)
—
—
174
1,723
—
—
1,897
—
(474)
—
—
(474)
1,423
2,439
—
174
1,723
474
172
2,543
(100)
(474)
(44)
(512)
(1,130)
1,413
2,439
3,853
The fair value of the identified assets and liabilities included in our consolidated financial statements at the acquisition date was
K€1,413. The Group acquired 100% of voting equity interests in ID3D Inc. for a total consideration of K€3,853. This is the fair value of
the identified assets and liabilities increased by a goodwill of K€2,439.
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.
The accounting for the business combination resulted in fair values at date of acquisition of K€174 for Brands and trademarks (useful life
of 7 years) and K€1,723 for software (useful life of 7 years). The valuation technique used to measure the fair value of brands and
trademarks, as well as software, was the relief-from-royalty method. The relief-from-royalty method considers the discounted estimated
royalty payments that the Group would be prepared to pay to license the respective asset under a contract if it did not own the asset. Key
assumptions used in the application of this valuation technique include the forecasted year-on-year growth rate of revenue, the software
royalty rate, the brands and trademarks royalty rate and the discount rate. A deferred tax liability was recognized of K€(474) on the
adjusted fair values. The discount rate used for the valuation was set at 14.05%. Trade receivables acquired comprised gross contractual
amounts due of K€0.
The amount of revenue included in the consolidated financial statement between acquisition date of September 1, 2022 and the merger
date of December 31, 2022 was K€ 0. As integration within the Materialise Software segments started immediately it is impracticable to
disclose information on profit.
There are no contingent considerations payable.
F-28
Table of Contents
Acquisitions in 2021
The Group did not effect any business combinations in the course of 2021.
5
Goodwill
The goodwill has been allocated to the cash generating units (“CGU”) as follows:
in 000€
CGU: MAT Software
CGU: e-Prototypy
CGU: ACTech
CGU: OrthoView
CGU: Engimplan
CGU: Materialise Motion
Total
2023
28,961
787
8,812
4,598
—
—
43,158
As of December 31,
2022
28,933
730
8,812
4,505
—
1,175
44,155
The changes in the carrying value of the goodwill can be presented as follows for the years 2023, 2022 and 2021:
in 000€
At January 1, 2021
Additions
Impairment
Currency translation
At December 31, 2021
Additions
Impairment
Currency translation
At December 31, 2022
Additions
Impairment
Currency translation
At December 31, 2023
Impairment
Gross
20,070
—
—
304
20,374
25,691
—
(263)
45,802
—
—
178
45,980
(1,471)
—
(177)
—
(1,648)
—
—
—
(1,648)
—
(1,175)
—
(2,823)
2021
3,241
743
8,812
4,755
—
1,175
18,726
Total
18,599
—
(177)
304
18,726
25,691
—
(263)
44,155
—
(1,175)
178
43,158
The goodwill of MAT Software, Orthoview and e-Prototypy include respectively K€28, K€93 and K€57 impact of currency translation in
2023.
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), and Materialise Motion are
included in the reportable segment “Materialise Manufacturing”. The CGUs Orthoview (UK) and Engimplan (BR) are 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, the goodwill related to
the acquisition of Marcam in 2011 (DE-3D Printing Software), the goodwill from the acquisition of Link3D in 2022 and the goodwill
from the acquisition of Identify3D in 2022.
F-29
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 9.91% (11.21% pre-tax) (2022:
9.67% post-tax; 2021: 7.40% post-tax) and a perpetual growth rate of 5% (2022: 5%; 2021: 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€41,158. 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 12.89%
(14.89% pre-tax) (2022: 12.72% post-tax; 2021: 9.90% post-tax) and a perpetual growth rate of 2% (2022: 2%; 2021: 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 higher than the carrying value of the cash generating unit of K€4,144. 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 five years. The main
assumptions include a discount rate (based on WACC) of 8.26% (11.33% pre-tax) (2022: 8.04% post-tax; 2021: 6.36% post-tax) and a
perpetual growth rate of 1% (2022: 1%; 2021: 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€24,824. 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 10.75% (13.69% pre-tax) (2022:
10.27% post-tax; 2021: 8.05% post-tax) and a perpetual growth rate of 1% (2022: 1%; 2021: 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€12,307. 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 integrated 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 be considered a separate cash generating unit.
F-30
Table of Contents
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 18.82% (21.26% pre-tax) (2022: 19.84% post-tax; 2021: 15.49% post-tax) and
a perpetual growth rate of 7.6% (2022: 8.5%; 2021: 7.0%), supported by an expected long term inflation rate of 4.1%, 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 both local and Group management based on past
experience. It was concluded that the value in use is lower than the carrying value of the cash generating unit of K€9,214 which has
resulted in a full impairment of the intangible assets customer lists and trade marks for respectively K€(397) and K€(121) as well as a
tangible asset 3D printer for K€(139) as shown in Note 6 and Note 7. The full impairment charge was recognized in the Consolidated
income statement under Net other operating income and is included in the reportable segment ‘Materialise Medical’.
The key events that led to the impairment loss for the CGU Engimplan were related to a delay of business growth and to less advantage
of synergies than initially foreseen.
A sensitivity analysis was performed to assess the impact of changes in the key assumptions used on the current estimated value-in-use
and can be summarized as follows:
Sensitivity analysis Engimplan impairment
Relevant assumption
WACC
WACC
Perpetual Growth
CGU Materialise Motion
As of December 31,2023
Change
applied
Evolution of the
value-in-use
(in 000€)
+1 %
-1%
-1%
(611)
739
(401)
The impairment test on the CGU Materialise Motion is based on the discounted cash flows, considering a period of five years. The main
assumptions include a discount rate (based on WACC) of 9.91% (11.72% pre-tax) (2022: 9.67% post-tax; 2021: 7.40% post-tax) and a
perpetual growth rate of 3% (2022: 5%; 2021: 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
lower than the carrying value of the cash generating unit of K€3,605 which has resulted in a full impairment of the goodwill for an
amount of K€(1,175) as well as a partial impairment on intangible assets partnership agreement, customer list, and developed technology
for respectively K€(853), K€(107), and K€(1,437) as shown in Note 6. The full impairment charge was recognized in the Consolidated
income statement under Net other operating income and is included in the reportable segment ‘Materialise Manufacturing’.
The key event that led to the impairment loss for the CGU Materialise Motion was a delay in business growth versus what was initially
foreseen.
A sensitivity analysis was performed to assess the impact of changes in the key assumptions used on the current estimated value-in-use
and can be summarized as follows:
Sensitivity analysis Materialise Motion impairment
Relevant assumption
WACC
WACC
Perpetual Growth
As of December 31,2023
Change
applied
Evolution of the
value-in-use
(in 000€)
+1 %
-1%
-3%
(1,028)
1,405
(1,629)
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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 2023, 2022 and 2021:
in 000€
Acquisition value
At January 1, 2021
Additions
Acquisition of a subsidiary
Disposals
Transfer between accounts
Currency translation
Other
At December 31, 2021
Additions
Acquisition of a subsidiary
Disposals
Transfer between accounts
Currency translation
Other
At December 31, 2022
Additions
Acquisition of a subsidiary
Disposals
Transfer between accounts
Currency translation
Other
At December 31, 2023
Patents and
licenses
Acquired
customers,
technology and
Developed
technology and
software under
Software
order backlog construction
Total
4,662
660
—
(153)
272
1
—
5,442
362
1,241
(267)
137
(1)
—
6,915
327
—
(132)
129
0
—
7,239
11,494
70
—
(23)
162
6
—
11,709
184
—
(1,142)
1,908
20
—
12,679
1,006
—
(4,504)
7,458
11
—
16,649
35,484
—
—
—
2
386
—
35,872
—
8,613
—
—
(54)
—
44,431
—
—
—
—
241
—
44,673
4,658
3,058
—
(65)
(496)
—
—
7,155
2,619
—
—
(1,248)
1
—
8,527
1,685
—
(45)
(7,603)
0
—
2,564
56,298
3,788
—
(242)
(60)
393
—
60,177
3,165
9,855
(1,409)
797
(33)
—
72,552
3,018
—
(4,680)
(16)
252
—
71,125
F-32
Table of Contents
in 000€
Amortization & Impairments
At January 1, 2021
Amortization charge for the year
Impairments
Disposals
Transfer between accounts
Currency translation
Other
At December 31, 2021
Amortization charge for the year
Impairments
Disposals
Transfer between accounts
Currency translation
Other
At December 31, 2022
Amortization charge for the year
Impairments
Disposals
Transfer between accounts
Currency translation
Other
At December 31, 2023
Net carrying value
At December 31, 2023
At December 31, 2022
At December 31, 2021
At January 1, 2021
Patents and
licenses
Acquired
customers,
technology and
Developed
technology and
software under
Software
order backlog construction
Total
(3,051)
(392)
—
107
(1)
(1)
—
(3,337)
(1,729)
(29)
267
—
0
—
(4,829)
(755)
—
132
—
(0)
—
(5,453)
1,786
2,086
2,105
1,611
(7,721)
(1,831)
(231)
23
(33)
(5)
(41)
(9,839)
(1,416)
(672)
1,142
—
(15)
—
(10,799)
(3,027)
—
4,504
—
(10)
—
(9,333)
7,316
1,879
1,869
3,773
(10,433)
(2,523)
—
—
(0)
(287)
—
(13,244)
(3,780)
—
—
—
67
—
(16,957)
(2,722)
(2,915)
—
—
(191)
—
(22,785)
21,887
27,474
22,628
25,051
(2,112)
—
—
—
22
—
—
(2,090)
—
—
—
—
—
—
(2,090)
—
—
—
—
—
—
(2,090)
474
6,437
5,065
2,546
(23,317)
(4,746)
(231)
131
(12)
(293)
(41)
(28,510)
(6,926)
(702)
1,408
—
52
—
(34,676)
(6,504)
(2,915)
4,636
—
(202)
—
(39,661)
31,464
37,875
31,668
32,981
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
2.4 years for the main software purchases and 2.2 years for the main patents and licenses.
The ‘Acquired customers, technology and other intangibles’ have been recognized as part of the acquisition of Materialise Motion,
Engimplan, ACTech, E-Prototypy, OrthoView, Cenat, Link3D and Identify3D (see Note 4). At December 31, 2023, the remaining
amortization period for the acquired customers is 1.9 years for Materialise Motion, fully amortized for Engimplan, 12.75 years for
ACTech, fully amortized for E-Prototypy, 0.75 years for OrthoView and 1.25 years for Cenat. At December 31, 2023, the remaining
amortization period for the acquired technology and contracts is 1.75 years for Materialise Motion.
The net book value of developed technology and software under construction at December 31, 2023 relates primarily to the internal
digitalization program.
The total amortization charge for 2023 is K€6,504 (2022: K€6,926; 2021: K€4,746). In 2023, impairments were booked on “Acquired
customers, technology and other intangibles” for K€2,915 related to Motion and Engimplan (also refer to Note 5).
