CLIFFORD CHANCE US LLP
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VIA EDGAR AND BY FEDERAL EXPRESS
June 3, 2014
Pamela Long, Esq.
United States Securities and Exchange Commission
Division of Corporation Finance
100 F Street, N.E.
Washington, D.C. 20549-0404
|Amendment No. 2 to Registration Statement on Form F-1|
|Filed May 23, 2014|
|File No. 333-194982|
Dear Ms. Long:
On behalf of our client, Materialise NV, a Belgian limited liability company (naamloze vennootschap) (the Company), set forth below are the responses of the Company to comments made by the staff (the Staff) of the Securities and Exchange Commission (the SEC) by letter dated May 30, 2014 (the Comment Letter) in connection with Amendment No. 2 to the Registration Statement on Form F-1, which the Company publicly filed on May 23, 2014 (the Registration Statement).
The Companys responses to the Staffs comments contained in the Comment Letter are set out in the order in which the comments were set out in the Comment Letter and are numbered accordingly.
Report of Independent Registered Public Accounting Firm, page F-2
|1.||In light of the change in the level of testing of goodwill for impairment to comply with the guidance in IAS 36.80(b), which resulted in a change to the disclosures included in Note 5, please clarify whether or not this change was included in the scope of the audit, since the independent registered audit report is not dual dated. Refer to AU Section 530.|
In connection with the Staffs request for an explanation of why the auditors report is not dual dated as a consequence of the changes made to disclosures in Note 5 to the audited consolidated financial statements, the Company respectfully notes to the Staff that the Companys auditor, BDO Bedrijfsrevisoren Burg. CVBA (BDO), has reviewed the
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Ms. Pamela Long
June 3, 2014
Companys response to Comment 3 below, and concurs with the Companys commentary in this regard. As discussed in the Companys response to Comment 3 below, the disclosure changes in Note 5 did not provide substantive additional evidence regarding the recoverable value of the Marcam Engineering GmbH (Marcam) cash generating unit (CGU) that did not exist at the time of the signing of their report, and, therefore, the auditor does not consider there to be any need to dual date their audit opinion.
3 Summary of Significant Accounting Policies, page F-9
Significant accounting judgments, estimates and assumptions, page F-21
Impairment of goodwill, intangible assets and property, plant & equipment, page F-23
|2.||Please revise your disclosure regarding the level at which goodwill is tested to provide disclosure that is consistent with the revised disclosure in Note 5.|
In response to the Staffs comment, the Company will change the reference on page F-23 from Germany to Marcam (DE-3D Printing Software) in the next pre-effective amendment to the Registration Statement.
5 Goodwill, page F-24
|3.||We note that you changed the level of testing 1.5 million of your 1.6 million of goodwill, which significantly reduced the recoverable amount of the revised CGU, Marcam (DE-3D Printing Software). Please expand your disclosures to explain the nature of the change in application of IAS 36.80(b) for the testing of goodwill for impairment.|
The Company acknowledges the Staffs comment. In the context of amending the disclosures in the audited consolidated financial statements related to testing goodwill for impairment, the Company respectfully refers the Staff back to the description of the Companys original assessment of goodwill for impairment contained in the Companys response to Comment 6 in our prior response letter to the Staff dated April 22, 2014. The original assessment was performed on a German combined CGU basis (German combined CGU), rather than on a separate CGU basis (in this case, the German Software CGU of which the Marcam CGU is a part). The Company had explained to the Staff in its original response that the ability to allocate assets to the Companys CGUs was hindered due to the lack of discrete financial information at each of the Companys CGUs. The Company had also explained that the view of management was that, rather than create a new arbitrary allocation of the Companys assets within its German combined CGU to each of the relevant separate CGUs, including the German Software CGU, the Company would review the goodwill for impairment at the higher German combined CGU level. The Companys belief at that time was that such testing and analysis provided sufficient support that the recoverable amount of its German combined
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Ms. Pamela Long
June 3, 2014
CGU was significantly in excess of the net book value of such assets. The Company had created a detailed value in use analysis of each of the Companys CGUs, and it was evident to the Company at the balance sheet date that the recoverable amount of the German Software CGU was higher than the net book value of the assets held in the entire German combined CGU. As the majority of the net book value of the assets related to such goodwill, the Company believed it had clear evidence to support its position that no impairment of goodwill existed at the balance sheet date.
The Company decided to re-perform its assessment of goodwill for impairment based on the specific criteria set out in IAS 36: Impairment of Assets, paragraph 80(b), at the Staffs request to provide further clarification of the Companys previous conclusion that no such impairment existed. For these purposes, the Company identified discrete financial information for the Marcam CGU, which was previously aggregated in the net book value of the German combined CGU. The Company then compared the net book value of the Marcam CGU with the recoverable amount of the Marcam CGU. The Company respectfully advises the Staff that it does not believe that such assessment provided any significant additional information to the Companys previous conclusions that there was no impairment of goodwill.
In this regard, the Company respectfully notes that the recoverable amount of the Marcam CGU was information that had previously been available to the Company (and its auditor) at the time of the original assessment of goodwill for impairment, but was then aggregated to compare to the net book value of the German combined CGU. At the time of the Companys original assessment, the recoverable value of the Marcam CGU was known to the Company (4.7 million of the total recoverable value of 9.1 million within the German combined CGU). However, the Company chose not to disclose the specific recoverable amount of the Marcam CGU within the consolidated audited financial statements in order to compare the recoverable amount of the entire German combined CGU to its book value on a consistent basis.
The Company respectfully advises the Staff that it believes that the change to the previous disclosure of recoverable amount was essentially a mechanical change to the Companys financial statements and not a change to the Companys original identification of the recoverable amount of the Marcam CGU or to the Companys related conclusion on impairment. Furthermore, the change to the disclosure did not constitute any form of correction of an error in accordance with IAS 8: Accounting policies, changes in accounting estimates and errors (IAS 8). In particular, the change did not occur as a result of the Companys analysis containing either a material error or an immaterial error made intentionally to achieve a particular presentation of the Companys financial position, financial performance or cash flows.
The Company also respectfully notes to the Staff that any change that the Company believes would have been as a result of either a material error or an immaterial error made intentionally to achieve a particular presentation of its financial position, financial performance or cash flows in accordance with IAS 8 would lead to the Company having to withdraw the financial statements previously issued and to re-issue the financial
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Ms. Pamela Long
June 3, 2014
statements. The Company respectfully submits that it does not believe that reflecting an identification of the recoverable value of the Marcam CGU of 4.7 million as opposed to a German combined CGU of 9.1 million in re-issued financial statements would present an investor with additional relevant material information, as no corresponding change to the Companys financial position, financial performance or cash flows resulted from the further analysis that was carried out.
Should the Staff have additional questions or comments regarding any of the foregoing, please do not hesitate to contact the undersigned at (212) 878-3079 or Alejandro E. Camacho at (212) 878-8434.
|Per B. Chilstrom|
|cc:||Securities and Exchange Commission|
|Clifford Chance US LLP|
|Alejandro E. Camacho|
|Paul Hastings LLP|
|William F. Schwitter|
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