VEEM LTD — Interim / Quarterly Report 2022

Feb 21, 2022

APPENDIX 4D HALF YEAR REPORT

VEEM LTD A.C.N. 008 944 009

RESULTS FOR ANNOUNCEMENT TO THE MARKET

This Preliminary Final Report is provided to the Australian Securities Exchange (ASX) under ASX Listing Rule 4.2A.3

Current Reporting Period: 31 December 2021 Previous Corresponding Period: 31 December 2020

For and on behalf of the Directors

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---

DAVID JAMES RICH

COMPANY SECRETARY

Dated: 21 February 2022

RESULTS FOR ANNOUNCEMENT TO THE MARKET

RESULTS FOR ANNOUNCEMENT TO THE MAR	KET
Revenue and Net Profit (Loss)				AUD
				$’000’s
Revenue from ordinary activities	down	7.4%	to	26,297
Profit/ (Loss) from ordinary activities	down	89.0%	to	330
Net Profit/ (Loss) for the period attributable to
members	down	89.0%	to	330

Dividends

On 21 September 2021, the Company paid a final unfranked ordinary dividend in respect to the financial year ended 30 June 2021 of $585,000 representing a payment of $0.0045 per share.

The Directors have declared an unfranked interim dividend in respect to the 30 June 2022 year of $95,000 representing approximately 30% of Net Profit After Tax and $0.0007 per share with the following relevant details:

Date the dividend is payable	19 April 2022
Record date to determine entitlement to the dividend	9 March 2022
Amount per security	$0.0007
Total dividend	$95,000
Amount per security of foreign sourced dividend or distribution	N/A
Details of any dividend reinvestment plans in operation	N/A

APPENDIX 4D HALF YEAR REPORT

VEEM LTD A.C.N. 008 944 009

COMMENTARY

The directors report accompanying this preliminary final report contains an operating and financial review for the period ended 31 December 2021.

NET TANGIBLE ASSET BACKING

NETTANGIBLEASSETBACKING	NETTANGIBLEASSETBACKING
		31 Dec 2021 **$’000’s **		31 Dec 2020 **$’000’s **
	Net Assets / (Liabilities)		42,749		35,265
Less intangible assets		(17,141)		(14,132)
Net tangible assets of the Company1		25,608		21,133
Fully paid ordinary shares on issue at Balance Date		135,719,452		130,000,000
Net tangible asset backing per issued ordinary share
as at Balance Date		18.87c		16.26c

1 Net tangible assets include right-of-use-assets of $11,334,144 and lease liabilities of $12,225,391.

AUDIT DETAILS

The accompanying half-yearly financial report has been reviewed. A signed copy of the review report is included in the financial report.

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ABN 51 008 944 009

Financial Report for the Half-year Ended 31 December 2021

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Contents Directors’ Report Auditor’s Independence Declaration Condensed Statement of Profit or Loss and Other Comprehensive Income Condensed Statement of Financial Position Condensed Statement of Cash Flows Condensed Statement of Changes in Equity Notes to the Condensed Financial Statements Directors’ Declaration Independent Auditor’s Review Report	Page
	2 5 6 7 8 9 10 17 18

CORPORATE DIRECTORY

Directors

Mr Brad Miocevich (Non-Executive Chairman) Mr Mark Miocevich (Managing Director) Mr Ian Barsden (Non-Executive Director) Mr Peter Torre (Independent Non-Executive Director) Mr Michael Bailey (Independent Non-Executive Director)

Share Registry

Computershare Investor Services Pty Ltd Level 11 172 St Georges Terrace, PERTH WA 6000 Telephone: + 618 9323 2000 Facsimile: + 618 9323 2033

Auditors

Company Secretary

Mr David Rich

Registered Office

22 Baile Rd Canning Vale WA 6155 Telephone: +61 8 9455 9355

HLB Mann Judd (WA) Partnership Level 4 130 Stirling Street Perth WA 6000 Australia Telephone: +618 9227 7500 Facsimile: +618 9227 7533

Stock Exchange

Website

www.veem.com.au

Australian Securities Exchange (Home Exchange: Perth, WA)

ASX Code

VEE

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DIRECTORS’ REPORT

The Directors submit the financial report of VEEM Ltd (“the Company”) for the half-year ended 31 December 2021. In order to comply with the provisions of the Corporations Act 2001, the Directors report as follows:

DIRECTORS

The names of Directors who held office during or since the end of the half-year and until the date of this report are as below. Directors were in office for this entire period unless otherwise stated.

Brad Miocevich	Non-Executive Chairman
Mark Miocevich	Managing Director
Ian Barsden	Non-Executive Director
Peter Torre	IndependentNon-ExecutiveDirector
Michael Bailey	Independent Non-Executive Director

RESULTS OF OPERATIONS

The profit after tax for the half-year ended 31 December 2021 was $330,441 (31 December 2020: $2,995,201).