F-33
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 2023, 2022 and 2021:
in 000€
Acquisition value
At January 1, 2021
Additions
Disposals
Transfers
Currency Translation
At December 31, 2021
Additions
Acquired from business combinations
Disposals
Transfers
Currency Translation
At December 31, 2022
Additions
Disposals
Transfers
Currency Translation
At December 31, 2023
Depreciation
At January 1, 2021
Depreciation charge for the year
Disposals
Transfers
Currency Translation
At December 31, 2021
Depreciation charge for the year
Disposals
Transfers
Currency Translation
At December 31, 2022
Depreciation charge for the year
Impairment
Disposals
Transfers
Currency Translation
At December 31, 2023
Net book value
At December 31, 2023
At December 31, 2022
At December 31, 2021
At January 1, 2021
Land and Plant and Right-of-use Construction
buildings
equipment
assets
in progress
Total
42,417
462
—
4,099
183
94,420
5,259
(3,682)
6,673
598
47,161 103,268
3,555
62
(4,227)
3,167
52
773
—
(18)
5
38
47,959
142
—
40
458
48,599
—
(8,007)
(1,344)
—
(143)
(92)
(9,586)
(1,416)
—
—
(43)
(11,045)
(1,352)
—
—
—
(33)
(12,430)
105,877
3,850
(4,299)
15,031
586
121,045
—
(49,202)
(10,590)
3,594
(1,595)
(380)
(58,173)
(10,222)
3,898
—
27
(64,470)
(10,433)
(160)
3,996
(2,935)
(356)
(74,358)
36,169
36,914
37,575
34,410
46,688
41,407
45,095
45,218
F-34
20,147
2,397
(1,191)
(1,249)
103
20,207
2,871
155
(1,293)
(329)
8
21,619
3,965
(3,313)
(4,433)
(74)
17,764
—
(9,151)
(3,640)
1,166
515
(41)
(11,151)
(3,302)
1,203
—
51
(13,199)
(3,296)
—
3,024
3,802
8
(9,661)
8,102
8,420
9,056
10,996
15,955
8,325
—
(11,585)
(153)
12,543
8,639 165,623
10,331
2,213
(5,652)
(779)
1,227
(8,296)
888
4
1,781 172,417
24,479
17,280
217
—
(5,576)
(38)
(217)
(3,060)
90
(8)
191,410
16,282
(7,612)
(947)
817
199,951
—
—
(66,360)
—
(15,574)
—
4,760
—
(1,223)
—
(513)
—
(78,910)
—
(14,940)
—
5,101
—
—
—
35
—
— (88,714)
— (15,081)
(160)
—
7,020
—
867
—
—
(381)
— (96,449)
12,544
15,955
1,781
8,639
103,503
102,696
93,507
99,263
Table of Contents
The investments in property, plant & equipment and right-of-use assets in 2023 amounted to K€16,282 (2022:K€24,479). They are
related to land and buildings (K€4,027), new machines and installations (K€8,682), IT equipment (K€1,102), (leased) vehicles (K€2,240)
and furniture (K€231). The additions to land and buildings, machines and installations in 2023 related mainly to our new metal
production facility in the USA and the extension and expansion of our production capacity in Germany. The investments in 2022 related
to new machines and installations (K€7,903), land and buildings (K€13,985), IT equipment (K€1,275) and leased vehicles (K€971) and
furniture (K€343). The investments in 2021 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 Group realized a net gain on disposal of property, plant and equipment of K€416 in 2023 (2022: a net loss of K€347; 2021: a net loss
of K€210).
Impairments of property, plant and equipment amounted to K€ (160) in 2023 (2022: K€0; 2021: K€0).
Assets under construction
Per December 31, 2023 the main assets under construction were related to the extension and expansion of capacity in Germany for
K€10,551.
F-35
Table of Contents
The right of use assets can be presented as follows:
The carrying value of Right-of-Use assets at December 31, 2023 was K€8,102 (2022: K€8,420; 2021: K€9,054). Right-of-Use assets are
mainly related to buildings with a carrying value of K€4,511 at December 31, 2023 (2022: K€4,822; 2021: K€4,419) and for which
depreciation of K€1,735 was recorded in 2023 (2022: K€1,663; 2021: K€1,794). New leases in 2023 amount to K€3,965 of which
K€1,739 related to leased buildings (2022: K€1,934; 2021: K€1,624).
in 000€
Acquisition value
At January 1, 2021
Additions
Disposals
Currency Translation
Transfers
At December 31, 2021
Additions
Acquired from business combinations
Disposals
Currency Translation
Transfers
At December 31, 2022
Additions
Disposals
Currency Translation
Transfers
At December 31, 2023
Depreciation
At January 1, 2021
Depreciation charge for the year
Disposals
Currency Translation
Transfers
At December 31, 2021
Depreciation charge for the year
Disposals
Currency Translation
Transfers
At December 31, 2022
Depreciation charge for the year
Disposals
Currency Translation
Transfers
At December 31, 2023
Net book value
At December 31, 2023
At January 1, 2023
Buildings Vehicles
Equipment
Total
7,574
1,624
(1,022)
96
(151)
8,121
1,934
155
(546)
11
(284)
9,391
1,739
(2,607)
(112)
(236)
8,175
(2,657)
(1,794)
639
(41)
151
(3,702)
(1,663)
467
47
283
(4,569)
(1,735)
2,360
45
235
(3,664)
4,511
4,822
4,555
710
(268)
3
(112)
4,888
877
—
(680)
2
(407)
4,680
1,980
(676)
2
(909)
5,077
(1,891)
(1,236)
257
(2)
74
(2,798)
(1,188)
671
(2)
407
(2,909)
(1,185)
627
(3)
909
(2,561)
2,516
1,771
8,018
62
(281)
3
(605)
7,197
60
—
(65)
(5)
(782)
6,405
246
(30)
36
(2,145)
4,512
(4,603)
(610)
270
2
289
(4,652)
(455)
65
6
458
(4,578)
(376)
36
(34)
1,515
(3,437)
1,075
1,827
20,147
2,396
(1,571)
102
(868)
20,206
2,871
155
(1,291)
8
(1,473)
20,476
3,965
(3,313)
(74)
(3,290)
17,764
(9,151)
(3,640)
1,166
(41)
514
(11,152)
(3,306)
1,203
51
1,148
(12,055)
(3,296)
3,023
8
2,659
(9,662)
8,102
8,420
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
2023
(3,296)
(325)
(689)
As of December 31,
2022
(3,306)
304
645
2021
(3,640)
(289)
(537)
F-36
Table of Contents
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
Pledges
2023
As of December 31,
2022
2021
1,089
1,838
1,430
1,571
3,015
1,560
Land and buildings (including buildings under construction) with a carrying amount of K€21,851 (2022: K€22,696; 2021: K€24,451) 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€314 (2022: K€864; 2021: K€1,131) (Note 24).
8
Investments in joint ventures
Materialise had no investments in joint ventures at December 31, 2023, 2022 or 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
2023
As of December 31,
2022
9,061
4,070
3,266
637
17,034
7,975
4,626
2,837
643
16,081
2021
6,246
2,383
2,171
495
11,295
Inventory written-off on the balance sheet amounted to K€471 for the year ended December 31, 2023 (2022: K€1,473; 2021: K€1,196).
The expenses are recorded in Cost of Sales.
The Group has contracts in progress and advances from customers. The total costs incurred is K€545 and the profit recognized is K€92
as of December 31, 2023. Advances were received for the amount of K€126 with respect to contracts in progress per end of 2023 (2022:
K€60; 2021: K€11).
10 Other assets
Other non-current assets
Other non-current assets include the following:
Investments in convertible loans
in 000€
Convertible loan
Total
2023
As of December 31,
2022
3,744
3,744
3,494
3,494
2021
3,560
3,560
F-37
Table of Contents
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€3,744 at December 31, 2023. 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
2023
As of December 31,
2022
2021
—
—
307
307
399
399
At December 31, 2023, the Group remeasured the fair value of its investment in AM Danube BV (holding company for AM Flow
Holding BV) to zero, recognizing a K€307 fair value adjustment in other comprehensive income. We refer to Note 3 and Note 20.
At December 31, 2022, the Group remeasured the fair value of its investment in African Drive NV to zero, recognizing a K€92 fair value
adjustment in other comprehensive income. We refer to Note 3 and Note 20.
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.
Other non-current assets
in 000€
Tax credits
Guarantees and deposits
Loan to Link3D incl capitalized interest
LT deferred charges
Other
Total
2023
As of December 31,
2022
2021
4,467
493
—
—
541
5,501
4,144
404
—
—
588
5,136
4,044
447
2,249
741
38
7,519
The non-current tax credits mainly relate to Belgian R&D tax credits, recoverable between 2025 and 2029.
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
Derivatives
Total other current assets
2023
As of December 31,
2022
2021
4,486
814
611
2,466
372
272
139
9,160
4,158
962
17
1,004
944
1,077
261
8,424
2,958
673
384
1,459
1,021
675
1,770
8,940
The other tax receivables included Value Added Tax (VAT) receivables and corporate tax receivables.
11 Trade receivables
The trade receivables include the following:
in 000€
Trade receivables
Allowance for doubtful accounts
Total
2023
53,505
As of December 31,
2022
51,443
(807)
52,698
(400)
51,043
2021
42,814
(1,273)
41,541
F-38
Table of Contents
Trade receivables are non-interest bearing and are generally on payment terms of 30 to 90 days.
As of December 31, 2023, trade receivables of an initial value of K€807 (2022: K€400; 2021: K€1,273) were considered to be not
probable of recovery, based on the expected credit loss analysis. Impairment is accounted for under the other operating expenses. See
below for changes in the impairment of receivables.
in 000€
At January 1, 2021
Addition
Usage
Reversal
At December 31, 2021
Addition
Usage
Reversal
At December 31, 2022
Addition
Usage
Reversal
At December 31, 2023
12 Cash and cash equivalents
Cash and cash equivalents include the following:
in 000€
Cash at bank
Cash equivalents
Total
(1,475)
(689)
259
632
(1,273)
(517)
483
906
(400)
(706)
122
177
(807)
2021
192,895
3,133
196,028
2023
119,606
7,967
127,573
As of December 31,
2022
26,028
114,839
140,867
For the year ended December 31, 2023, cash at banks earned a net interest income of €4.0 million, based on short-term deposit rates.
There were no cash balances on a restricted bank account per December 31, 2023, 2022 or 2021.
13 Equity
Share capital
The share capital of the parent company Materialise NV consists of 59,067,186 ordinary nominative shares at December 31, 2023 (2022:
59,067,186; 2021: 59,063,521) with no nominal but par value of €0.076 in 2023 (2022:€0.076; 2021:€0.076) for a total amount of
K€4,487 at December 31, 2023 (2022:K€4,487; 2021:K€4,489).
in 000€, except share data
Outstanding at January 1, 2021
Capital increase through exercise of warrants
Capital increase through exercise of convertible bonds
Equity settled share-based payments expense
Outstanding on December 31, 2021
Capital increase through exercise of warrants
Outstanding on December 31, 2022
Equity settled share-based payments expense
Outstanding on December 31, 2023
No new shares were issued in 2023.
F-39
Total
number of
ordinary shares
54,169,257
294,264
4,600,000
—
59,063,521
3,665
59,067,186
—
59,067,186
Total
shareholders’
capital
4,096
22
371
—
4,489
(2)
4,487
—
4,487
Total
share premium
141,275
2,322
90,235
41
233,872
22
233,895
47
233,942
Table of Contents
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€233,942 at December 31, 2023 (2022: K€233,895; 2021: K€233,872). The change in 2023
is the result of the share-based payments expense of K€47.
The change in 2022 is the result of the capital increase via exercise of warrants of K€22.
The change in 2021 is the result of the share-based payments expense of K€41, the capital increase via exercise of warrants of K€2,322
and the capital increase via public offering of K€90,235.
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
2023
As of December 31,
2022
279
2,010
47
(9,682)
(7,346)
279
1,987
72
(10,606)
(8,268)
2021
279
1,987
72
(9,087)
(6,749)
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 2023, 2022 and 2021.
Other comprehensive loss
Other comprehensive loss consists of the following:
in ’000€
At January 1, 2021
Currency translation impact
Fair value adjustment
At December 31, 2021
Currency translation impact
Fair value adjustment
At December 31, 2022
Currency translation impact
Fair value adjustment
At December 31, 2023
Currency Fair value Total OCI
Translation
Differences
& Other
adjustment
equity
investments
attributable to
the
shareholder
(8,285)
2,152
—
(6,133)
(1,427)
—
(7,560)
1,255
—
(6,305)
489
—
(3,443)
(2,954)
—
(92)
(3,046)
—
(331)
(3,377)
(7,796)
2,152
(3,443)
(9,087)
(1,427)
(92)
(10,606)
1,255
(331)
(9,682)
F-40
Table of Contents
Non-controlling interest
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€(53) at
December 31, 2023 (2022: K€(28); 2021: K€1).
