VEEM LTD — AGM Information 2017

Nov 23, 2017

AGM Presentation

November 2017

THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER OR ADVERTISEMENT

This document, including the information contained in this disclaimer, is not a prospectus, product disclosure statement or other disclosure document and does not constitute, or form any part of, an offer to sell, or a solicitation of an offer to buy, the Shares. This document does not constitute an invitation, offer or recommendation to apply for or purchase the Shares and does not contain any application form for the Shares. This d ocument does not constitute an advertisement for an offer or proposed offer of the Shares. Neither this document nor anything contained in it shall form the basis of any contract or commitment and it is not intended to induce or solicit any person to engage in, or refrain from engaging in, any transacti on. No person is authorised to give information or make any representation in connection with any Public Offer which is not contained in this document. Any information or representation not so contained may not be relied on as being authorised by the Company, the Lead Manager or any person assoc iated withthem.

This document does not constitute an offer to sell, or the solicitation of an offer to buy, any securities in the United States. The Shares have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (Securities Act) or the securities laws of any state or other jurisdiction of the United States, and may not be offered or sold, directly or indirectly, in the United States absent registration under the Securities Act or in a transaction exempt from, or not subject to, the registration requirements of the Securities Act and any other applicable U.S. state securities laws.

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NO LIABILITY

The Company has prepared this document based on information available to it at the time of preparation, from sources believed to be reliable and subject to the qualifications in this document. To the maximum extent permitted by law, Limited Parties accept no responsibility or liability for the contents of this document and make no recommendation or warranties concerning any Public Offer. No representation or warranty, express o r implied, is made as to the fairness, accuracy, adequacy, validity, correctness or completeness of the information, opinions and conclusions contained in this document. To the maximum extent permitted by law, none of the Limited Parties accepts any responsibility or liability including, without l imitation, any liability arising from fault or negligence on the part of any person, for any loss whatsoever arising from the use of this document or its contents or otherwise arising in connection with it. Neither of the Lead Manager, nor any of its affiliates, related bodies corporate (as that term is defined in the Corporations Act) and their respective directors, employees, officers, representatives, agents, partners, consultants and advisers have authorised, permitted or caused the issue, lodgement, submission, despatch or provision of this document, and none of them make or purport to make any statement in this document and there is no statement in this document which is based on any statement by them.

PAST PERFORMANCE

Past performance information in this document is given for illustration purposes only and should not be relied upon as (and i s not) an indication of future performance. Actual results could differ materially from those referred to in this document.

FORWARD-LOOKING STATEMENTS

Certain statements, beliefs and opinions contained in this document, particularly those regarding the possible or assumed fut ure financial or other performance of the Company, industry growth or other trend projections are or may be forward looking state ments. Forward-looking statements can be identified by the use of 'forward-looking' terminology, including, without limitation, the terms 'believes', 'estimates', 'anticipates', 'expects', 'predicts', 'intends', 'plans', 'propose', 'goals', 'targets', 'aims', 'outlook', 'guidance', 'forecasts' , 'may', 'will', 'would', 'could' or 'should' or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors because they relate to events and depend on circumstances that may or may not occur in the future, assumptions which may or may not prove correct, and may be beyond the Company's ability to control or predict which may cause the actual results or performance of the Company to be materially different from the results or performance expressed or implied by such forward-looking statements. Forward-looking statements are based on assumptions and contingencies and are not guarantees or predictions of future performance. No representation is made that any of these statements or forecasts will come to pass or that any forecast result will be achieved. Similarly, no representation is given that the assumptions upon which forward looking statements may be based are reasonable. None of the Company, the Lead Manager or any other Limited Party, makes any representation or warranty as to the accuracy of any forward looking statements contained in this document. Forward-looking statements speak only as at the date of this document and the Limited Parties disclaim any obligations or undertakings to release any update of, or revisions to, any forward-looking statements in this document. All dollar values contained in this document are in Australian dollars (A$) unless otherwise stated.

NOT FINANCIAL PRODUCTADVICE

No attempt has been made to independently verify the information contained in this document. You should make your own assessment in considering an investment in the Company and should not rely on this document. In all cases, you should conduct your own investigations and analysis of the financial condition, assets and liabilities, financial position and performance, profits and losses, prospects and business affairs of the Company and its business, and the contents of this document.

This document is not, and should not be construed as, a recommendation by the Company, related bodies corporate (as that term is defined in the Corporations Act), or any of their respective officers, employees, directors, shareholders, partners, representatives, agents, consultants or advisers or any other party referred to in this document (each a Limited Party and, together, the Limited Parties ) to invest in the Company. The information in this document is of a general nature and does not constitute financial product advice, investment advice or any recommendation. Nothing in this document constitutes legal, financial, tax or other advice. The information in this document does not take into account the particular investment objectives, financial situation or needs of any person. You should seek legal, financial, tax and other advice appropriate to your jurisdiction.

