VEEM LTD — Capital/Financing Update 2023

Oct 5, 2023

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VEEM LTD

DISCLAIMER

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 document 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.

DISTRIBUTION

Distribution of this document outside Australia may be restricted by law. Persons who come into possession of this document who are not in Australia should seek advice on and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws.

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 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 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.

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Who is VEEM?

• Commenced in 1968. Listed on ASX 2016.

• Headquartered in Perth, Western Australia, with a 14,700 sqm purpose-built fabrication and manufacturing facility, including Australia’s largest non-ferrous foundry.

• Approximately 200 staff in Australia, including graduates and apprentices

• Highly skilled research and development team in-house.

• Designer and manufacturer of its own disruptive, hightechnology marine propulsion and stabilization systems for the global luxury motor yacht, fast ferry, commercial workboat and defense industries.

• Revenue generated from the following markets:

• Propellers

• Gyrostabilisers

• Defence

• Engineering products and services

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What has been Agreed?

• Agreement signed with Sharrow Engineering for VEEM and Sharrow to partner together to design Sharrow propellers for inboard powered vessels

• VEEM will then exclusively manufacture and sell the SHARROW by VEEM range of propellers worldwide for inboard powered vessels.

• The agreement is for 17 years (or longer if the patents expire after that date) provided VEEM meets minimum requirements for sales of propellers over the first three-year period and annually thereafter. Should VEEM fail to meet these, Sharrow can remove the exclusivity.

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• VEEM will pay Sharrow a licence fee based on the sales of the SHARROW by VEEM propellers.

• Progressing with the project is subject to VEEM’s acceptance of the performance of the Sharrow design on the VEEM test vessel with the testing to be done in the coming weeks.

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Why is this Important

• The Sharrow Propeller™was invented by Gregory Sharrow in 2012 and is cited as the first major advancement in propeller technology since the 1830s.

• Its design has solved the most basic problem of rotary propulsion. Specifically, tip cavitation and vortices have been eliminated or significantly reduced, offering incredible performance gains over traditional propellers.

• The award-winning Sharrow propeller design has made a spectacular impact on the outboard motor market with outstanding improvements in fuel efficiency, noise, vibration and handling.

• VEEM will now take this technology to the larger inboard propellers.

• The Sharrow patents protect these designs from being copied by others which, along with VEEM having an exclusive worldwide licence, provides the confidence for VEEM to develop and invest in its processes and methods with the expectation that there will be a strong market for the SHARROW by VEEM products.

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Why did Sharrow Choose VEEM?

• VEEM is currently the world leader in high-performance fixed pitch propeller manufacturing. It has achieved this standing over years of refining its designs and its processes for casting and machining the perfect propeller. A VEEM propeller is a perfectly machined component.

• VEEM already sells its high-performance propellers to the major boat builders around the world and has a global distribution network.

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Where will these be made? Expansion Plans?

• VEEM will be initially manufacturing the SHARROW by VEEM propellers at its plant in Western Australia which has capacity for 450 to 500 propellers a month. Initially these are expected to be taken up by demand from boat manufacturers and commercial operators.

• If the adoption rates follow the same patterns as the Sharrow outboard motor propellers, then VEEM expects to be building increased capacity in the next few years.

• Any expansion plan would likely involve a new manufacturing facility being built or acquired with the main cost being equipment such as CNC machining centers, robots, laser guided forklifts, furnaces and other foundry equipment and other ancillary equipment.

• Outsourcing of some or all of the required equipment/services is an option, provided VEEM can implement its end-to-end software securely and guarantee quality control.

• Funding of the above will be decided at the time the expansion is committed to and be appropriate for the options being chosen.

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What is the Target Market and Pricing?

• Target market is propellers below 5 metres in diameter used for inboard vessels.

• The main volumes VEEM is targeting initially are in the 30 – 90 feet (10 – 30m) range where there are premium production yacht manufacturers who the Company anticipates will embrace the significantly better product.

• Commercial operators are expected to adopt the new SHARROW by VEEM product purely for the economic benefits of less fuel usage.

• Overall market is 100,000 vessels which would be in the order of US$2.6 bn. The new boat market is 15,000 vessels worth in the order of US$338 million per annum.

• The SHARROW by VEEM propellers will cost more to make in both raw materials and manufacturing time. The selling price will be at a further premium due to the licence fee payable to Sharrow. This will lead to a pricing structure that is at a significant premium to current standard propellers, however the adoption rates for the outboard motor market have shown that customers are prepared to embrace the product at a premium due to the tangible benefits realised.

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*The independent market assessment was conducted by EQC Consulting. The market assessment excludes: vessels over 10 years old; non-ocean-going commercial vessels; defence vessels; outboards, jets; stern drives; recreational vessels over 90m and under 10m; and commercial vessels without an IMO number. Valuation is calculated using approximately two times current design prices.

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What’s next?

Investors can expect updates from the Company around the following milestones:

1. Completion of VEEM’s acceptance testing of the performance of the Sharrow design on the VEEM test vessel. Testing is expected to be done in the coming weeks with results in December 2023.

2. The first SHARROW by VEEM propellers are expected to be available for purchase by customers in early 2024.

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1. The full range of SHARROW by VEEM propellers is expected to be completed and rolled out by the end of 2024.

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Q & A
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Contact

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VEEM LTD

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