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
2023
77,709
350,000
(4,257)
—
423,452
73,452
2022
82,950
—
(1,576)
(3,665)
77,709
77,709
2021
407,722
—
(7,193)
(317,579)
82,950
78,405
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.
In all outstanding warrant plans one warrant gives right to one share.
Equity-settled share-based payment plans
The Group has several plans in place which each have slightly different characteristics as described below.
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 vested 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.
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
No warrants were exercised in 2023.
F-41
2023
51,781
—
(4,257)
—
47,524
47,524
2022
53,590
—
(944)
(865)
51,781
51,781
2021
236,726
—
(3,372)
(179,764)
53,590
49,045
Table of Contents
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 vested 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
No warrants were exercised in 2023.
Warrant plan 2023
2023
14,600
—
—
—
14,600
14,600
2022
17,400
—
—
(2,800)
14,600
14,600
2021
133,900
—
(2,000)
(114,500)
17,400
17,400
The board of directors decided on September 25, 2023 on a new plan (“2023 warrant plan”) by which it can grant up to 500,000 warrants
to employees, directors or management companies performing services to the Company. Each warrant gives the right to the holder to one
ordinary share of the parent Company. The warrants vested for 10% on December 31, 2025; 20% on December 31, 2026; 30% on
December 31, 2027; and 40% on December 31, 2028, 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 quarter, or (ii) if no quarterly results are published, during
the month March 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 seven years.
The Group granted 325,000 warrants in October 2023 with an exercise price of €4.87. The Group granted another 25,000 warrants in
November 2023 with an exercise price of €5.09.
The status of the 2023 warrant plan at December 31 is as follows:
Outstanding at January 1
Granted
Forfeited / Cancelled
Exercised
Outstanding at December 31
Exercisable at December 31
Fair value
2023
—
350,000
—
—
350,000
—
2022
2021
—
—
—
—
—
—
—
—
—
—
—
—
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 IPO warrant plan, 2015 warrant plan and the 2023 warrant
plan:
Return dividend
Expected volatility
Risk-free interest rate
Expected life
Exercise price (in €)
Stock price (in €)
Fair value warrant (in €)
2023
(Nov)
2023
(Oct)
2015
(Sept 16)
2015
(Nov)
IPO 2014
IPO 2014
(Nov)
(June)
0 %
64 %
3.19 %
5.59
5.09
5.60
3.44
0 %
64 %
3.50 %
5.59
4.87
5.15
3.12
0 %
47 %
0.24 %
4.30
6.45
6.42
2.41
0 %
47 %
1.17 %
5.50
8.81
8.08
3.30
0 %
50 %
1.12 %
5.50
8.81
8.67
3.94
0 %
46 %
1.70 %
5.50
8.81
8.81
3.83
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 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€47 in 2023 (2022: K€0; 2021:
K€41).
The weighted average fair value for the warrants outstanding at the end of 2023 was €3.19 (2022: €3.41; 2021: €3.39). The weighted
average exercise price for the warrants outstanding at the end of 2023 was €5.39 (2022: €8.12; 2021: €8.07).
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
2023
11,328
2022
11,960
—
—
—
11,328
11,328
—
(632)
—
11,328
11,328
2021
37,096
—
(1,821)
(23,315)
11,960
11,960
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).
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The SARs have a contractual term of ten years and vested 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.
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 €)
2023
2022
2021
0 %
46 %
2.68 %
0.25
8.81
5.95
0.03
0 %
60 %
3.20 %
0.25
8.81
8.25
0.78
0 %
80 %
0.18 %
0.25
8.81
21.05
12.26
The expense arising from share-based payment transactions for the SARs plan was K€9 in 2023 (2022: K€(140);2021: K€(874)). The
carrying value of the liability at December 31, 2023 amounts to K€0 (2022: K€9; 2021: K€147). The total intrinsic value of the liability
for warrants currently exercisable at December 31, 2023 amounts to K€0 (2022: K€9; 2021: K€147).
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
No warrants were outstanding at the end of 2023.
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 warrant
2023
2022
2021
33
—
(33)
—
—
—
186
—
(153)
—
33
33
186
—
—
—
186
186
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€0 in 2023 (2022: K€0; 2021: K€2).
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15 Loans and borrowings
The loans and borrowings include the following:
in 000€
K€50,000 KBC credit facility
K€35,000 EIB bank loan
K€28,000 acquisition bank loan
K€17,700 secured bank loans
K€12,300 bank loans ACTech
K€5,000 other facility loan
Bank investment loans - top 20 outstanding
Bank investment loans - other
Lease liabilities
Related party loan
Total loans and borrowings
Current
Non-Current
K€50,000 KBC credit facility
2023
—
21,667
10,000
14,904
3,546
1,496
4,778
—
7,943
64
64,398
25,483
38,915
As of December 31
2022
—
27,500
12,559
16,165
5,860
1,881
8,828
606
7,485
96
80,980
19,960
61,020
2021
—
33,333
15,604
16,592
8,160
2,248
12,852
1,569
8,621
128
99,107
21,202
77,905
In October 2022 the Group entered into a credit facility agreement with KBC which allows for a € 50 million delayed draw. The credit
facility foresees a first draw between October 2022 and April 2025, reimbursable at once in April 2030, with an interest rate of 3.56% A
second draw is foreseen between October 2022 and June 2025, reimbursable at once in June 2031, with an interest rate of 3.81%. And a
third and final draw can be made between October 2022 and June 2026, reimbursable at once in June 2032, with an interest rate of
3.87%. As per December 31, 2023 the credit line remains unused.
Reservation cost for all 3 tranches amounts to 0.15% per year.
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%. Pledges have
been given on moveable assets as well as 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, 2023, The Group was in
compliance with all debt covenants.
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.
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K€17,700 secured bank loans
The K€17,700 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€11,700; and for this tranche,
reimbursements have started in June 2023. 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.
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 have been granted 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€5,000 - Other facility loan
This facility loan was contracted in 2012 for the construction of Leuven office and production facilities. The balance of this loan amounts
to K€1,496 per December 31, 2023. The loan has a repayment schedule of 15 years and interest rate is fixed at 4.61%.
Miscellaneous investment loans
The 20 largest of these loans outstanding as of December 31, 2023 amount to a balance of K€4,778. 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€7,943 Lease liabilities
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 of December 31, 2023 the balance of these lease agreements amounts to K€7,943,
and are mostly at fixed interest rates with weighted average below 1%.
The total cash outflow from the lease liabilities amounts to K€3,549 in 2023, K€3,379 in 2022 and K€3,775 in 2021.
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, 2023 is K€64 (2022: K€96; 2021: K€128). The interest expense for the year ended December 31, 2023 is K€3 (2022:K€5;
2021:K€5).
Changes of liabilities for financing activities:
The following table presents the changes of the liabilities for financing activities:
in 000€
At January 1,
Repayment of loans & borrowings
New leases
Repayment of leases
Loans acquired from business combination
Net foreign exchange movements
At December 31,
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For the year ended December 31
2022
99,107
(17,708)
2,871
(3,379)
100
(11)
80,980
2023
80,980
(16,723)
3,919
(3,549)
—
(229)
64,398
2021
115,110
(14,277)
2,355
(3,775)
—
(306)
99,107
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16 Other non-current liabilities
The other non-current liabilities consist of the following:
in 000€
Advances received on contracts
Provisions
Other
Total
2023
As of December 31,
2022
—
1,430
315
1,745
—
1,611
—
1,611
2021
1,500
667
—
2,167
Provisions mainly relate to retention bonuses for our employees.
The advances received on contracts as of December 31, 2021 related to advances received from a customer in the context of a long term
contract for medical devices.
The other amount relates to a commitment for a multi-year license contract.
In Belgium, the Group contributes to a Sector Plan for eligible employees and to a “Branch 21” pension plan for a limited group of
management staff. Under both plans, the Group pays contributions expressed as a percentage of a reference salary. These plans are
administered by third party insurance companies and are not material to the consolidated financial statements.
17 Tax payables
The tax payables amount to K€1,777 as per December 31, 2023 (2022:K€1,246; 2021:K€783).
18 Deferred income
Deferred income consists of the following:
in 000€
Deferred maintenance and license revenue
Deferred (project) fees
Deferred government grants
Total
current
non-current
2023
44,905
5,485
1,102
51,492
40,791
10,701
As of December 31,
2022
42,780
7,285
933
50,998
41,721
9,277
2021
34,287
3,537
435
38,259
33,307
4,952
The deferred maintenance and license revenue consists of maintenance and license fees paid up-front which are deferred and recognized
in earnings over the maintenance period or the duration of the license, respectively. Deferred maintenance and license revenue grew to
K€44,905 as per December 31, 2023 from K€42,780 in December 31, 2022. 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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19 Other current liabilities
Other current liabilities include the following:
in 000€
Payroll-related liabilities
Non-income tax payables
Accrued charges
Advances received
Derivatives
Cash settled share-based payment plan
Other current liabilities
Total
2023
12,786
1,139
927
289
—
—
562
15,703
As of December 31,
2022
15,192
2,016
1,718
795
—
9
227
19,957
2021
11,836
2,058
1,170
276
118
147
367
15,972
The non-income tax payables mainly relate to VAT payables and payroll taxes.
20 Fair value
Financial assets
The carrying value and fair value of the financial assets as of December 31, 2023, 2022 and 2021 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 amortized 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
2023
Carrying value
2022
2021
2023
Fair value
2022
2021
51,043
404
2,021
52,698
493
643
41,541
2,696
1,696
127,573 140,867 196,028 127,573 140,867 196,028
181,407 194,335 241,961 181,407 194,335 241,961
52,698
493
643
51,043
404
2,021
41,541
2,696
1,696
139
3,744
261
3,494
1,770
3,560
3,883
3,755
5,330
—
—
307
307
399
399
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, 2023, 2022 and 2021
● 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.
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● for the non-listed equity investment in AM Flow, as of December 31, 2023, Materialise recorded a remeasurement of fair
value to zero through OCI (K€307).
● 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 convertible loan granted to Fluidda is measured at fair value. As of December 31, 2023, management determined the
fair value based upon level 3 inputs as follows:
o The Group determined that the fair value of the convertible loan as of December 31, 2023 amounted to K€3,802.
Fluidda is a private start-up company which offers turnkey contract research services for drug development and
medical device development. 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 13.32% 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 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€(51) / K€52. As the carrying value is not materially different from the fair value, the Group has
not made an adjustment to the carrying value.
Financial liabilities:
The carrying value and fair value of the financial liabilities as of December 31, 2023, 2022 and 2021 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
Cash settled share based payments
Derivatives
Total financial liabilities measured at fair value
Total non-current
Total current
Carrying value
2022
2023
2021
2023
Fair value
2022
2021
64,398
21,196
335
85,929
80,980
23,230
330
104,540
99,108
20,171
485
119,764
63,062
21,196
335
84,593
78,848
23,230
330
102,408
100,417
20,171
485
121,073
—
—
—
9
—
9
38,915
47,014
61,020
43,529
147
118
265
79,905
40,124
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;
● 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.
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Fair value hierarchy
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.
Fair value hierarchy 3 evolution
Convertible Loans Ditto & Fluidda
in 000€
As of 1 January,
Addition
Remeasurement
Capitalized interest
Reimbursement Ditto convertible loan
As of 31 December,
Written Put Option on NCI RapidFit+
in 000€
As of 1 January,
Remeasurement
Payout put-option PMV
As of 31 December,
21
Segment information
2023
Fair Value Evolution
2022
3,494
—
—
250
—
3,744
3,560
—
(316)
250
—
3,494
2021
6,203
—
—
—
(2,643)
3,560
2023
Fair Value Evolution
2022
2021
—
—
—
—
—
—
—
—
875
—
(875)
—
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.