Dividends

On 21 September 2021 the Company paid a final unfranked ordinary dividend in respect to the financial year ended 30 June 2021 of $585,000 representing $0.0045 per share (2020: $292,500 unfranked).

PRINCIPAL ACTIVITIES

The principal activity of the Company during the course of the half-year was the manufacturing of bespoke products and services for the marine, defence and mining industries.

OPERATING AND FINANCIAL REVIEW

Total Revenue for the first half of the 2022 financial year was $26.3 million, down 7% from the prior corresponding period (2021: $28.4m). Earnings before interest, tax, depreciation and amortisation (EBITDA) was $2.9 million (2021: 5.7m) and net profit after tax was $0.3m (2021: $3.0m). As foreshadowed at the Company’s annual general meeting (AGM), there were a number of factors that impacted the results for the first half of the 2022 financial year and these are set out below.

Like many businesses, VEEM has been and continues to be competing for staff in a very tight labour market. This has meant that we have been unable to recruit as many skilled trades as we desire, constraining capacity (production hours) and increasing costs through overtime and higher wages.

Raw materials price increases have eroded margins, particularly the bronze (copper and nickel) used for propellers where a fixed price list exists, As price rises can only apply on new orders, the impact on sales and margins of these input cost increases is felt for several months in the financial results until the price rise takes effect. VEEM has been active in continually looking for, and has now been successful in finding, sources of supply globally in order to improve margins and lower the risks of its supply chain. VEEM has also been impacted by increases in freight costs and shipping times which impact margins and the price rises have also sought to cover this.

There have also been a number of indirect impacts of COVID-19 on VEEM. These include delays in the receipt and installation of new machinery (and hence capacity) due to supplier staff shortages resulting from border closures. Overseas we have seen delays in European boatbuilding leading to delays in purchases, installations and commissioning of gyros. This then leads to delays in repeat business and customer recommendations which are key drivers to increasing the sales of VEEM’s large gyros. One clear example of this is the 12 month delay in the product launch of Damen’s new walk to work vessel, the FCS 7011. This vessel has a VG520SD (previously called a VG1000SD) as a key stabilising component and VEEM is very excited about the potential for this vessel which is now expected to have its global gala launch in the Netherlands in the next few weeks.

There was a rare event of an increase in defective propeller castings that occurred in the second quarter of the FY that had the double impact of additional cost and reduced capacity for new orders thus reducing sales. The causes were addressed and propeller casting quality is now back to previous levels.

Revenue from gyrostabilisers was $1.6m for the period. Production continued at a steady rate with the inventory value of complete gyros and work in progress increasing by $3m to $6m. The volume and quality of leads and recent orders provides confidence to expect 2H FY22 orders and sales to be up on FY21 sales and escalating into FY23. Of the 44 gyros sold and delivered to date, there are 17 not yet commissioned, demonstrating the lead times that can occur between VEEM delivering the gyro and the owner experiencing the benefits and spreading the word or ordering another in the case of commercial vessels. As sales grow this lag will become less of an issue. As VEEM continues to build gyros to a plan, it is able to sell from inventory which is proving popular with customers, particularly in the retrofit market.

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Significant personnel moves were made during the period in relation to gyrostabilisers with the addition of a senior production manager, Head of Sales and Business Development - Europe and an after sales and service supervisor in the US. The addition of staff in the very large European market in particular is a key step forward in the drive to increase sales of VEEM gyrostabilisers. The continuing maturation of marketing, sales, production, engineering and procurement places VEEM in a very strong position going forward.

Propulsion sales were higher than the prior comparative period and the previous six months as a result of the increased capacity generated through new machines and improved processes. Delays in the arrival and commissioning of the two new machines and the issues raised above held back the revenue growth and margins somewhat in what is a very strong global market for leisure marine products. Price rises were implemented during the period and the full effect of these will flow in to the next six months.

Defence sales to Austal and ASC were both down significantly on prior periods as expected. Deliveries to ASC under the new full cycle docking program are set to commence in April 2022 and work was commenced on these during the period. There were ongoing spares sales to ASC during the period. The last of the LCS work for Austal was completed during the period with only a small amount still to be invoiced in 2022. Other work is ongoing for Austal and new work is being quoted, but is not expected to reach the levels of the LCS ride control work over the last 14 years. Other defence work was steady during the period.

Engineering products and services revenue was up on both the prior comparative period and the prior six months. Demand generally for foundry-led, precision engineered products remains strong. Hollow bar was up on the prior comparative period, but lower that the six months to 30 June 2021 showing that the market for this product is still in its infancy and has some education required to reinforce the commercial and safety benefits of the product over the long term. Margins in this area were impacted by the labour issues raised above.

