DE.MEM LIMITED — M&A Activity 2019

Oct 22, 2019

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De.mem Limited (ASX:DEM) Acquisition Overview: Geutec Industrie-und Abwassertechnik GmbH 23 October 2019

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CONTENTS

3 ACQUISITION OVERVIEW 4 STRATEGIC RATIONALE 5 ACQUISITION STRUCTURE 6 KEY INVESTMENT CONSIDERATIONS

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ACQUISITION OVERVIEW

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De.mem has completed the acquisition of 75% of the shares in Geutec Industrie- und Abwassertechnik GmbH, Essen, Germany (“Geutec” or the “Target Company”).

Geutec supplies solutions for industrial waste water treatment based on proprietary chemical formulations.

The acquisition will expand De.mem’s product range, increase cross-sell potential by enabling the company to sell innovative chemicals-based products to its customer base in Australia and Asia, increase recurring revenues, accelerate De.mem’s path to operating cash positive and increase geographic diversification.

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Geutec – Business Overview

Geutec has a focus on waste water treatment products and solutions for the heavy industrial, plating and metals processing industries. It is an established business with a customer base in Germany and Europe which has grown over decades. Strong potential in the Asia-Pacific and with the current De.mem customer base Complementary Product Lines

Includes products often used in conjunction with membrane based water treatment systems such as:

• Proprietary, advanced chemicals for industrial waste water treatment

• Chemical dosing systems

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• Filtration equipment and consumables

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Earnings Accretive and Highly Profitable

Revenues of A$1.8m and Normalized Earnings Before Tax of A$245k in the 12 months to 31 December 2018 (unaudited)

Recurring Revenues from Strong and Diversified Customer Base Long-term customer relationships with 100+ large corporates and SMEs in Germany and Europe, providing stable, recurring revenues

Attractive Valuation and Acquisition Structure

De.mem acquired 75% in Geutec’s shares for approx. A$915k cash Valuation approx. 5x Normalized Earnings Before Tax

Offices

Projects Completed

STRATEGIC RATIONALE

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Geutec is well known and highly synergistic to De.mem Strategic Rationale: Product Range Expansion, Cross Selling, Geographic Diversification and Earnings Accretion

Product Range Expansion and Cross Selling Opportunity

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• Geutec’s products are highly complementary to De.mem’s membrane based water treatment systems, i.e. by sales of chemicals for pre-treatment to membranes such as coagulants and flocculants, membrane cleaners, anti-scalants to the De.mem customer base

• Strong cross-selling opportunity for Geutec’s know how into Australia and the Asia-Pacific

• Immediate product need among De.mem’s existing customer base in Australia

• Large market opportunity in particular within the mining and heavy industrials sector

Geographic Diversification

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• Strategic milestone for De.mem with market entry into Germany and Europe – market size for water supply and waste water treatment estimated at approx. EUR 20.5 bn* annually in Germany alone, or 11% of global market volume

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• Geutec provides established platform for offering of De.mem group products and services to German and European customers

Earnings Accretive and Strengthening Recurring Revenues

• Adds stable, recurring revenue stream to De.mem’s core business in Australia

• Attractive valuation at approx. 5x Normalized Earnings before Tax

*Source: Germany Trade & Invest; Statista; VDMA (2017/18)

Offices

Projects Completed

ACQUISITION STRUCTURE

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The acquisition is well-priced at 5x Normalized Earnings Before Taxes

Upfront cash consideration is less than 2% of DEM’s market capitalisation

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Structure

• De.mem acquired 75% of the Geutec’s shares for approx. A$915k in cash

• Reasonable valuation at approx. 5x Normalized Earnings Before Taxes

• Option for De.mem to acquire the remaining 25% in the Target Company based on the same valuation

Closing and Completion Date

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• Closing (signing of share purchase agreement) took place on 17

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• October 2019

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• Completion announced today

Management

Owner/Managing Director of Target Company remains with De.mem after the acquisition

Offices

Projects Completed

KEY INVESTMENT CONSIDERATIONS

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Uniquely positioned to become the leading player in decentralized water treatment across APAC, providing a range of proven, world-class, highly scalable and potentially disruptive technologies to a large addressable market

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Proprietary technology – De.mem has access to a range of proven, disruptive, easy-to-scale membrane technologies targeting a huge addressable market. Part of the IP is owned by De.mem, other has been licensed exclusively from Nanyang Technological University (NTU), Singapore – ranked no. 2 in membrane research worldwide by Lux Research (2013).

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High growth market – The global water industry is estimated to reach US$915bn by 2023 ( source: Global Water Intelligence ). The global market for packaged / decentralised water treatment systems was valued at USD 12 bn in 2015 and is projected to reach USD 21.8 billion by 2021 - a compounded growth of 10.4% per annum ( source: Markets & Markets ).

