VEEM LTD — AGM Information 2022

Nov 23, 2022

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VEEM Ltd Annual General Meeting 23 November 2022

AGM Presentation

26 November 2019 Managing Director’s Presentation

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 with them.

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 his 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 is 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. Forwardlooking 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 PRODUCT ADVICE

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.

1

1. FY22 Review

2. Engineering Products and Services

3. Defence

4. Propellers

5. Gyrostabilizers

6. Trading update

7. Outlook

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2

• Cost increases, staff shortages and COVID impacted overall result.

• Strong Propulsion and Engineering Products and Services results.

• Defence revenue lower due to completed major contracts.

• Gyro unit numbers steady, but revenue less.

• Foundry issues experienced in Q2 addressed and rectified during Q3.Non conforming product now at historic low levels.

• Maintained dominant position as the only major supplier in the large marine gyrostabilizer market.

• Increased propeller capacity by over 25% with two new machines commissioned.

• Net assets increased $7.0m to $43.6m.

• Cash on hand of $2.6m at 30 June 2022 plus an undrawn overdraft facility of $3.4m and an undrawn commercial loan facility of $2.0m.

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3

	FY22 Financial Results FY22 A$mil. FY21 (Excluding Jobkeeper*) A$mil. % Change Revenue 54.2 59.5 -9% EBITDA 6.1 8.7 -30% Profit before Tax 1.4 4.4 -68% Net Profit after Tax (NPAT) 1.3 3.8 -67% Earnings Per Share (EPS)(cents) 0.93 2.95 -67% Cash Flow From Operations 2.5 4.1 -38% Net Assets 43.6 36.6 19%

*Refer to slide 13 of the ASX release dated 19 August 2022 entitled Presentation - FY22 Results Update for the reconciliation between the FY21 audited result and the above data which is shown excluding the JobKeeper subsidy received in FY21. Net assets are not adjusted for JobKeeper.

4

FY22 Highlights

• Revenue of $8.4 million, up 20% on FY21 (includes hollow bar, excludes defence).

• Strong demand from mining sector.

• Several large orders for foundry-led precision engineering work.

• Hollow bar revenue (includes the Forever Pipe product) steady at $5.6 million (strong 2H v 1H).

• Cost increases passed on to customers for new orders.

Outlook

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• Increase in sales & marketing resources expected to drive mining sector sales higher in CY23.

• Demand to remain strong after closure of several foundries.

• Foundry and precision engineering capability to continue to support the marine and defence businesses.

• Recruiting skilled trades to remain challenging.

5

2022 Overview

• As expected, revenue fell following completion of major contracts.

• Deliveries for the next Collins Class FCD order ($9m) commenced.

• Ongoing Austal ride control and propulsion work being won.

• Deliveries of the ECCPB and PPBR from Austal to the RAN.

• Successful Phase 1 of the qualification program for the manufacture of the Hunter Class Frigate propellers – becoming a supplier to Kongsberg Marine.

Outlook

• Complete deliveries of the current submarine full-cycle docking order along with normal levels of spares.

• Expected growth through BAE Systems Australia and others as part of Federal Government’s increased drive for local content and sovereign capability generally and AUKUS specifically.

• $1.7m order received from BAE Systems Australia for the next stage “demonstrator” program for the Hunter Class Frigate Program for delivery Q2 CY24. This has global potential for other Type 26 Frigate programs.

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Image courtesy Austal Ships
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Image courtesy of BAE Systems Australia
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• Continued work from Austal.

6

2022 Highlights

• Propeller and shaft line sales up 26%.

• New supplier contracts with key superyacht builders.

• Several price rises implemented to account for cost increases.

• Delivery and commissioning of two new propeller CNC machining centres.

Outlook

• Three smaller machines scheduled for delivery late ‘22 (increase capacity a further 25% early in CY23).

• Key global customers forecasting continued high production – many yards booked out to 2023-4.

• R&D focus is to continually increase the automation of the propeller process, reducing time and cost and the requirement for highly skilled labour as capacity expands.

• Cost increases have now been passed through to customers via pricing.

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7

• 12 gyros (in line with prior year) sold worth $5.5m.

• Dominant position in the large marine gyrostabilizer market (est. US$1.1bn for new builds and US$13.5bn for retrofits*).

• Increased the volume and quality of leads and enquiries from European customers and shipyards since appointment of Head of Sales and Business Development – Europe.

• Development of an international service team brought forward to counteract impact COVID had on ability to provide after-sales support.

• Development program continued to improve the product and develop design concepts for the next size down.

• Successful launch of Damen’s new walk to work vessel in early CY22 has seen significant enquiries for the VG520SD and VG750SD gyros.

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8

*Refer to the ASX release of 12 May 2021.

• Currently seeing strong renewed interest at key trade shows in the US and Europe (METS, FLIBS). First trade shows since COVID.

• Confidence of increased orders and sales in the near to medium term is supported by a strong level of quality leads and enquiries partly generated by the investment in a high-quality, direct sales person in Europe. Forecast sales for FY23 expected to exceed FY22.

• Commercial retrofit and luxury superyacht new build markets expected to be the major growth areas.

• In FY23 the engineering and design team will be releasing significant improvements through upgrades of the current range, completing the VG750SD and progressing a new smaller frame size.

• Small gyro development continues with great progress and encouragement from potential customers. Several patents have recently been applied for including regeneration.

• VEEM has also been working with some non-marine customers on other applications for VEEM’s gyrostabilizer IP.

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9

• Strong order book and work in progress for traditional engineering and defence work including ASC (full-cycle docking) and Austal.

• Non conforming product now at historic low levels.

• LTIFR at historic lows since accreditation to ISO 45001.

• Propeller sales averaging over $1.8m per month with new machines operating and demand remaining strong.

• Gyro leads and enquiries growing on the back of increased awareness and exposure to global markets after COVID.

• Cost increases covered by price increases to customers and overheads have remained steady.

• Concerted effort to resolve issues created by tight labour market, particularly the ability to recruit more skilled trades. More apprentices employed for long term skill development.

• Continued investment in expanding capacity and improving product range, particularly in gyro.

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10

• Traditional engineering business to remain strong and highly profitable albeit with some constraints due to skilled labour availability.

• Defence work to continue, including ASC, Austal and for BAE on the Hunter Class demonstrator project.

• Propeller sales to increase significantly once three new machines and LGV arrive and are commissioned. This will flow through to higher profitability later in FY23.

• Expecting to receive orders for several VG520/VG750 gyros in the next six months. Overall gyro orders expected to increase significantly.

• Sales are expected to be slightly higher for the first half of FY23 dependent upon Work In Progress at the end of December, with EBITDA and NPAT returning to traditionally higher levels.

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11

Brad Miocevich Chairman

Mark Miocevich Managing Director & CEO

Ian Barsden Non-Executive Director

Mike Bailey Independent Non-Executive Director

Peter Torre Independent Non-Executive Director

David Rich

Chief Financial Officer & Company Secretary

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12

Corporate Snapshot
ASX Code	VEE
Share Price(22 Nov 2022)	$0.54
Market Capitalisation (22 Nov 2022)	$73m
Shares on Issue	135.7m

Substantial Shareholders
Miocevich Family	50.20%
Perennial Value Management	12.45%
Salter Brothers Emerging Companies Limited	7.74%

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12-MONTH SHARE PRICE PERFORMANCE
1.20 6,000,000.0
1.00 5,000,000.0
0.80 4,000,000.0
0.60 3,000,000.0
0.40 2,000,000.0
0.20 1,000,000.0
0.00 0.0
Volume Share Price
Volume
Share Price ($)
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13

Contacts

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Q & A