VEEM continued to invest in research and development during the period with a number of staff involved in developing a smaller gyro model and improvements to the current gyro range as well as projects related to the engineering and propulsion businesses.

The Company held cash on hand of $4.6m at 31 December 2021 (30 June 2021: $2.2m) and has an undrawn overdraft facility of $3.4m.

During the period VEEM raised $6.4m (net of costs) through the issue of 5,719,452 new shares as set out below. These two share issues took the Company’s ordinary fully paid shares on issue to 135,719,452 (30 June 2021: 130,000,000).The funds raised are being used for research and development, sales and marketing to drive gyro sales growth and working capital.

• On 16 September 2021 the Company issued 5,084,746 new ordinary fully paid shares at $1.18 to institutional and sophisticated investors. Further details of the capital raising are set out in the ASX announcement on 13 September 2021.

• On 13 October 2021 the Company issued a further 634,706 new ordinary fully paid shares at $1.18 to existing shareholders under a Share Placement Plan which was also announced on 13 September 2021.

Outlook

Overall the Board is confident the Company is in a strong position going forward with an existing robust core business which has allowed it to invest and support the focus on driving the growth of the disruptive VEEM Gyro product into the global marine market.

The gyrostabilizer product is still in the early stages of its life cycle, with VEEM holding a dominant position as the only major supplier in the large marine gyrostabiliser market estimated at US$1.1bn for new builds and US$13.5bn for retrofits (current fleet). VEEM’s significant investment to date and ongoing development now provides major barriers to entry for potential competitors. VEEM is seeking to exploit this by driving sales growth and taking its robust technology into smaller frames where it can compete against the small recreational gyrostabilisers on the market.

With the new senior staff now on board, more customers experiencing the benefits of the gyro and the quality and quantity of leads coming from many areas of the marine industry, VEEM is confident that the gyro revenue will escalate significantly over the coming months and years.

The global demand for propellers is expected to remain strong and VEEM has already increased its manufacturing capacity in January 2022 with another new machining centre arriving. Three additional smaller machines have been ordered for late 2022. VEEM expects sales of propellers to increase in line with capacity and also be boosted by price rises which are required due to rising raw material prices.

VEEM’s defence revenue is expected to remain strong with the deliveries under the upcoming Collins Class submarine full cycle docking commencing in April 2022. Other defence work for a number of different prime contractors is also expected to continue. VEEM is active and well positioned to take advantage of further defence work that may result from the current federal government drive for increased local content, including opportunities arising out of AUKUS.

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The traditional engineering products and services business continues to underpin VEEM’s operations, revenue and profit and is expected to continue. Revenue over the next period will likely be similar to the first half with labour constraints holding back growth. Price rises are expected to restore margins that were eroded in the first half due to rising costs.

For a number of years, as part of its research and development program, VEEM has been using its knowledge of induction heating technology to work with a local Perth liver surgeon in building a small prototype for the treatment of liver cancer. VEEM expects to test the prototype over the next few months. Success would be a significant step toward a treatment for a disease that claims a million lives a year in globally. Although outside its core business, VEEM is proud to be able to use its knowledge and experience to help humanity overcome this disease.

The Board expects the recent challenges of a tight labour market, rising raw materials and freight costs, freight and supplier uncertainty and COVID-related issues to continue and VEEM has in place plans to deal with these where issues can be foreseen and VEEM has some degree of control.

SIGNIFICANT EVENTS AFTER THE BALANCE DATE

On 21 February 2022, the Directors declared an unfranked interim dividend in respect to the 30 June 2022 year of $95,000 representing approximately 30% of the Net Profit After Tax and 0.07 cents per share.

Other than the above, there are no significant events subsequent to reporting date.

AUDITOR INDEPENDENCE DECLARATION

Section 307C of Corporations Act 2001 requires our auditors, HLB Mann Judd, to provide the directors of the company with an Independence Declaration in relation to the review of the half-year financial report. This Independence Declaration is set out on page 5 and forms part of this directors’ report for the half-year ended 31 December 2021.

This report is signed in accordance with a resolution of the Board of Directors made pursuant to s.306(3) of the Corporations Act 2001.

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Brad Miocevich Chairman Perth, Western Australia 21 February 2022

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AUDITOR’S INDEPENDENCE DECLARATION

As lead auditor for the review of the financial report of VEEM Ltd for the half-year ended 31 December 2021, I declare that to the best of my knowledge and belief, there have been no contraventions of:

• a) the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

• b) any applicable code of professional conduct in relation to the review.