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Table of Contents
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, 2023
Revenues
Segment Adjusted EBITDA
Segment Adjusted EBITDA %
For the year ended December 31, 2022
Revenues
Segment Adjusted EBITDA
Segment Adjusted EBITDA %
For the year ended December 31, 2021
Revenues
Segment Adjusted EBITDA
Segment Adjusted EBITDA %
Materialise Materialise Materialise
Software
Medical
Manufacturing
Total
segments
Unallocated Consolidated
44,442
7,450
101,376
26,544
110,310
7,537
256,127
41,530
—
(10,133)
256,127
31,397
16.8 %
26.2 %
6.8 %
16.2 %
12.3 %
43,688
1,514
84,846
18,822
103,489
8,229
232,023
28,565
—
(9,551)
232,023
19,014
3.5 %
22.2 %
8.0 %
12.3 %
8.2 %
42,902
15,705
73,368
20,669
89,180
6,275
205,450
42,649
—
(10,159)
205,450
32,490
36.6 %
28.2 %
7.0 %
20.8 %
15.8 %
The segment Adjusted EBITDA is reconciled with the consolidated net profit (loss) for the year as follows:
in 000€
Net profit (loss) for the year
Share in loss of joint venture
Income taxes
Financial income
Financial expenses
Operating (loss)/ profit
Impairments
Other operating income (expense)
Corporate headquarter costs
Corporate research and development
Depreciation, amortization and impairment
Segment Adjusted EBITDA
2023
For the year ended December 31,
2022
(2,153)
—
975
(6,114)
4,420
(2,872)
—
(2,693)
9,504
2,600
22,026
28,565
6,695
—
78
(5,019)
3,865
5,619
4,228
(3,077)
10,464
2,785
21,511
41,530
2021
13,145
—
591
(5,620)
4,101
12,217
177
(3,527)
10,317
2,948
20,516
42,649
The Group has 1 individual customer that represents sales larger than 10% of the total revenue in 2023 (2022: 1; 2021: 1). The total
amount of revenues from this customer for the year 2023 was K€ 39,868 (2022: K€ 31,338; 2021: 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
F-51
2023
90,350
7,049
8,265
33,172
19,053
20,780
15,153
11,412
7,977
22,928
19,988
256,127
As of December 31,
2022
79,380
7,544
7,407
30,039
16,237
16,918
11,062
8,124
6,621
28,731
19,960
232,023
2021
69,140
6,297
6,947
20,442
12,964
13,643
8,836
6,520
7,310
33,816
19,535
205,450
Table of Contents
The total revenue realized in the country of domicile (Belgium) in 2023 amounts to K€8,265 (2022: K€7,407; 2021: K€6,947).
The total non-current assets, other than financial instruments and 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
2023
12,329
3,023
85,150
61,520
12,000
8,024
1,578
183,625
As of December 31,
2022
12,048
3,812
91,690
60,374
11,640
8,591
2,012
190,167
2021
4,237
3,276
67,865
55,712
12,756
10,019
1,739
155,604
The totals of the above table include goodwill, intangible assets, property, plant & equipment and Right-of-Use Assets as disclosed in the
consolidated statements of financial position
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
Materialise Materialise Materialise Total
Software
Medical Manufacturing
segments
Unallocated Consolidated
For the year ended December 31, 2023
15,451
488
17,708
130
10,665
44,442
53,748
5,673
34,082
1,155
6,718
101,376
44,442
—
— 31,700
— 69,676
—
—
—
—
101,376
44,442
21,151
888
78,686
6,980
2,605
110,310
90,350
7,049
130,476
8,265
19,988
256,127
— 44,442
— 31,700
— 69,676
110,310
—
256,127
110,310
—
110,310
14,844
29,598
44,442
73,750
27,626
101,376
105,205
5,105
110,310
193,799
62,329
256,127
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
90,350
7,049
130,476
8,265
19,988
256,127
44,442
31,700
69,676
110,310
—
256,127
193,799
62,329
256,127
F-52
Table of Contents
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 Materialise Materialise Total
Software
Medical Manufacturing
segments
Unallocated Consolidated
For the year ended December 31, 2022
14,946
523
17,148
247
10,825
43,688
45,929
5,752
24,468
1,003
7,694
84,846
43,688
—
— 27,074
— 57,772
—
—
—
—
84,846
43,688
18,505
1,269
76,116
6,158
1,441
103,489
79,380
7,544
117,731
7,408
19,960
232,023
— 43,688
— 27,074
— 57,772
103,489
—
232,023
103,489
—
103,489
16,067
27,621
43,688
61,884
22,962
84,846
98,580
4,909
103,489
176,531
55,492
232,023
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
79,380
7,544
117,731
7,408
19,960
232,023
43,688
27,074
57,772
103,489
—
232,023
176,531
55,492
232,023
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
Total
22.1.2 Contract balances
For the year ended December 31
2022
43,688
27,074
57,772
103,489
232,023
2023
44,442
31,700
69,676
110,310
256,127
2021
42,902
22,887
50,481
89,180
205,450
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
2023
53,505
637
50,390
As of December 31,
2022
51,443
643
50,065
2021
42,814
495
39,324
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 2023 that was included in the contract liability at the beginning of the year amounts
to K€41,721.
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.
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Table of Contents
● 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
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
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
Total
F-54
For the year ended December 31
2022
(51,597)
(11,174)
(42,718)
2,234
(103,255)
2023
(53,747)
(11,298)
(46,678)
727
(110,996)
2021
(38,691)
(11,296)
(38,499)
1,208
(87,278)
For the year ended December 31
2022
(5,930)
(1,454)
(30,184)
—
(37,568)
2023
(4,759)
(1,459)
(31,900)
20
(38,098)
2021
(3,770)
(1,821)
(21,300)
—
(26,891)
For the year ended December 31
2022
(11,802)
(2,541)
(47,782)
(62,125)
2023
(10,437)
(2,285)
(45,100)
(57,822)
2021
(6,704)
(1,892)
(40,555)
(49,151)
For the year ended December 31
2022
(6,240)
(1,710)
(27,193)
(35,143)
2023
(7,211)
(2,361)
(27,496)
(37,068)
2021
(11,248)
(2,987)
(19,080)
(33,315)
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
Arbitration settlement
Impairment of intangible assets (Note 6) and PP&E (Note 7)
Impairment of goodwill (Note 5)
Indemnity fee from commercial agreement
COVID support Germany
Other
Total
For the year ended December 31
2022
2021
2023
4,853
(4,012)
(448)
—
1,360
(5,189)
(3,054)
(1,175)
—
—
1,141
(6,524)
4,932
(5,146)
390
—
887
—
—
—
506
681
946
3,196
4,466
(2,521)
(58)
223
746
—
(177)
—
—
—
723
3,402
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.
In May 2023, the Belgian Center for Arbitration and Mediation issued a decision in the arbitration proceedings filed by ZimmerBiomet
against Materialise, pursuant to which we were ordered to pay an amount of € 5.2 million, including interests, to ZimmerBiomet.
22.7 Payroll expenses
The following table shows the breakdown of payroll expenses for 2023, 2022 and 2021:
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
F-55
For the year ended December 31
2022
2023
(117,443)
(19,430)
(1,586)
(12,715)
(151,174)
2,437
(115,169)
(19,002)
(1,463)
(12,241)
(147,875)
2,439
2021
(93,850)
(17,076)
(1,250)
(7,259)
(119,435)
2,332
For the year ended December 31
2022
(2,047)
(1,645)
(728)
(4,420)
2023
(1,751)
(1,770)
(344)
(3,865)
2021
(2,435)
(1,258)
(408)
(4,101)
Table of Contents
22.9 Financial income
Financial income includes the following selected information:
in 000€
Interest income
Foreign exchange gains
Other finance income
Total
22.10 Income taxes and deferred taxes
Current income tax
The following table shows the breakdown of the tax expense for 2023, 2022 and 2021:
in 000€
Current income tax
Deferred income taxes
Total income taxes for the period
For the year ended December 31
2022
2021
2023
4,450
563
6
5,019
1,332
4,778
4
6,114
658
4,904
58
5,620
2023
(2,355)
2,277
(78)
As of December 31,
2022
(2,000)
1,025
(975)
2021
(1,252)
661
(591)
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 2023, 2022 and
2021:
in 000€
Tax losses, patent and innovation income 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
Deferred income
Investment grants
Inventory valuation
Total deferred tax liabilities
Netting
Total deferred tax assets, net
Total deferred tax liabilities, net
Total deferred tax income (expense)
2023
3,199
400
224
53
343
4,220
(569)
(3,664)
(743)
(172)
—
(5,148)
1,422
2,797
(3,725)
—
Asset/(liability)
2022
3,134
328
40
72
—
3,574
(274)
(5,470)
(778)
(178)
—
(6,700)
2,388
1,186
(4,312)
—
2021
2,162
136
55
35
274
2,662
(850)
(5,757)
—
(199)
—
(6,806)
2,435
227
(4,371)
—
Income/(expense)
2022
2023
—
—
—
—
—
3,623
—
—
—
—
—
(1,345)
—
—
—
2,277
—
—
—
—
—
4,580
—
—
—
—
—
(3,554)
—
—
—
1,025
2021
—
—
—
—
—
687
—
—
—
—
—
(26)
—
—
—
661
The Group has unused tax losses carried forward and Innovation Income Deduction of K€91,753 for 2023 (2022: K€87,558; 2021:
K€48,648) of which K€46,533 for 2023 (2022: K€45,245; 2021: K€35,578) relating to Materialise NV.
Under the Belgian Innovation Income Deduction system, companies can deduct up to 85% of their net innovation income from the
taxable basis.
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Table of Contents
With respect to the tax losses carried forward and Innovation Income Deductions carried forward we recognized at December 31, 2023 a
deferred tax asset of € 0.1 million for Materialise NV (2022: € 0.2 million, 2021: € 0.0 million) and € 1.0 million for Materialise USA
(2022: €1.6 million, 2021: € 0.0 million).
The deferred tax liability of K€5,148 as at December 31, 2023 mainly relates to the intangibles that have been recognized in connection
with business combinations (mainly ACTech).
Relationship between Tax Expense and Accounting Profit
in 000€
Profit (loss) before taxes
Income tax at statutory rate of 25%
Effect of different local tax rate
Tax adjustments to the previous period
Non-deductible expenses
Research and development tax credits
Innovation income deduction
Non recognition of deferred tax asset
Recognition of previously unrecognized tax losses
Non-taxable income
Use of previous years’ tax losses and tax credits for which no deferred tax assets were
recognized
Taxes on other basis
Other
Income tax benefit (expense) as reported in the consolidated income statement
23 Earnings per share
2023
For the year ended December 31
2022
(1,178)
295
39
84
(431)
177
—
(1,706)
548
406
6,772
(1,693)
(416)
(63)
(324)
203
2,560
(1,815)
1,186
450
2021
13,736
(3,432)
12
88
(354)
398
2,847
(407)
—
350
—
(232)
66
(78)
243
(149)
(481)
(975)
163
(71)
(185)
(591)
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
Net profit (loss) attributable to ordinary equity holders of the parent adjusted for the
2023
For the year ended December 31
2022
(2,123)
6,722
2021
13,154
effect of dilution
6,722
(2,123)
13,154
The warrants are dilutive at December 31, 2023. The warrants were antidilutive as per December 31, 2022 and were dilutive as per
December 31, 2021.
F-57
Table of Contents
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
Weighted average number of ordinary shares adjusted for effect of dilution
The earnings per share are as follows:
For the year ended December 31
2022
59,064
2023
59,067
2021
56,685
18
59,085
—
59,064
158
56,843
For the year ended December 31
2022
2021
2023
Earnings per share attributable to the owners of the parent
Basic
Diluted
24 Commitments and contingent liabilities
Mortgages and pledges
0.11
0.11
(0.04)
(0.04)
0.23
0.23
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€22,165 (2022: K€23,560; 2021: K€25,582). The total outstanding mortgages and pledges are
K€100,755 in 2023 (2022: K€100,978; 2021: K€103,685).
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 2023 (2022: K€69,300; 2021: K€69,300) and pledges on other fixed assets for a total amount of K€219 (2022: K€442;
2021: K€1,399).