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Established and highly regarded industry leader

• VEEM is a Perth based high-technology specialist manufacturer of premium marine propulsion and gyrostabilisation systems

• Passionate about design and engineering excellence

• An industry leader with an outstanding brand and reputation built over 49 years

• Financially strong with a long history of profitability

• A long term investor in R&D and technology, which has created significant intellectual property and barriers to entry

• A computerised numerical control ( CNC ) manufacturer with world class facilities using global best practice and substantial automation

• Opportunity to increase sales within the global gyro-stabilisation market

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The VEEM Board

Brad Miocevich

Chairman

Mark Miocevich Managing Director & CEO

Ian Barsden

VEEM Key Management

Les Kay General Manager

Paul Steinmann

Business & Development Manager – Marine

VEE

ASX Code

$0.52 Share Price

Non Executive Director

Tracy Caudwell Joint Company Secretary

Peter Torre Joint Company Secretary

Mike Coyle Business & Development ManagerIndustrial and Defence

Tracy Caudwell Finance and Admin Manager

$67.6 million Market Capitalisation

130 million

Shares on Issue

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For a long time, partly due to our location and markets, VEEM was a manufacturer of anything and everything.

VEEM has supplied to:

• Boeing and Airbus (B737, A320 components)

• CERN Large Hadron Collider (radiation shields)

• precision hull valves to submarine builders

• ride control assemblies for defence and ferries

• propellers for pleasure craft to large ships

• statues of people on salt lakes

• bearings and wear components for mining companies

• pump and gas turbine assembly, and so on

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Anthony Gormley statues at Lake Ballar Western Australia

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VEEM supplies the ride control fins to Austal Ships for the US Navy’s Littoral Combat Ship

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As a result we had developed a wide capability and capacity of engineering skills including:

• Detail engineering design

• Hydrodynamics

• 3D modelling

• Programming

• Electronics

• High compliance casting - Produce over 250 types of alloys.

• CNC machining

• Robotics

• Dynamic balancing

• High compliance welding

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• Electroless plating

VEEM supplied the radiation shields for the Large Hadron Collider’s Atlas Detector

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----- Start of picture text -----

2012
2005/6
Continuing our story New workshops Fast loop
manufacturing
combining Osborne
Park into Canning process
Vale implemented
four year $30m
2016
LCS contract
with Austal Conquest
Propellers
2006/7 Ships secured
2000 released
1987 Propeller Interceptor
style propeller
Quality System Export
released and 2015
1968 accreditation and 1994 commenced
Operations Implementation of ABE framework patents Gyro
obtained released
commenced ERP System adopted
1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016
1982 1989 1995 2016
Miocevich Acquired SS Integrated SS 2002 2008 VEEM lists on
brothers Engineering Foundry and Timcast VEEM Ltd the ASX
assume control VEEM Corp acquired established
of the business
2001 2017
IPS workshops 2011 VEEM pays it’s first
acquired Gyro assets dividend as a public
acquired
company
----- End of picture text -----

Continuing our story

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Eventually we realised that we are really a Manufacturer of Sophisticated Marine Products . To build on that - we have taken a two-prong approach to meet the needs of the growing local and international superyacht, commercial, naval and recreational sectors:

1. Meeting the needs of the marine industry supply-chain by being a reliable supplier, specifically for high compliance requirement products.

2. Generally where there are stringent standards such as Class survey, DEF-STAN, NAVSEA, NES standards.

   • Unique products – Precision and high spec castings and components requiring flexible manufacturing.

   • Over years build capacity to handle up to 25 tonne assay, cast to 16 tonne.

3. Developing sophisticated marine products which have a high technical and capital barrier to entry.

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VEEM high speed propellers fitted to the Armadale Class Patrol Vessels

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• Advanced parametric modeling system

• Robotically produced NiBrAl castings:

• 1 or 100 at the same marginal cost

• Fully CNC machined precision propellers

• From 0.5m to 4.6m diameter

• Current production 3,000 units pa, capacity for over 6,000 units pa.

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Cavitation Tunnel testing of VEEMStar-C high speed propeller series

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Fully CNC machined VEEMStar propeller with Patented Interceptor pitch adjustment system

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Conquest Propeller have been developed to specifically meet the demands of the replacement propeller market

• Since the release of Conquest in 2016, VEEM has been actively engaging propeller distributors around the world

• Current number of dealers and stockists around the world: 61

• Number of Conquest propellers sold in the 12 months since inception : 280

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Sales update FY2018

• Completed $700,000

• Won contracts won totalling $3.5 million

• Tendered $11.4 million shaft lines

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VEEM Gyros are initially designed and packaged for the superyacht industry to reduce vessel roll which increases comfort and vessel operational

VEEM Gyro Range

Size	Model	Torque	Boat size (approx. per 1 unit)
Small	VG120	120k Nm up to 145k Nm	25 to 30m
Medium	VG260	260k Nm	30 to 40m
Large1	VG1000	1,000k	45 to 60m

• VEEM Gyros will target the superyacht industry first, however are also suitable for naval and commercial vessels such as:

• Work boats

• Patrol boats

• Crew transfer vessels

• While also suitable for larger recreational vessels

• VEEM’s goal is to build a range of the most powerful stabilisers available off-the-shelf

Note 1 : VG1000 completion of final design, completion of detail drafting and commencement of production in March 2018.