Perth, Western Australia 21 February 2022

N G Neill Partner

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Condensed Statement of Profit or Loss and Other Comprehensive Income for the half-year ended 31 December 2021

Note Revenue 4 Other income 4 Changes in inventories of finished goods and work in progress Raw materials and consumables Employee benefits expense Depreciation and amortisation expense Repairs and maintenance expense Occupancy expense Borrowing costs expense Other expenses 5 Profit before income tax Income tax benefit/(expense) Profit after income tax Other comprehensive income, net of income tax Total comprehensive income for the half-year Earnings per share Basic earnings per share (cents) Diluted earnings per share (cents)	31 December 2021 $ 31 December 2020 $
	26,297,335 28,384,486 174,821 1,606,213 3,763,189 3,055,865 (13,413,155) (13,895,593) (11,844,283) (10,593,927) (2,268,371) (1,858,414) (748,528) (983,608) (600,783) (598,441) (318,570) (378,372) (767,903) (1,256,698)
	273,752 3,481,511
	56,689 (486,310)
	330,441 2,995,201
	- -
	330,441 2,995,201
	0.24 2.30 0.24 2.30

The above Condensed Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.

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Condensed Statement of Financial Position as at 31 December 2021

Note ASSETS Current Assets Cash and cash equivalents Trade and other receivables Inventories 6 Current tax assets Derivative asset 7 Other assets 8 Total Current Assets Non-Current Assets Property, plant and equipment 9 Intangible assets 10 Right-of-use assets Deferred tax assets Total Non-Current Assets Total Assets LIABILITIES Current Liabilities Trade and other payables 11 Provisions Borrowings – current 12 Lease liabilities - current Total Current Liabilities Non-Current Liabilities Borrowings – non current 12 Provisions Lease liabilities – non current Deferred tax liabilities Total Non-Current liabilities Total Liabilities Net Assets EQUITY Issued capital 13 Reserves 14 Retained earnings Total Equity	31 December 2021 $ 30 June 2021 $
	4,623,366 2,233,076 8,156,288 9,820,535 15,442,099 12,992,181 443,482 522,162 38,396 - 2,798,657 2,682,958
	31,502,288 28,250,912
	14,808,803 12,917,940 17,141,037 15,705,046 11,334,144 12,108,464 2,212,686 1,301,610
	45,496,670 42,033,060
	76,998,958 70,283,972
	7,376,741 7,494,592 1,653,606 1,842,135 1,748,857 1,469,153 1,364,140 1,312,232
	12,143,344 12,118,112
	6,259,750 5,701,585 100,929 154,135 10,861,251 11,558,461 4,884,601 4,129,227
	22,106,531 21,543,408
	34,249,875 33,661,520
	42,749,083 36,622,452
	11,509,613 5,140,616 12,193 - 31,227,277 31,481,836
	42,749,083 36,622,452

The above Condensed Statement of Financial Position should be read in conjunction with the accompanying notes.

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Condensed Statement of Cash Flows for the half-year ended 31 December 2021

Note Cash flows from operating activities Receipts from customers Payments to suppliers and employees Government subsidies received Interest paid Interest received Income tax received/(paid) Net GST paid Net cash flows provided by operating activities Cash flows from investing activities Purchase of property,plant and equipment Proceeds from sale of property plant & equipment Purchase of intangible assets Net cash flows used in investing activities Cash flows from financing activities Dividends paid 17 Repayments of borrowings Payments of hire purchase liabilities Payments of lease liabilities Net proceeds from issue of shares Net cash flows provided by / (used in) financing activities Net increase in cash and cash equivalents Cash at the beginning of the period, net of overdraft Effects of exchange rate fluctuations on cash held Cash and cash equivalents at the end of the period, net of overdraft Components of cash Cash at bank Bank overdraft	31 December 2021 $ 31 December 2020 $
	28,065,792 30,665,073 (26,877,588) (28,171,952) 38,506 2,188,807 (318,570) (378,372) 82 2,850 (20,333) 466,286 284,158 (1,024,906)
	1,172,047 3,747,786
	(1,665,223) (166,264) 118,215 6,787 (1,595,047) (1,065,249)
	(3,142,055) (1,224,726)
	(585,000) (292,500) (600,000) (300,000) (227,754) (704,841) (645,302) (623,450) 6,368,997 -
	4,310,941 (1,920,791)
	2,340,933 602,269 2,233,076 3,618,166 49,357 (92,388)
	4,623,366 4,128,047
	4,623,366 4,128,047 - -
	4,623,366 4,128,047

The above Condensed Statement of Cash Flows should be read in conjunction with the accompanying notes.