Other commitments
At December 31, 2023, the Group has outstanding non-cancellable contracts with a future commitment of K€22,267 (2022:K€25,385;
2021:K€7,043), mainly related to purchase commitment for raw materials, energy and gas; and of K€9,330 (2022: K€0; 2021: K€0)
related to property, plant & equipment.
Legal Proceedings
The Group is currently not a party to any 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.
25 Risks
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, 2023, 2022 and 2021, 34%, 39% and 35% 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.
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Table of Contents
If the U.S. dollar (rate for €1) would have appreciated by 10%, the net result would have been € 0.9 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 € 0.8 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 U.S. dollar, the Group has entered into currency rate swaps. As of
December 31, 2023 the Group had hedge agreements in place for $ 11.2 million, all maturing before year-end 2024. We refer to note 20
for the related fair value of these derivatives.
Inflation risk
We transact business globally and are subject to risks associated with fluctuating inflation. The risk exists that, if inflation increases our
costs of remuneration, materials, services, energy, and capital expenditures, we may not be able to offset such costs fully by increasing
our selling prices. As such, in a high inflationary environment, our results of operations and financial condition may be adversely
affected.
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. At December 31, 2023, we held cash and cash
equivalents of € 127.6 million, while €25.5 million of our € 64.4 million gross debt was short term. At December 31, 2023, we had an
undrawn credit line of € 50 million as more fully described in Note 15 to the consolidated financial statements.
The range of contracted obligations are as follows (incl. interest):
in 000€
At December 31, 2023
Loans & borrowings
Lease liabilities
Trade payables
Other liabilities
Total
At December 31, 2022
Loans & borrowings
Lease liabilities
Trade payables
Other current liabilities
Total
At December 31, 2021
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
23,858
2,895
21,196
650
48,599
19,668
3,010
—
315
22,993
8,257
1,951
—
—
10,208
58,867
7,084
8,732
876
— 21,196
965
—
89,760
7,960
Less than 1
year
2 to 3 years 4-5 years
More than 5
years
Total
18,156
3,080
23,230
339
44,805
35,131
2,725
—
—
37,856
15,017
1,289
—
—
16,306
8,627
1,425
—
—
10,052
76,931
8,519
23,230
339
109,019
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
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.
F-59
Table of Contents
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.
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, 2023
December 31, 2022
December 31, 2021
Capital management
Total
Non-due
52,698 41,895
51,043 41,764
41,541 34,002
Less than 30
days
7,053
5,451
4,199
31-60 days 61-90 days 91-180 days
935
458
611
1,213
2,212
1,634
983
656
426
More than
181 days
619
502
669
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, 2023, 2022 and 2021.
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
2022
2021
2023
2,554
73
2,627
350,000
350,000
2,736
75
2,811
—
—
2,832
93
2,925
—
4,545
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, 2023, a total of 350.000 warrants
were granted to key management personnel. Compensation expense recognized in the year ending December 31, 2023 related to share-
based payment arrangements, amounted to K€47 (2022: K€0; 2021: K€132).
F-60
Table of Contents
The following table provides the total amount of transactions that have been entered into with related parties for the relevant
financial year:
in 000€
Non-executive directors of the Group
2023
2022
2021
Shareholders of the Group
2023
2022
2021
Joint ventures
2023
2022
2021
Non-controlling interests
2023
2022
2021
Related party – Lunebeke NV / Ailanthus NV
Sale of Purchases
goods to
from
Interest Right-of-
Depreciation expense Use Assets Receivables
Lease Other
liabilities
liabilities
—
—
—
—
—
—
—
—
—
—
—
—
172
163
122
97
104
37
—
—
—
—
—
—
— —
— —
— —
—
—
—
3
5
6
— —
— —
— —
— —
— —
— —
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
77
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
64
86
58
64
96
60
—
—
—
—
—
—
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. The total amount paid to Lunebeke NV for rent in 2023 was K€97
(2022: K€104; 2021: K€37).
27 Events subsequent to the statement of financial position date
No events subsequent to the date of the statement of financial position have occurred that would require adjustment to, or disclosure in,
the consolidated financial statements.
F-61
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
OBL SAS
Materialise Austria GmbH
MATERIALISE SDN. BHD
Materialise Ukraine LLC
RapidFit NV
Meridian Technique Limited
OrthoView Holdings Limited
Materialise SA
Materialise Colombia SAS
Materialise Motion NV
Materialise Shanghai Co.Ltd
Engimplan Engenharia de Implante Industria E Comércio Ltda
Engimplan Holding Ltda
Materialise Limited
Materialise Australia PTY Ltd
Materialise S.R.L.
ACTech GmbH
ACTech Holding GmbH
ACTech North America, Inc.
Tianjin Zhenyuan Materialise Medical Technology Ltd
Country of
incorporation
Belgium
France
Germany
Japan
Czech Republic
United States
France
Austria
Malaysia
Ukraine
Belgium
United Kingdom
United Kingdom
Poland
Colombia
Belgium
China
Brazil
Brazil
South-Korea
Australia
Italy
Germany
Germany
United States
China
2023
% equity interest*
2022
2021
100 %
100 %
100 %
100 %
100 %
99 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
51 %
100 %
100 %
100 %
100 %
100 %
99 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
51 %
100 %
100 %
100 %
100 %
100 %
99 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
51 %
*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, 2021, 2022 and 2023.
29 Non-IFRS 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-62
WARRANTS PLAN 2023
(English translation)
EXHIBIT 4.5
SUBSCRIPTION RIGHTS 2023
REGULATIONS
1. Definitions
The terms listed below have the following meaning:
Affiliated Company
a company affiliated with the Company within the meaning of Article 11 of the Code on Companies and
Associations ;
Authorized representative of the Board of
Directors
The person to whom the Board of Directors of the Company has granted the power to perform all
operations which are necessary or useful in connection with the offering of the Subscription rights and to
achieve the issuance of Subscription rights.
Beneficiary
the person who, in accordance with Article 4.7.2, has been appointed by the Holder of the Subscription
Rights to exercise the rights of the Holder of the Subscription Rights after the Subscription Rights
Holder’s death;
Board of Directors
the Board of Directors of the Company
Company
Consultant Agreement
Date of the Offer
Materialise NV, with registered office at 15 Technologielaan, 3001 Leuven, and with enterprise number
VAT BE 0441.131.254 (Leuven Legal Entities Register);
The contract, other than a Directorship or Employment Agreement, under which services are provided to
the Company or an Affiliated Company;
the date on which the authorized representative of the Board of Directors has offered the Subscription
Rights to the Selected Participants in accordance with the second paragraph of Article 4.3.1;
Directorship
A mandate or office as director of the Company or an Affiliated Company;
Employment Agreement
the agreement in the sense of the Employment Contracts Act of 3 July 1978 (or an agreement under any
law other than Belgian law which corresponds with the content hereof) under which a person performs
services in subordination to the Company or an Affiliated Company;
of Employment, Consultancy
End
Agreement or the Directorship
the effective date upon which the termination, for whatever reason, of the Employment Agreement or
Consultant Agreement between the relevant Selected Participant and the Company or any Affiliated
Company or the Selected Participant’s Directorship within the Company or any Affiliated Company takes
effect, with the exception of a termination that shall be accompanied by simultaneous employment in the
context of a (possibly new) Employment Agreement or Consultancy Agreement with the Company or any
Affiliated Company or by a (potentially new) appointment as a director of the Company or an Affiliated
Company;
Exercise Period
the period or periods during which the Selected Participant may exercise the Subscription Rights granted
to him, in accordance with Article 4.6, to acquire ordinary shares of the Company;
Exercise price
General meeting
Offer
Transfer
Securities
the price for obtaining one ordinary share upon exercising a Subscription Right, as defined herein;
the general meeting of the Company
the offer of the Subscription rights about which the Selected Participant has been notified in accordance
with Article 4.3.1 of this regulation;
The selling, offering for sale, forward selling, pledging of securities or the granting of a usufruct or any
other right thereon or allowing options to buy or sell securities or access thereto in a different way, or the
closing of any swap or other agreement transferring in whole or in part the economic benefits of
ownership of securities, whether such transfer shall be made for payment or not, by way of general legal
succession or in any other manner and irrespective whether such transaction shall be processed by means
of delivery of securities, in cash or by some other method;
shares, bonds and other securities, whether or not representing the capital, and which grant voting rights or
not, as well as securities granting the right to subscribe to or to purchase securities or to conversion into
securities;
Selected Participant
the person to whom the Subscription Rights shall be offered by the Authorized representative of the Board
of Directors.
Under the SOP, the Selected Participants are the persons who, at the time of the Offer, are linked to the
Company through an Employment Agreement, or, directly or indirectly through a management company,
through a Consultancy Agreement or, directly or indirectly through a management company, through a
Directorship and to whom Subscription Rights shall be offered by the Authorized representative of the
Board of Directors.
The form which must be completed and signed by the Selected Participant for acceptance or refusal of the
Subscription Rights offered to him / her, and which (in the case of acceptance) must contain a proxy for
registration of the grant of the Subscription Rights accepted by him/her.
a right to subscribe issued by the Company which entitles the Selected Participant to subscribe to one
ordinary share, in accordance with the Regulation and with the Acceptance Form.
Acceptance form
Subscription Right
Holder of the Subscription Rights
the person registered in the Company’s Subscription Rights’ Register as the holder of one or more
Subscription rights.
2. Additional conditions; modifications
The Board of Directors, or one or more proxy holders can decide, at any moment, for all or a part of the Subscription Rights, to:
- impose additional conditions or restrictions to the Offer or the exercisability of the Subscription Rights; and
- modify these Regulations.
The modifications or completion of these regulations can not limit the rights associated with a granted Subscription Right without the consent of the
relevant Holder of the Subscription Right.
3.
Issue Price and Exercise Price of the Subscription Rights
The Subscription Rights shall be offered for free.
Each Subscription Right entitles the holder to subscribe to one ordinary share, under the conditions described below.
The exercise Price of the Subscription Rights will be determined by the Board of Directors or one or more proxy holders mandated for that purpose, on
the Date of the Offer, taking into account the applicable legal rules.
The Exercise Price will be booked as statutory capital for an amount equal to the fraction value which the ordinary shares have at the moment of the
issuance of ordinary shares resulting from the exercise of the relevant Subscription Right. The amount that exceeds the fraction value, will be booked as
issuance premium.
4.
Issuance and exercise conditions of the Subscription Rights
4.1. Number of ordinary shares
Each Subscription Right entitles the Holder of the Subscription Right the right to subscribe to one (1) ordinary share.
4.2. Eligible persons
The Subscription Rights shall be offered to the Selected Participants. Within the limitations stipulated in the aforementioned sentence, the Board of
Directors or one or more proxyholders empowered thereto by the Board of Directors will decide who the Selected Participants are and what the Exercise
Price and the other issuance- and exercise conditions are for the Subscription Rights according to the stipulation of these Regulations.
Offers under these Regulations are not necessarily identical for every Selected Participant.
The Company shall apply the appropriate tax and special tax treatment resulting from free subscription of the Subscription Rights by the Selected
Participants who accept the Offer and to whhom the Act of 26 March 1999 applies.
4.3 Offer, Acceptance, Grant and Vesting of the Subscription Rights
4.3.1.
Offer of the Subscription Rights to the Selected Participants
The Selected Participants will be informed of this Offering by the Authorized representative of the Board of Directors (with a possibility for further sub-
delegation).
A form shall be made available to the Selected Participants, indicating the number of Subscription Rights offered to them, the Exercise Price, as well as
the other issuance and exercise conditions of the Subscription Rights. An Acceptance form shall be attached to the notification.
4.3.2.
Acceptance period
Each Selected Participant has the right to either accept or refuse the Offer. The acceptance must happen in writing by the marking of the option
acceptance, with a specification of the number of accepted Subscription Rights on the Acceptance Form created for that purpose. The Acceptance From
must be completed and signed before the date mentioned therein and be returned by the Selected Participant to the Company. If the Selected Participant
has not accepted the Subscription Rights in writing before the date mentioned in the Acceptance Form through submitting the Acceptance Form (except
in case of a prolonged acceptance period by the Board of Directors or one or more of the Authorized Representatives of the Board of Directors), he/she
will be irrevocably be deemed to have refused the Offer and no acceptance of the Subscription Rights will be possible.