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Blue chip customer base – Including: Rio Tinto, Monadelphous, Bechtel (mining/resources); St Hilliers, Mulpha, JRK Group, Civeo, Ausco (infrastructure/municipal); Givaudan, FMC Technip (industrial)

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High revenue growth – From $0.3m in 2016 to $2.9m in 2017 and $10.5m 2018. FY19 YTD exceeding FY18 run-rate, with $10.5m secured revenues as of October 2019.

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Stable revenue component - Approx. $3.5m or 35% of revenues from long term or revolving Operations & Maintenance or Build, Own, Operate contracts

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Multiple growth drivers – High growth addressable market; growing product range; emerging new technologies; crosssell opportunities; recent expansion into new geographies (Western Australia and Pacific Islands).

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Visible path to cash positive – Operating cash outflow of $1.6m on $10.5m revenue in FY18, with growing FY19 revenue outlook. Flexible revenue model, low cost base, existing projects providing stable cash flow and recurring service revenues.

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Valuation discount – DEM trades at a discount to ASX-listed peers on a market cap/revenue (x) basis.

LEGAL DISCLAIMER

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This presentation has been prepared by De.mem Limited and its related entities (the “Company”). It does not purport to contain all the information that a prospective investor may require in connection with any potential investment in the Company. You should not treat the contents of this presentation, or any information provided in connection with it, as financial advice, financial product advice or advice relating to legal, taxation or investment matters.

No representation or warranty (whether express or implied) is made by the Company or any of its officers, advisers, agents or employees as to the accuracy, completeness or reasonableness of the information, statements, opinions or matters (express or implied) arising out of, contained in or derived from this presentation or provided in connection with it, or any omission from this presentation, nor as to the attainability of any estimates, forecasts or projections set out in this presentation. This presentation is provided expressly on the basis that you will carry out your own independent inquiries into the matters contained in the presentation and make your own independent decisions about the affairs, financial position or prospects of the Company. The Company reserves the right to update, amend or supplement the information at any time in its absolute discretion (without incurring any obligation to do so). Neither the Company, nor its related bodies corporate, officers, their advisers, agents and employees accept any responsibility or liability to you or to any other person or entity arising out of this presentation including pursuant to the general law (whether for negligence, under statute or otherwise), or under the Australian Securities and Investments Commission Act 2001, Corporations Act 2001, Competition and Consumer Act 2010 or any corresponding provision of any Australian state or territory legislation (or the law of any similar legislation in any other jurisdiction), or similar provision under any applicable law. Any such responsibility or liability is, to the maximum extent permitted by law, expressly disclaimed and excluded. Nothing in this material should be construed as either an offer to sell or a solicitation of an offer to buy or sell securities. It does not include all available information and should not be used in isolation as a basis to invest in the Company.

Future Matters | This presentation contains reference to certain intentions, expectations, future plans, strategy, revenue forecasts and prospects of the Company. Those intentions, expectations, future plans, strategy, revenue forecasts and prospects may or may not be achieved and may be forward looking statements. They are based on certain assumptions, which may not be met or on which views may differ and may be affected by known and unknown risks. The performance and operations of the Company may be influenced by a number of factors, many of which are outside the control of the Company. No representation or warranty, express or implied, is made by the Company, or any of its directors, officers, employees, advisers or agents that any intentions, expectations or plans will be achieved either totally or partially or that any particular rate of return will be achieved. Given the risks and uncertainties that may cause the Company’s actual future results, performance or achievements to be materially different from those expected, planned or intended, recipients should not place undue reliance on these intentions, expectations, future plans, strategy, revenue forecasts and prospects. The Company does not warrant or represent that the actual results, performance or achievements will be as expected, planned or intended.

US Disclosure | This document does not constitute any part of any offer to sell, or the solicitation of an offer to buy, any securities in the United States or to, or for the account or benefit of any “US person” as defined in Regulation S under the US Securities Act of 1993 (“Securities Act”). The Company’s shares have not been, and will not be, registered under the Securities Act or the securities laws of any state or other jurisdiction of the United States, and may not be offered or sold in the United States or to any US person without being so registered or pursuant to an exemption from registration including an exemption for qualified institutional buyers.

All figures included in this presentation are in AUD$ unless otherwise stated. Assumed exchange rate of AUD$1:USD$0.75

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DE.MEM LIMITED (ASX:DEM)

Andreas Kroell Chief Executive Officer De.mem Limited investor@demem.com.sg

INVESTOR ENQUIRIES

George Gabriel, CFA Managing Director BLETCHLEY Park Capital investors@bletchleyparkcapital.com.au (03) 8686 9144