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Condensed Statement of Changes in Equity for the half-year ended 31 December 2021

Note At 1 July 2021 Profit for the half-year Other comprehensive income Total comprehensive income for the half-year Shares issued during the year Share issue costs Share-based payment expense recognised Dividends paid 17 Balance at 31 December 2021 Note At 1 July 2020 Profit for the half-year Other comprehensive income Total comprehensive income for the half-year Dividends paid 17 Balance at 31 December 2020	Note At 1 July 2021 Profit for the half-year Other comprehensive income Total comprehensive income for the half-year Shares issued during the year Share issue costs Share-based payment expense recognised Dividends paid 17 Balance at 31 December 2021 Note At 1 July 2020 Profit for the half-year Other comprehensive income Total comprehensive income for the half-year Dividends paid 17 Balance at 31 December 2020	Issued Capital $ Reserves $ Retained earnings $ Total $
		5,140,616 - 31,481,836 36,622,452 - - 330,441 330,441 - - - -
		- - 330,441 330,441 6,749,000 - - 6,749,000 (380,003) - - (380,003) - 12,193 - 12,193 - - (585,000) (585,000)
		11,509,613 12,193 31,227,277 42,749,083
		Issued Capital $ Reserves $ Retained earnings $ Total $
		5,140,616 - 27,422,161 32,562,777 - - 2,995,201 2,995,201 - - - -
		- - 2,995,201 2,995,201 - - (292,500) (292,500)
		5,140,616 - 30,124,862 35,265,478

The above Condensed Statement of Changes in Equity should be read in conjunction with the accompanying notes.

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Notes to the Condensed Financial Statements for the half-year ended 31 December 2021

1. Corporate

The half-year financial report of VEEM Ltd (“the Company”) for the half-year ended 31 December 2021 was authorised for issue on 21 February 2022 in accordance with a resolution of the Directors on 21 February 2022.

VEEM Ltd is a company limited by shares incorporated and domiciled in Australia whose shares are publicly traded on the Australian Securities Exchange. The nature of the operations and principal activities of the Company are described in the Directors’ Report.

2. Basis of Preparation and Accounting Policies

(a) Basis of preparation

These general purpose condensed financial statements for the half-year ended 31 December 2021 have been prepared in accordance with Australian Accounting Standard 134 Interim Financial Reporting and the Corporations Act 2001. Compliance with AASB 134 ensures compliance with IAS 34 Interim Financial Reporting.

These half-year financial statements do not include all the notes of the type normally included in annual financial statements and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the Company as the full financial statements. Accordingly, these half-year financial statements are to be read in conjunction with the annual financial statements for the year ended 30 June 2021 and any public announcements made by VEEM Ltd during the half-year reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

The half-year report has been prepared on an accruals basis and is based on a historical cost basis.

For the purpose of preparing the half-year financial report, the half-year has to be treated as a discrete reporting period. The accounting policies and methods of computation are the same as those adopted in the most recent annual financial statements except for the impact of the new standards and interpretations described in Note 2(b) below. These accounting policies are consistent with Australian Accounting Standards and with International Financial Reporting Standards.

Going Concern

This report has been prepared on the going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and settlement of liabilities in the normal course of business.

(b) Adoption of the revised standards

Standards and Interpretations applicable to 31 December 2021

In the half-year ended 31 December 2021, the Directors have reviewed all of the new and revised Standards and Interpretations issued by the AASB that are relevant to the Company and effective for reporting periods beginning on or after 1 July 2021 and none of these were considered to have a material impact on the Company. Therefore, no change is necessary to the Company’s accounting policies.

New Standards and Interpretations in issue not yet adopted

The Directors have also reviewed all of the new and revised Standards and Interpretations in issue not yet adopted for the half-year ended 31 December 2021. As a result of this review, the Directors have determined that there is no material impact of the Standard and Interpretations in issue not yet adopted on the Company and, therefore, no change is necessary to its accounting policies.

No other new standards, amendments to standards or interpretations are expected to affect the Company's financial statements.

(c) Significant accounting judgments and key estimates

The preparation of the half-year financial report requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expense. Actual results may differ from these estimates.

In preparing this half-year financial report, the significant judgments made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the financial report for the year ended 30 June 2021.

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Notes to the Condensed Financial Statements for the half-year ended 31 December 2021

3. Segment Reporting

Management has determined the operating segments based on the reports reviewed by the Board of Directors that are used to make strategic decisions. The entity does not have any operating segments with discrete financial information.

The Board of Directors review internal management reports on a monthly basis that are consistent with the information provided in the statement of comprehensive income, statement of financial position and statement of cash flows. As a result, no reconciliation is required because the information as presented is what is used by the Board to make strategic decisions.

The Company has one customer where the revenue was in excess of 10% of the Company’s revenue. The customer generated 19% (2020: 16%) of the Company’s revenue for the half-year.