Acceptance may cover all or part of the Subscription Rights offered. For clarity, it is stated that no parts of Subscription Rights shall be issued.
Notwithstanding the aforementioned, the Offer and the Acceptance of the Subscription Rights may be included in a specific subscription agreement or
added in a different (written) agreement which is concluded between the Company and the Selected Participant.
Explicitly or tacitly refused Subscription Rights can still be offered to the same or different Selected Participants.
4.3.3.
Grant of the Subscription rights
After the expiry of the aforementioned Acceptance Period, the Authorized representative of the Board of Directors shall, within a reasonable time,
proceed with the registration thereof in the Subscription Rights register of the Company of the Holder of the Subscription Rights with a mentioning of
the number of Subscription Rights which have been accepted by the Selected Participants in accordance with the stipulations of these regulations (the
“Grant”).
4.3.4.
Vesting of the Subscription rights
Prior to or at the moment of the Offer, the Board of Directors or one or more proxy holders empowered by the Board thereto, may decide whether, when
and to which extent the offered Subscription Rights will be vested for the Selected Participant.
Unless otherwise decided b the Board of Directors or one or more proxy holders empowered thereto prior to or at the moment of the Offer, the
Subscription Rights will vest after Grant to a Selected Participant only over a period of four years, int eh following manner:
-
-
-
-
The first trench of 10% of the total number of the Subscription Rights granted to the Selected Participants (in accordance with article 4.3.3) on
31 December 2025;
The second trench of 20% of the total number of the Subscription Rights granted to the Selected Participants (in accordance with article 4.3.3)
on 31 December 2026;
The third trench of 30% of the total number of the Subscription Rights granted to the Selected Participants (in accordance with article 4.3.3)
on 31 December 2027;
The fourth trench of 40% of the total number of the Subscription Rights granted to the Selected Participants (in accordance with article 4.3.3)
on 31 December 2028;
The above in each instance on the condition that this person, on the relevant date of Vesting, is still connected by an Employment Agreement or a
Consultant Agreement with the Company or with an Affiliated Entity or exercises a Director’s mandate in the Company or the Affiliated Entity (uness
otherwise decided by the Board of Directors or one or more proxy holders appointed thereto by the Board of Directors for all or a part of the
Subscription Rights).
Still after the Offer of the Subscription Rights, the Board of Directors or one or more proxy holders appointed thereto by the Board of Directors may
adjust the conditions for vesting for all or part of the Subscription Rights, it being understood that the rights of the Holder of the Subscription Rights
may not be limited without the consent of the Holder of the Subscription Rights. For example, the Board of Directors or one or more proxy holder
appointed thereto can allow that all or a part of the Subscription Rights, which have not vested at the End of the Employment Agreement, the Consultant
Agreement or the Director’s Mandate, will still be vesting.
The vesting always refers to entire Subscription rights. In case the respective annual percentage of the total number of Subscription rights that are
granted to the Selected Participant is not an integer number, this number shall be rounded down and an additional Subscription Right shall vest for the
year as soon as the sum of the hitherto neglected fractions shall amount to one (such addition Subscription Right shall form the sum of the fraction(s) of
a Subscription Right which was/were neglected upon the vesting of the previous bracket/brackets).
4.4.
Nominative nature
The Subscription Rights are in registered form and shall be registered in the register of Subscription Rights Holders to be kept at the registered office of
the Company.
4.5.
Term of the Subscription Right
The term of the Subscription rights under the Plan shall end ten years after the decision to issue them.
4.6.
Exercise Periods
Unless otherwise decided by the Board of Directors or one or more proxy holders appointed thereto for all or a part of the Subscription Rights before or
at the moment of the Offer, and without prejudice to Articles 4.3.4, 4.7 and 4.8, the vested Subscription Rights may only be exercised in compliance
with Article 4.3.4, and only during (i) a period of four weeks following the announcement of the results of the first quarter, or (ii) if no
quarterly results are announced, during the month of March of every year (an “Exercise Period(s)”). The Board of Directors or one or more proxy
holders appointed thereto shall be authorized to provide for possible additional Exercise Periods.
The Subscription Rights Holder shall be free not to exercise all or part of any vested Subscription Rights in the course of an exercise period and to
postpone the exercise of the unexercised Subscription rights to a later Exercise Period, subject only to the exceptions and limitations contained in
Articles 4.7 and 4.8.
The (still) exercisable Subscription Rights which are not exercised at the time of the conclusion of the last exercise period during the Term stipulated in
article 4.5, shall automatically expire without value.
4.7.
Exercisability of Subscription Rights: exceptions and limitations
4.7.1.
End of the Employment Agreement, the Consultancy Agreement or the Directorship
At the end of: (i) the Employment Agreement for a compelling reason (within the meaning of Article 35 of the Act of 3 July 1978), or (ii) the
Consultancy Agreement for breach of contract, or (iii) the Directorship for compelling reasons, in respect of the Selected Participant who is also a
Warrant holder, intervening before the exercise of the Subscription rights, the relevant Selected Participant’s Subscription rights not exercised at that
moment shall automatically expire (regardless of whether the Subscription rights were vested in accordance with Article 5.2.5), and shall expire with no
value.
At the End of the Employment Agreement, the Consultant Agreement or the Directorship of a Selected Participant who is also Subscription Rights
Holder, and unless otherwise decided by the Board of Directors or one or more proxy-holders appointed thereto for all or a part of the Subscription
Rights prior to the End of the Employment Agreement, the Consultant Agreement or the Directorship:
(i)
(ii)
The Subscription Rights of the Selected Participants, which have at that moment not vested, will in accordance with article 4.3.4 become
automatically void and without value; and
The Subscription Rights which have vested at that moment may be exercised in the first or second upcoming Exercise Period. The
Subscription Rights of the Selected Participant concerned which are not exercised during these Exercise Periods can, in deviation of article
4.6, second paragraph, not be transferred to a later Exercise Period and will upon the expiration of this Exercise Period immediately and
automatically become void and without value.
4.7.2.
Death
If a Subscription Rights Holder dies while a Subscription Rights has not been exercised and is exercisable or may be exercised according to the issuance
and exercise conditions, all vested unexercised Subscription rights held by the Subscription Rights Holder shall be transferred to the Subscription Rights
Holder’s Beneficiary and such vested Subscription Rights may be exercised by the Beneficiary at the time and according to the procedures stipulated in
the issuance and exercise conditions. The Subscription Rights of the relevant Subscription Rights Holder that had not yet been vested at the time of their
death shall automatically expire with no value in accordance with Article 5.2.5.
A Subscription Rights Holder may only designate their husband / wife and / or one or more other legal heirs as their Beneficiary.
The designation, as well as the revocation and re-designation of a Beneficiary must be made in writing.
In the absence of any valid designation under the two preceding paragraphs, the persons who are the Subscription Rights Holder’s legal heirs under the
applicable succession laws shall be deemed to be the Beneficiary. If there are several heirs, the heirs acting jointly or, where appropriate, a person
designated by all heirs acting jointly, shall be deemed to be the Beneficiary.
4.7.3.
Retirement pension
At the End of the Employment Agreement, the Consultant Agreement or the Directorship of the Selected Participant who is also Warrant holder, the
Selected Participant shall, due to his legal retirement or reaching retirement age, retain their vested Subscription Rights and may exercise such
Subscription Rights without prejudice at the time and according to the procedures stipulated in the issuance and exercise conditions. The Subscription
Rights held by the Subscription Rights Holder in question at the time of taking their retirement pension and which have not been vested in accordance
with Article 4.3.4 shall automatically expire with no value, unless the Board of Directors or one or more proxy holders appointd thereto prior to the End
of the Employment Agreement, the Consultant Agreement or the Directorship has decided otherwise for all or a part of the Subscription Rights.
4.8.
Acceleration of the exercise of the Subscription rights
Unless the Board of Driectors or one or more proxy holders appointed thereto decides differently for all or a part of the Subscription Rights, the Holder
of Subscriptio Rights, in the herafter listed cases, has the right to exercised, in an accelerated manner, his Subscription Rights, irrespective the fact
whether these are already vested in accordance with article 4.3.4 during the foreseen Exercise Period or any other Exercise Period which the Board of
Directors can organise, in accordance with the formalities foreseen in these Regulations and taking into consideration and taking the charge of all
possible tax consequences tied to an accelerated exercise.
(i) liquidation of the Company;
(ii) the sale of all or substantially all of the assets of the Company;
(iii) change of control over the company.
The tax consequences of an accelerated exercise shall be borne by the relevant Subscription Rights Holder.
The Company shall notify the Subscription Rights Holders in writing if any of the events listed above occurs, as well as about any additional Exercise
Periods about which the Board of Directors has decided.
If the Subscription Rights Holder, in the event of (i) or (ii) occurring, as mentioned above, does not wish to accelerate the exercise of their Subscription
Rights, such Subscription Rights shall automatically expire and shall be void, unless otherwise decided by the Board of Directors or by one or more
proxy holders appointed thereto for all or a part of these Subscription Rights granted under these Regulations.
4.9
Transferability of the Subscription rights
The Subscription Rights are not transferable except in the event of the death of a Subscription Rights Holder, in which case the Subscription Rights held
by the Warrant Holder at the time of death shall be transferred to the Beneficiary in accordance with the terms of Article 4.7.2. The Board of Directors
or one or more proxy holders appointed thereto may authorize exceptions to this non-transferability for all or a part of the Subscription Rights granted
under these Regulations.
The possible tax consequences of a transfer pursuant to a statutory obligation shall be borne by the Warrant holder.
4.10.
Ordinary shares to which a Warrant entitles possession
4.10.1 Ordinary shares; dividend
Each Subscription Right entitles to subscribe to one ordinary share of the Company.
The ordinary shares to be issued upon the exercise of the Subscription Rights shall entitle to dividends from the beginning of the financial year in which
the Subscription Rights are exercised or, if the Subscription Rights are exercised at a time when the annual meeting has not yet decided on the allocation
of the financial results of the past financial year, from the start of the financial year preceding the year in which the Subscription Rights are exercised.
4.10.2. Exercise procedure; issuance of shares; shareholders’ register; ADSs or other securities
The Company shall only be obliged to issue ordinary shares to the benefit of the Holder of the Subscription Rights only as a result of the exercise of the
Subscription Rights if the requirements set out in Article 4.11 are fulfilled. No fractions of ordinary shares shall be issued upon the exercise of a
Subscription Right.
In the event of the exercise of the Subscription Rights, the ordinary shares will be issued as soon as reasonably possible, taking into account the
applicable administrative and corporate formalities and taking into account the number of shares to be issued, after the end of the exercise period
concerned in accordance with the relevant provisions of the Code on Companies and Associations.
After the issuance of ordinary shares pursuant to the exercise of Subscription Rights, the Board of Directors shall ensure that the new ordinary shares are
registered in the share register of the Company in the name of the subscriber.
The subscriber can, if so wished by the subscriber, take the necessary steps for the inclusion in the listing of the new ordinary shares in the form of
ADSs or other securities. All direct costs and taxes which must be borne in this respect will be paid for by the relevant shareholder. The Company shall
provide reasonable support to convert the shares in ADSs or in other (relevant) securities.
4.11.
Exercise procedure
An exercisable Subscription Right shall only be validly exercised if, by the last day of the relevant Exercise Period, the Board of Directors receives:
(i)
(ii)
(iii)
(iv)
a letter delivered through email, addressed to the Board stating that Subscription Rights are being exercised. The letter shall expressly mention
the number of Subscription Rights to be exercised and signed by the Holder of the Subscription Rights (or his Beneficiaries); and
full payment for the ordinary shares subscribed for pursuant to the exercise of the Subscription Rights, by bank transfer to an account of the
Company the number of which shall be notified by the Company; and
if the Subscription Rights are exercised by a person or persons other than the Selected Participant, appropriate proof of the right of such
person or persons to exercise the Subscription Right; and
statements and documents that the Board deems necessary or desirable to comply with applicable legal or regulatory requirements, and which
the Board requires to be submitted.