• VEEM Gyros are designed for fatigue and long life using relevant international and European standards of design for materials endurance limit

• Bearing life design, structure and serviceability makes VEEM Gyros valuable for commercial and naval requirements with the ability to produce over 100 units per year

• Recent deliveries to the Netherland, the United States , New Zealand, and Australia

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VG120 sea trials on MY Tango after installation in November 2016

• 61% roll reduction was achieved with the VG120 was turned on

• Wider operational area opened up for the MY Tango due to roll management

• Guest transfer to and from the tender is faster, safer, and more comfortable

• Over 3000 hours of running time

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FY17 FINANCIAL RESULT

FY17 was a very significant year for VEEM Ltd. This was the first financial year trading as an ASX listed public company.

• The operational performance underscores the consistent reporting of profits by VEEM historically, whilst it continues to develop ground breaking technology in new products with the view to deliver substantial future earnings to the company.

• Due to an increased emphasis on production productivity gains resulted in an gross profit margins increased for 2017.

• Resulting in a lower overhead costs, leading to an increase of normalised profit after tax of $539,159 over prospectus forecast.

• A key milestone for the Company during the year was the commencement of sales in the VEEM gyro range of gyro stabilising for vessels and the full production commencement of the VEEM Gyro VG120 and VG260 production.

• The operating success provided the result in line with forecast and allowed the Board to maintain its dividend policy of declaring a dividend subsequent to year end of 30% of Normalised Net Profit after Tax, representing 1.23 cents per share, with a total dividend of approximately $1.6 million.

	FY16	FY17	Prospectus Forecast FY17	Forecast Variance
Operating Revenue	$41.37m	$38.08m	$46.77m	(18.6%)
EBITDA	$8.45m	$7.80m	$7.84m	(0.5%)
Normalised PBT1	$6.14m	$6.14m	$5.86m	4.8%
Normalised NPAT1	$5.01m	$5.35m	$4.81m	11.2%
Statutory NPAT	$5.01m	$3.85m	$4.01m	(4.0%)
EPS	-	3.21	-

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MARKET UPDATE

Solid progress made already in FY2018

VEEM Gyros

• Traction and engagement with key OEMs:

• Westport Yachts

  • US-based superyacht builder has ordered two VEEM Gyro120 to be commissioned early 2018.

  • Damen Shipyards Oil & gas industry supplier integrating Gyros into crew change solution for offshore production facilities and patrol boat tenders. Trials next April, potential supply of a VEEM Gyro1000 late 2018.

  • Negotiations underway with two large OEM’s in Italy for supply in 2019 and one in USA for supply in 2018.

  • Designed into a number of platforms awaiting sale and build, over thirty active quotations in progress.

 Meeting technical expectations

• 3000+ hours for VG120 installed in MY Tango and over 1500 in the VEEM test vessel

• Van der Valk superyacht successfully commissioned with trials showing 60% roll reduction May 20th

 As part of the Austal tender for the Offshore Patrol Vessels, VEEM Gyros listed as an option.

Solid progress made already in FY2018

Defence

• Final negotiations of three year ASC supply contract with component order for scheduled docking to occur before end of the financial year

• Awarded $2.8m Pacific Patrol Boat shaft line contract over 5 years

• VEEM expects next LCS ride control fin contract in the near term

Propulsion

• Commissioned new 6 axis CNC machining centre

• Increases propeller capability from 2.2m in diameter to 4.6m

• Currently working on LCS contract

• Conquest has achieved over $420,000 sales in its first year of production

Sales and Production update

• Units completed in FY2017:

• 14 x VG120[1]

• 2 x V260 pre production status

• Units Sold: 6 x VG120

• OEM Appointments: 2

• VG1000 - completion of final design, completion of detail drafting and commencement of production on target for March 2018.

• VG 120 single phase solution developed

• Appointed a full time representative in Italy

• Relocated VEEM test vessel to the Mediterranean Sea to perform gyro trials

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Note 1: Including the 1 VG120 which is installed in the VEEM test vessel

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Strategy

VEEM has strong capability and sees specific growth opportunities in:

• high-end marine propulsion equipment (propellers and shaft lines) for the Superyacht, Luxury and Sports Motor Yacht market;

• Conquest Propeller range for the replacement propeller market; and

• marine gyroscopic stabilisers for Superyachts and Luxury Sport Yachts

• Continue to pursue local defence and mining opportunities as they arise

Drivers for Growth

• Sales and Marketing via third party distributors and agents

• Continuous research and development

• VEEM has developed a global supply chain that allows the business to ramp up production without working capital restraints

• VEEM creates a natural hedge for business operations by using a range of global suppliers to provide an effective currency hedge and to protect its intellectual property

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Total world domination in the marine propulsion and gyro-stabilisation markets

• Traction and engagement with key OEMs and installed Gyros meeting technical expectation

• VEEM test vessel sent to Europe for 12 months to carry out trials for boat yards and trade shows.

• Defence component remains strong – PPB contract award, ASC, OPV tendering

• Over $420,000 Conquest propellers sold in FY2017

• Commissioned new 6 axis CNC machining centre – 4.6m propeller capability

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