Although the Company is managed as a single business segment, sales revenue of $26,297,335 (December 2020: $28,384,486) can be broken down into the following sales categories. Propulsion and stabilization consist of the manufacture of new propellers, shaft lines, gyrostabilizers and marine ride control fins. The sales in this category were $15,587,064 (December 2020: $15,009,384). Defence related sales for HY2022 totalled $6,807,188 (December 2020: $11,173,984) with $3,469,943 (December 2020: $3,797,602) of those sales being both within the defence and propulsion/stabilization categories. Sales of engineering products and services (non-defence) for the period were $7,373,026 (December 2020: $5,998,720).

4. Revenue

Revenue from contracts with customers

Sales revenue • Revenue – point in time • Revenue – over time Other revenue • Government subsidies – JobKeeper & Cash flow boost • Government subsidies – Manufacting Modernisation Fund • Apprentice subsidies • Interest received • Commissions received • Scrap metal	6 months to 31 December 2021 $ 6 months to 31 December 2020 $ 2,025,281 2,683,019 24,272,054 25,701,467
	26,297,335 28,384,486
	- 1,587,261 38,506 - 117,312 4,112 82 2,850 607 637 18,314 11,353
	174,821 1,606,213

5. Other Expenses

Foreign exchange (losses)/gains (net) Insurance Advertising, marketing and travel expense Other general expenses	87,202 (417,836) (224,250) (241,831) 139,490 116,736 (491,365) (480,295)
	(767,903) (1,256,698)

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Notes to the Condensed Financial Statements for the half-year ended 31 December 2021

6. Inventories

Work in progress – over time Work in progress – point in time Less: Progress billings Goods for resale, raw materials and stores	31 December 2021 $ 30 June 2021 $ 5,842,098 8,451,146 2,545,694 711,362
	8,387,792 9,162,508 (6,934,411) (8,263,159)
	1,453,381 899,349 13,988,718 12,092,832
	15,442,099 12,992,181

7. Financial and Risk Management

Foreign exchange risk

The Company’s foreign exchange risk management strategy remains as set out in Note 19 of the annual financial statements for the year ended 30 June 2021. During the half-year to 31 December 2021 the Board adopted a policy of hedging net foreign currency exposures using forward contracts. As at 31 December 2021 there were forward exchange contracts in place for USD 2,363,598 (30 June 2021: Nil). For fair value hedges, any gain or loss from remeasuring the hedging instrument at fair value is adjusted against the carrying amount of the hedged item and recognised in profit or loss.

8. Other Assets

Prepayments Suppliers paid in advance	31 December 2021 $ 30 June 2021 $ 695,843 499,266 2,102,814 2,183,692
	2,798,657 2,682,958

9. Property, Plant and Equipment

As at 30 June 2021 Cost Accumulated depreciation Closing carrying amount Half-year ended 31 December 2021 Opening carrying amount Additions Disposals Depreciation and amortisation charge Closing carrying amount As at 31 December 2021 Cost Accumulated Depreciation Carrying amount	Plant and Equipment Motor Vehicles Capital Work in Progress Computer Equipment Total $ $ $ $ $ 37,976,862 714,300 213,741 1,725,215 40,630,118 (25,769,982) (528,156) - (1,414,040) (27,712,178)
	12,206,880 186,144 213,741 311,175 12,917,940
	12,206,880 186,144 213,741 311,175 12,917,940 1,705,411 - 1,052,493 89,187 2,847,091 (52,811) (14,215) - (37,961) (104,987) (783,894) (14,635) - (52,712) (851,241)
	13,075,586 157,294 1,266,234 309,689 14,808,803
	39,488,918 662,767 1,266,234 1,774,252 43,192,171 (26,413,332) (505,473) - (1,464,563) (28,383,368)
	13,075,586 157,294 1,266,234 309,689 14,808,803

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Notes to the Condensed Financial Statements for the half-year ended 31 December 2021

10. Intangible Assets

As at 30 June 2021 Cost Accumulated amortisation Closing carrying amount Half-year ended 31 December 2021 Opening carrying amount Additions Amortisation Closing carrying amount As at 31 December 2021 Cost Accumulated amortisation Carrying amount	Other Intellectual Property Product Development Total $ $ $ 946,425 16,693,904 17,640,329 (540,464) (1,394,819) (1,935,283)
	405,961 15,299,085 15,705,046
	405,961 15,299,085 15,705,046 - 2,078,801 2,078,801 (86,488) (556,322) (642,810)
	319,473 16,821,564 17,141,037
	946,425 18,772,705 19,719,130 (626,952) (1,951,141) (2,578,093)
	319,473 16,821,564 17,141,037

11. Trade and Other Payables

Trade payables (i) Annual leave payable GST payable Other creditors	31 December 2021 $ 30 June 2021 $ 4,200,867 4,326,074 1,999,801 1,790,447 238,421 296,376 937,652 1,081,695
	7,376,741 7,494,592

(i) Trade payables are non-interest bearing and are normally settled on 30-day terms.