The Board of Directors or one or more proxy holders appointed thereto shall have the power to change the above procedure at its own discretion and/or
to allow deviations thereto for all or a part of the Subscription Rights granted under these Regulations.
Irrespective the moment within the Exercise Period on which the aforementioned actions have been taken, the Subscription Rights will be deemed to
have been exercised on the last date of this Exercise Period.
Upon (and under condition of) acceptance of the Subscription rights, the Selected Participant shall also grant a call option in favour of the Company on
all the shares they have acquired following the exercise of the Subscription rights.
This call option shall be exercisable for six months after the end of the Employment Agreement, the Consultant Agreement, or the Directorship (or, if
later, within six months from the exercise of the Subscription rights taking place after the end of the Employment Agreement, the Consultant
Agreement, or the Directorship of the relevant Selected Participant), and may be applied to the whole or a part of the ordinary shares acquired by the
Selected Participant (or Beneficiary) following the exercise of the Subscription rights. The price per share upon which the call option may be exercised
shall be determined as follows:
4.12.
Costs and Taxes
Stamp duties, brokerage fees and other similar duties or taxes or social securitiy contributions levied as a result of the Offer, the Grant, the Exercise or
the Transfer of the Subscription Rights and / or the acquisition of ordinary shares or ADSs shall be borne by the Subscription Rights Holder.
4.13.
Changes to the capital structure of the Company - reservation of rights
Notwithstanding Article 7:71 of the Code on Companies and Associations and without prejudice to the statutory exceptions, the Company may take any
decisions it deems necessary with respect to its capital, its Articles of Association or its management, including, but not limited to, a capital reduction
with or without distribution to shareholders, a capital increase by incorporation of reserves whether or not new shares are created, a capital increase by
contributions in kind, a capital increase by cash contribution whereby the preferential right of the existing shareholders may or may not be restricted or
withdrawn, an issue of bonus shares, convertible bonds, preferred shares, bonds cum subscription rights, ordinary bonds or naked subscription rights, an
alteration to the Articles of Association regarding the appropriation of profit or the liquidation proceeds or other rights attached to the ordinary shares, a
share split, a distribution of share dividends, a dissolution of the Company, a merger, a division or a contribution or a transfer of a totality or of an
industry whether or not accompanied by the exchange of shares. The Company may make such resolutions even if they (could) lead to a reduction of the
benefits which the issuance conditions of the Subscription Rights and the law assign to the Subscription Rights Holders, unless the sole purpose of such
resolutions should be such a reduction.
In the event of a merger or division, the Board of Directors shall make all reasonable efforts to ensure that the Subscription Rights outstanding at the
date of such transaction shall be replaced by subscription rights in the merged company or the demerged companies in accordance with the exchange
ratio applied to the ordinary shares of the Company existing at that time.
4.14.
Exercise of the Subscription Rights in accordance with the law
If the Subscription Rights Holder exercises Subscription Rights under Article 7:71 of the Code on Companies and Associations, the thus acquired
ordinary shares shall not be transferable as long as the Subscription Rights would not have been otherwise (i.e. abstraction of such exercise) exercisable
in accordance with the issuance and exercise conditions. The possible tax consequences of such exercise shall be borne by the Subscription Rights
Holder.
5.
Miscellaneous
5.1.
Authorized Representative of the Board of Directors
The Board of Directors can revoke the mandate of the Authorized Representative of the Board of Directors at any time and grant a new mandate to a
different Authorized Representative of the Board of Directors. The Authorized Representative of the Board of Directors can resign at any moment by
written notification thereto to the Board of Directors.
5.2.
Applicable law
These Regulations, the Subscription Rights and the issuance and exercise conditions of the Subscription Rights are governed by Belgian law.
5.3.
Competent courts
The Courts and Tribunals of the district of the registered office of the Company shall have exclusive jurisdiction over any disputes regarding the
Subscription Rights or the issuance and exercise conditions thereof.
5.4.
Notices
Any notice to the Subscription Rights Holder shall be made by email to the Materialise email addres of the Subscription Rights Holder concerned, or
shall be sent by registered letter to the address mentioned in the register of Subscription Rights Holders or by written notice with acknowledgement of
receipt.
Any notice to the Company, the Board of Directors or its Authorized Representative shall only be valid if made by email to legal@materialise.be or by
registered letter with acknowledgement of receipt to the registered office of the Company or by written notification with confirmation of receipt.
Any notice shall be deemed to have arrived three business days after the postmark of the registered letter or the first working day following the sending
of the email, if the notice has been given by email. Changes of address must be notified in accordance with this provision.
SUBSIDIARIES OF MATERIALISE NV
EXHIBIT 8.1
Name
Materialise SAS
Materialise GmbH
Materialise Japan K.K.
Materialise s.r.o.
Materialise USA, LLC
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
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, Brigitte de Vet- Veithen, certify that:
1.
I have reviewed this annual report on Form 20-F of MATERIALISE NV (the “company”);
CERTIFICATION
2. 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;
3. 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;
4. 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) 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;
(b) 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;
(c) 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
(d) 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) 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
(b) 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 12, 2024
By:
/s/ Brigitte de Vet-Veithen
Brigitte de Vet-Veithen
De Vet Management B.V.
Chief Executive Officer
EXHIBIT 12.2
I, Koen Berges, certify that:
1.
I have reviewed this annual report on Form 20-F of MATERIALISE NV (the “company”);
CERTIFICATION
2. 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;
3. 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;
4. 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) 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;
(b) 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;
(c) 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
(d) 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) 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
(b) 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 12, 2024
By:
/s/ Koen Berges
Koen Berges
Finstraco 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
EXHIBIT 13.1
In connection with the Annual Report of MATERIALISE NV (the “Company”) on Form 20-F for the fiscal year ended December 31,
2023, as filed with the U.S. Securities and Exchange Commission on the date hereof (the “Report”), I, Brigitte de Vet - Veithen, 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.
Date: April 12, 2024
By:
/s/ Brigitte de Vet – Veithen
Brigitte de Vet – Veithen
De Vet Management BV
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
EXHIBIT 13.2
In connection with the Annual Report of MATERIALISE NV (the “Company”) on Form 20-F for the fiscal year ended December 31,
2023, as filed with the U.S. Securities and Exchange Commission on the date hereof (the “Report”), I, Koen Berges, 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.
Date: April 12, 2024
By:
/s/ Koen Berges
Koen Berges
Finstraco BV
Chief Financial Officer
Consent of Independent Registered Public Accounting Firm
EXHIBIT 23.1
We consent to the incorporation by reference in the registration statements (No. 333-197236 and No. 333-212445) on Form S-8 and the
registration statements (No. 333-213649 and No. 333-258949) on Form F-3 of our report dated April 12, 2024, with respect to the
consolidated financial statements of Materialise NV and the effectiveness of internal control over financial reporting.
KPMG Bedrijfsrevisoren BV / KPMG Réviseurs d’Entreprises SRL
/s/ Gotwin Victor Jaak Jackers
Zaventem, Belgium
April 12, 2024
MATERIALISE NV
COMPENSATION RECOVERY POLICY
EXHIBIT 97.1
The Board has determined that it is in the best interests of the Company and its shareholders to adopt this Policy
enabling the Company to recover from specified current and former Company executives certain incentive-based
compensation in the event of an accounting restatement resulting from material noncompliance with any financial
reporting requirements under the federal securities laws. Capitalized terms are defined in Section 14.
This Policy is designed to comply with Rule 10D-1 of the Exchange Act and shall become effective on the
Effective Date and shall apply to Incentive-Based Compensation Received by Covered Persons on or after the
Listing Rule Effective Date.
1.
Administration
This Policy shall be administered by the Administrator. The Administrator is authorized to interpret and construe
this Policy and to make all determinations necessary, appropriate, or advisable for the administration of this
Policy. The Administrator may retain, at the Company’s expense, outside legal counsel and such compensation,
tax or other consultants as it may determine are advisable for purposes of administering this Policy.
2.
Covered Persons and Applicable Compensation
This Policy applies to any Incentive-Based Compensation Received by a person (a) after beginning service as a
Covered Person; (b) who served as a Covered Person at any time during the performance period for that
Incentive-Based Compensation; and (c) was a Covered Person during the Clawback Period.
However, recovery is not required with respect to:
i.
Incentive-Based Compensation Received prior to an individual becoming a Covered Person, even if the
individual served as a Covered Person during the Clawback Period.
ii.
Incentive-Based Compensation Received prior to the Listing Rule Effective Date.
iii. Incentive-Based Compensation Received prior to the Clawback Period.
iv. Incentive-Based Compensation Received while the Company did not have a class of listed securities on a
national securities exchange or a national securities association in the United States, including the
Exchange.
The Administrator will not consider the Covered Person’s responsibility or fault or lack thereof in enforcing this
Policy with respect to recoupment under the Final Rules.
3.
Triggering Event
Subject to and in accordance with the provisions of this Policy, if there is a Triggering Event, the Administrator
shall require a Covered Person to reimburse or forfeit to the Company the Recoupment Amount applicable to such
Covered Person. A Company’s obligation to recover the Recoupment Amount is not dependent on if or when the
restated financial statements are filed.
4.
Calculation of Recoupment Amount
The Recoupment Amount will be calculated in accordance with the Final Rules, as provided in the Calculation
Guidelines attached hereto as Exhibit B.
5.
Method of Recoupment
Subject to compliance with the Final Rules and applicable law, the Administrator will determine, in its sole
discretion, the method for recouping the Recoupment Amount hereunder which may include, without limitation:
i. Requiring reimbursement or forfeiture of the pre-tax amount of cash Incentive-Based Compensation
previously paid;
ii. Offsetting the Recoupment Amount from any compensation otherwise owed by the Company to the
Covered Person, including without limitation, any prior cash incentive payments, executive retirement
benefits, wages, equity grants or other amounts payable by the Company to the Covered Person in the
future;
iii. Seeking recovery of any gain realized on the vesting, exercise, settlement, cash sale, transfer, or other
disposition of any equity-based awards; and/or
iv. Taking any other remedial and recovery action permitted by law, as determined by the Administrator.
6.
Arbitration
To the fullest extent permitted by law, any disputes that may arise under this Policy or its Exhibits including any
question regarding its existence, validity, or termination, shall be referred to and finally resolved by the
International Commercial Arbitration Court under the European Arbitration Chamber (Belgium, Brussels, Avenue
Louis 146) according to the Rules of this ICAC, which as a result of referring to it, is considered as part of this
clause.
The number of arbitrators shall be three.
The seat, or legal place of arbitration shall be Brussels, Belgium.
The language to be used in the arbitral proceeding shall be Dutch. The governing law of the Policy shall be the
substantial law of the USA.
The Covered Person is not restricted from filing administrative claims that may be brought before any government
agency where, as a matter of law, the Covered Person’s ability to file such claims may not be restricted. However,
to the fullest extent permitted by law, arbitration shall be the exclusive remedy for the subject matter of such
administrative claims. If, for any reason, any term of this Arbitration provision is held to be invalid or
unenforceable, all other valid terms and conditions herein shall be severable in nature and remain fully
enforceable.
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7.
Recovery Process; Impracticability
Actions by the Administrator to recover the Recoupment Amount will be reasonably prompt.