12. Borrowings

Current Commercial facility (a) Hire purchase liability Less: Unexpired charges Non-current Commercial facility (a) Hire purchase liability Less: Unexpired charges	31 December 2021 $ 30 June 2021 $ 1,200,000 1,200,000 608,141 295,552 (59,284) (26,399)
	1,748,857 1,469,153
	4,700,000 5,300,000 1,640,711 423,735 (80,961) (22,151)
	6,259,750 5,701,584

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Notes to the Condensed Financial Statements for the half-year ended 31 December 2021

a) The Company has a Commercial Facility with a limit of $5,900,000. The Commercial Facility is repayable by 1 July 2023. $100,000 of principal is payable each calendar month with the remaining facility amount owing payable on the expiry date. The loan facility is reduced by the principal component of each repayment. Interest at the base rate plus 1.95% per annum is charged monthly and a line fee of 0.75% per annum of the Facility Limit is payable quarterly in arrears. The interest rate is currently at 1.37% (June 2021: 2.01%). The facility is reviewed on an annual basis. At 31 December 2021, the Company had no available undrawn committed borrowing facilities under the Commercial Facility in respect of which all conditions precedent had been met (2020: nil).

The Company has an Overdraft Facility with a limit of $3,400,000. Interest at the base rate less 0.75% per annum is charged monthly on the drawn amount. The facility is reviewed on an annual basis. At 31 December 2021 the Company had available $3,400,000 (June 2021: $3,400,000) of undrawn overdraft facilities. In addition, there is an Electronic Payment Facility with a limit of $300,000. At 31 December 2021, the Company had available $300,000 under this facility. The Company complied with all banking covenants during the period.

The bank overdraft and commercial facility are secured by a registered first mortgage over the assets and undertakings of the Company excluding those financed under Hire Purchase agreements.

Financing facilities available

At balance date, the following financing facilities had been negotiated and were available:

Total facilities • Overdraft Facility • Commercial Facility • Electronic Payments Facility • Commercial Card Facility Facilities used at balance date • Overdraft Facility • Commercial Facility • Commercial Card Facility Facilities unused at balance date • Overdraft Facility • Commercial Facility • Electronic Payments Facility • Commercial Card Facility Total facilities • Facilities used at balance date • Facilities unused at balance date	31 December 2021 $ 30 June 2021 $ 3,400,000 3,400,000 5,900,000 6,500,000 300,000 300,000 50,000 50,000
	9,650,000 10,250,000
	- - 5,900,000 6,500,000 19,332 47,969
	5,919,332 6,547,969
	3,400,000 3,400,000 - - 300,000 300,000 30,668 2,031
	3,730,668 3,702,031
	5,919,332 6,547,969 3,730,668 3,702,031
	9,650,000 10,250,000

The carrying value of plant and equipment held under hire purchase contracts at 31 December 2021 is $2,108,607 (June 2021: $670,738). Additions during the year include $1,665,623 (June 2021: $202,944) of plant and equipment held under hire purchase contracts.

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Notes to the Condensed Financial Statements for the half-year ended 31 December 2021

13. Issued Capital

(a) Issued and paid up capital

Issued and paid up capital
Ordinary shares fully paid	31 December 2021 $ 30 June 2021 $
	11,509,613 5,140,616

On 16 September 2021 the Company issued 5,084,746 new ordinary fully paid shares at $1.18 to institutional and sophisticated investors. Further details of the capital raising are set out in the ASX announcement on 13 September 2021. On 13 October 2021 the Company issued a further 634,706 new ordinary fully paid shares at $1.18 to existing shareholders under a Share Placement Plan which was also announced on 13 September 2021. These two share issues took the Company’s ordinary fully paid shares on issue to 135,719,452 (30 June 2021: 130,000,000). The movement in the issued capital balance reflects the proceeds from the above two issues, net of the costs of the issues of $380,003.

(b) Movements in ordinary shares on issue

Movements in ordinary shares on issue Opening balance Issue of shares Closing balance	6 months to 31 December 2021 Year to 30 June 2021 No. $ No. $ 130,000,000 5,140,616 130,000,000 5,140,616 5,719,452 6,368,997 - -
	135,719,452 11,509,613 130,000,000 5,140,616

14. Share-based Payment Reserve

This comprises the cumulative share-based payment expense recognised in the Statement of Profit or Loss and Other Comprehensive Income in relation to equity-settled options and share rights issued but not yet exercised.

The fair value of share rights subject to a market condition is determined at grant date using a trinomial valuation model. The values calculated do not take into account the probability of rights being forfeited prior to vesting, as VEEM Ltd revises its estimate of the number of share rights expected to vest at each reporting date.

Grant date	Vesting date	Expiry date	Beneficiary	Balance at 1 July	Granted during period	Exercised during period	Forfeited / lapsed during period	Balance 31 December
6 Jul 2021	6 Jul 2022	6 Aug 2024	D Rich	-	50,000	-	-	50,000
6 Jul 2021	6 Jul 2023	6 Aug 2024	D Rich	-	50,000	-	-	50,000
6 Jul 2021	6 Jul 2024	6 Aug 2024	D Rich	-	50,000	-	-	50,000

The share rights will vest on or after the vesting date upon the 30-day Volume Weighted Share Price of the company being $1.50, $2.00, $2.50 for tranches 1-3 respectively provided the beneficiary is still employed by the Company. All share rights have an accelerated vesting condition on a change of control event at any time up to expiry.

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Notes to the Condensed Financial Statements for the half-year ended 31 December 2021

14. Share-based Payment Reserve (continued)

Valuation assumptions	Tranche 1	Tranche 2	Tranche 3
Valuation Date	6-Jul-21	6-Jul-21	6-Jul-21
SpotPrice ($)	$1.34	$1.34	$1.34
ExercisePrice ($)	nil	nil	nil
Expected future volatility (%)	50.14%	50.14%	50.14%
Risk freerate (%)	0.19%	0.19%	0.19%
Dividend yield (%)	1%	1%	1%
Fair value per right	$0.632	$0.49	$0.382

15. Contingent Liabilities & Commitments

Hire purchase commitments payable - within one year - after one year but not more than five years Minimum hire purchase payments Less: Unexpired charges Present value of hire purchase payments Represented by: Current Non-current	31 December 2021 $ 30 June 2021 $ 608,141 295,552 1,640,711 423,735
	2,248,852 719,287 (140,245) (48,550)
	2,108,607 **670,737 **
	548,857 269,153 1,559,750 401,584
	2,108,607 670,737

Capital commitments

At 31 December 2021 the Company had $3,484,123 of capital commitments (June 2021: $3,972,965) which it expects to finance through hire purchase arrangements.

16. Subsequent Events

On 21 February 2022, the Directors declared an unfranked interim dividend in respect to the 30 June 2022 year of $95,000 representing approximately 30% of the Net Profit After Tax and 0.07 cents per share.

Other than the above, there are no significant events subsequent to reporting date.

17. Dividends

Unfranked dividends paid	6 months to 31 December 2021 $ 6 months to 31 December 2020 $ 585,000 292,500

18. Financial Instruments

The Directors consider that the carrying value of the financial assets and liabilities as recognised in the financial statements approximate their fair values.

There is a derivative asset of $38,396 (30 June 2021: Nil) recorded in relation to these forward exchange contracts recorded at fair value, the fair value is a Level 2 input in the fair value hierarchy.

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Directors’ Declaration

In the opinion of the Directors of VEEM Ltd (‘the Company’):

1. The financial statements and notes thereto, are in accordance with the Corporations Act 2001 including:

2. a. complying with Accounting Standard AASB 134: Interim Financial Reporting and the Corporations Regulations 2001; and

3. b. giving a true and fair view of the Company’s financial position as at 31 December 2021 and of its performance for the half-year then ended.

4. There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

This declaration is signed in accordance with a resolution of the Board of Directors made pursuant to s.303(5) of the Corporations Act 2001.

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Brad Miocevich Chairman Perth, Western Australia 21 February 2022

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INDEPENDENT AUDITOR’S REVIEW REPORT

To the members of VEEM Ltd

Report on the Condensed Half-Year Financial Report

Conclusion

We have reviewed the accompanying half-year financial report of VEEM Ltd (“the company”) which comprises the condensed statement of financial position as at 31 December 2021, the condensed statement of profit or loss and other comprehensive income, the condensed statement of changes in equity and the condensed statement of cash flows for the half-year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration.

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of VEEM Ltd does not comply with the Corporations Act 2001 including:

• (a) giving a true and fair view of the entity’s financial position as at 31 December 2021 and of its performance for the half-year ended on that date; and

• (b) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 .

Basis for conclusion

We conducted our review in accordance with ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity . Our responsibilities are further described in the Auditor’s responsibilities for the review of the financial report section of our report. We are independent of the company in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the annual financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

Responsibility of the directors for the financial report

The directors of the company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

Auditor’s responsibility for the review of the financial report

Our responsibility is to express a conclusion on the half-year financial report based on our review. ASRE 2410 requires us to conclude whether we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including giving a true and fair view of the entity’s financial position as at 31 December 2021 and

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its performance for the half-year ended on that date, and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 .

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 .

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HLB Mann Judd N G Neill Chartered Accountants Partner

Perth, Western Australia 21 February 2022

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