The Administrator must cause the Company to recover the Recoupment Amount unless the Administrator shall
have previously determined that recovery is impracticable and one of the following conditions is met:
i. The direct expense paid to a third party to assist in enforcing this Policy would exceed the amount to be
recovered; before concluding that it would be impracticable to recover any amount of erroneously awarded
Incentive-Based Compensation based on the expense of enforcement, the Company must make a
reasonable attempt to recover such erroneously awarded Incentive-Based Compensation, document such
reasonable attempt(s) to recover, and provide that documentation to the Exchange;
ii. Recovery would violate home country law where that law was adopted prior to November 28, 2022;
before concluding that it would be impracticable to recover any amount of erroneously awarded Incentive-
Based Compensation based on violation of home country law, the Company must obtain an opinion of
home country counsel, acceptable to the Exchange, that recovery would result in such a violation, and
must provide such opinion to the Exchange; or
iii. Recovery would likely cause an otherwise tax-qualified retirement plan, under which benefits are broadly
available to employees of the Company, to fail to meet the requirements of 26 U.S.C. 401(a)(13) or 26
U.S.C. 411(a) and regulations thereunder.
8.
Non-Exclusivity
The Administrator intends that this Policy will be applied to the fullest extent of the law. Without limitation to
any broader or alternate clawback authorized in any written document with a Covered Person, (i) the
Administrator may require that any employment agreement, equity award agreement, or similar agreement entered
into on or after the Effective Date shall, as a condition to the grant of any benefit thereunder, require a Covered
Person to agree to abide by the terms of this Policy, and (ii) this Policy will nonetheless apply to Incentive-Based
Compensation as required by the Final Rules, whether or not specifically referenced in those arrangements. Any
right of recoupment under this Policy is in addition to, and not in lieu of, any other remedies or rights of
recoupment that may be available to the Company pursuant to the terms of any other clawback policy of the
Company as then in effect, or any similar policy in any employment agreement, equity award agreement, or
similar agreement and any other legal remedies or regulations available or applicable to the Company (including
SOX 304). If recovery is required under both SOX 304 and this Policy, any amounts recovered pursuant to SOX
304 may, in the Administrator’s discretion, be credited toward the amount recovered under this Policy, or vice
versa.
3
9.
No Indemnification
The Company shall not indemnify any Covered Persons against (i) the loss of erroneously awarded Incentive-
Based Compensation or any adverse tax consequences associated with any incorrectly awarded Incentive-Based
Compensation or any recoupment hereunder, or (ii) any claims relating to the Company enforcement of its rights
under this Policy. For the avoidance of doubt, this prohibition on indemnification will also prohibit the Company
from reimbursing or paying any premium or payment of any third-party insurance policy to fund potential
recovery obligations obtained by the Covered Person directly. No Covered Person will seek or retain any such
prohibited indemnification or reimbursement.
Further, the Company shall not enter into any agreement that exempts any Incentive-Based Compensation from
the application of this Policy or that waives the Company’s right to recovery of any erroneously awarded
Incentive-Based Compensation and this Policy shall supersede any such agreement (whether entered into before,
on or after the Effective Date).
10.
Covered Person Acknowledgement and Agreement
All Covered Persons subject to this Policy must acknowledge their understanding of, and agreement to comply
with, the Policy by executing the certification attached hereto as Exhibit A. Notwithstanding the foregoing, this
Policy will apply to Covered Persons whether or not they execute such certification.
11.
Successors
This Policy shall be binding and enforceable against all Covered Persons and their beneficiaries, heirs, executors,
administrators or other legal representatives and shall inure to the benefit of any successor to the Company.
12.
Interpretation of Policy
To the extent there is any ambiguity between this Policy and the Final Rules, this Policy shall be interpreted so
that it complies with the Final Rules. If any provision of this Policy, or the application of such provision to any
Covered Person or circumstance, shall be held invalid, the remainder of this Policy, or the application of such
provision to Covered Persons or circumstances other than those as to which it is held invalid, shall not be affected
thereby.
In the event any provision of this Policy is inconsistent with any requirement of any Final Rules, the
Administrator, in its sole discretion, shall amend and administer this Policy and bring it into compliance with such
rules.
Any determination under this Policy by the Administrator shall be conclusive and binding on the applicable
Covered Person. Determinations of the Administrator need not be uniform with respect to Covered Persons or
from one payment or grant to another.
4
13.
Amendments; Termination
The Administrator may make any amendments to this Policy as required under applicable law, rules, and
regulations, or as otherwise determined by the Administrator in its sole discretion.
The Administrator may terminate this Policy at any time.
14.
Definitions
“Administrator” means the Remuneration and Nomination Committee of the Board, or in the absence of a
committee of independent directors responsible for executive compensation decisions, a majority of the
independent directors serving on the Board.
“ADSs” means American Depositary Shares, each representing one ordinary share of the Company.
“Board” means the Board of Directors of the Company.
“Clawback Measurement Date” is the earlier to occur of:
i. The date the Board, a committee of the Board, or the officer or officers of the Company authorized to take
such action if Board action is not required, concludes, or reasonably should have concluded, that the
Company is required to prepare an accounting restatement as described in this Policy; or
ii. The date a court, regulator, or other legally authorized body directs the Company to prepare an accounting
restatement as described in this Policy.
“Clawback Period” means the three (3) completed fiscal years immediately prior to the Clawback
Measurement Date and any transition period between the last day of the Company’s previous fiscal year end and
the first day of its new fiscal year (that results from a change in the Company’s fiscal year) within or immediately
following such three (3)-year period; provided that any transition period between the last day of the Company’s
previous fiscal year end and the first day of its new fiscal year that comprises a period of 9 to 12 months will be
deemed a completed fiscal year.
“Company” means Materialise NV, a limited liability company (naamloze vennootschap) organized and existing
under the laws of the Kingdom of Belgium, or any successor company.
“Covered Person” means any Executive Officer (as defined in the Final Rules), including, but not limited to,
those persons who are or have been determined to be “officers” of the Company within the meaning of Section 16
of Rule 16a-1(f) of the rules promulgated under the Exchange Act, and “executive officers” of the Company
within the meaning of Item 401(b) of Regulation S-K, Rule 3b-7 promulgated under the Exchange Act, and Rule
405 promulgated under the U.S. Securities Act of 1933, as amended; provided that the Administrator may identify
additional employees who shall be treated as Covered Persons for the purposes of this Policy with prospective
effect, in accordance with the Final Rules.
“Effective Date” means December 1st, 2023.
“Exchange” means the Nasdaq Global Select Market or any other national securities exchange or national
securities association in the United States on which the Company has listed its securities for trading.
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.
5
“Final Rules” means the final rules promulgated by the SEC under Section 954 of the U.S. DoddFrank Act, Rule
10D-1 and Exchange listing standards, as may be amended from time to time.
“Financial Reporting Measure” are measures that are determined and presented in accordance with the
accounting principles used in preparing the Company’s financial statements, and any measures that are derived
wholly or in part from such measures. Share (or ADS) price and TSR are also financial reporting measures. A
financial reporting measure need not be presented within the financial statements or included in a filing with the
SEC.
“Incentive-Based Compensation” means compensation that is granted, earned or vested based wholly or in part
on the attainment of any Financial Reporting Measure. Examples of “IncentiveBased Compensation” include, but
are not limited to: non-equity incentive plan awards that are earned based wholly or in part on satisfying a
Financial Reporting Measure performance goal; bonuses paid from a “bonus pool,” the size of which is
determined based wholly or in part on satisfying a Financial Reporting Measure performance goal; other cash
awards based on satisfaction of a Financial Reporting Measure performance goal; restricted shares, restricted
share units, performance share units, options, warrants and SARs that are granted or become vested based wholly
or in part on satisfying a Financial Reporting Measure goal; and proceeds received upon the sale of shares
acquired through an incentive plan that were granted or vested based wholly or in part on satisfying a Financial
Reporting Measure goal. “Incentive-Based Compensation” excludes, for example, time-based awards such as
options, warrants or restricted share units that are granted or vest solely upon completion of a service period;
awards based on non-financial strategic or operating metrics such as the consummation of a merger or
achievement of nonfinancial business goals; service-based retention bonuses; discretionary compensation; and
salary.
“Listing Rule Effective Date” means the effective date of the listing standards of the Exchange on which the
Company’s securities are listed.
“Policy” means this Compensation Recovery Policy.
Incentive-Based Compensation is deemed “Received” in the Company’s fiscal period during which the relevant
Financial Reporting Measure specified in the Incentive-Based Compensation award is attained, irrespective of
whether the payment or grant occurs on a later date or if there are additional vesting or payment requirements,
such as time-based vesting or certification or approval by the Remuneration and Governance Committee or Board,
that have not yet been satisfied.
“Recoupment Amount” means the amount of Incentive-Based Compensation Received by the Covered Person
based on the financial statements prior to the restatement that exceeds the amount such Covered Person would
have received had the Incentive-Based Compensation been determined based on the financial restatement,
computed without regard to any taxes paid (i.e., gross of taxes withheld).
“SARs” means share appreciation rights.
“SEC” means the U.S. Securities and Exchange Commission.
“SOX 304” means Section 304 of the U.S. Sarbanes-Oxley Act of 2002.
“Triggering Event” means any event in which the Company is required to prepare an accounting restatement due
to the material noncompliance of the Company with any financial reporting requirement under the securities laws,
including any required accounting restatement to correct an error in previously issued financial statements that is
material to the previously issued financial statements, or that would result in a material misstatement if the error
were corrected in the current period or left uncorrected in the current period.
“TSR” means total shareholder return.
6
EXHIBIT A
Certification
I certify that:
1.
2.
3.
4.
I have read and understand the Company’s Compensation Recovery Policy (the “Policy”). I understand that
the Company’s Corporate Legal Counsel is available to answer any questions I have regarding the Policy.
I understand that the Policy applies to all of my existing and future compensation-related agreements with the
Company, whether or not explicitly stated therein.
I agree that notwithstanding the Company’s restated articles of association and any agreement I have with the
Company, including any indemnity agreement I have with the Company, I will not be entitled to, and will not
seek indemnification from the Company for, any amounts recovered or recoverable by the Company in
accordance with the Policy.
I understand and agree that in the event of a conflict between the Policy and the foregoing agreements and
understandings on the one hand, and any prior, existing or future agreement, arrangement or understanding,
whether oral or written, with respect to the subject matter of the Policy and this Certification, on the other
hand, the terms of the Policy and this Certification shall control, and the terms of this Certification shall
supersede any provision of such an agreement, arrangement or understanding to the extent of such conflict
with respect to the subject matter of the Policy and this Certification; provided that, in accordance with
Section 8 of the Policy, nothing herein limits any other remedies or rights of recoupment that may be available
to the Company.
5.
I agree to abide by the terms of the Policy, including, without limitation, by returning any erroneously awarded
Incentive-Based Compensation to the Company to the extent required by, and in a manner permitted by, the
Policy.
Signature:
Name:
Title:
Date:
7
For purposes of calculating the Recoupment Amount:
EXHIBIT B
Calculation Guidelines
i.
ii.
iii.
For cash awards not paid from bonus pools, the erroneously awarded compensation is the difference
between the amount of the cash award (whether payable as a lump sum or over time) that was received
and the amount that should have been received applying the restated Financial Reporting Measure.
For cash awards paid from bonus pools, the erroneously awarded compensation is the pro rata portion
of any deficiency that results from the aggregate bonus pool that is reduced based on applying the
restated Financial Reporting Measure.
For equity awards, if the shares, options, warrants, restricted share units, or SARs are still held at the
time of recovery, the erroneously awarded compensation is the number of such securities received in
excess of the number that should have been received applying the restated Financial Reporting
Measure (or the value of that excess number). If the options, warrants or SARs have been exercised,
but the underlying shares have not been sold, the erroneously awarded compensation is the number of
shares underlying the excess options, warrants or SARs (or the value thereof). If the underlying shares
have been sold, the Company may recoup proceeds received from the sale of shares.
iv.
For Incentive-Based Compensation based on share (or ADS) price or TSR, where the amount of
erroneously awarded compensation is not subject to mathematical recalculation directly from the
information in an accounting restatement:
a. The amount must be based on a reasonable estimate of the effect of the accounting restatement on
the share (or ADS) price or TSR upon which the Incentive-Based Compensation was Received;
and
b. The Company must maintain documentation of the determination of that reasonable estimate and
the Company must provide such documentation to the Exchange in all cases.
8