VEEM LTD — Interim / Quarterly Report 2023

Feb 22, 2023

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 2022 Previous Corresponding Period: 31 December 2021

For and on behalf of the Directors

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---

DAVID JAMES RICH

COMPANY SECRETARY

Dated: 22 February 2023

RESULTS FOR ANNOUNCEMENT TO THE MARKET

Revenue and Net Profit (Loss)				AUD
				$’000’s
Revenue from ordinary activities	up	4.0%	to	27,357
Profit/ (Loss) from ordinary activities	up	452.5%	to	1,826
Net Profit/ (Loss) for the period attributable to
members	up	452.5%	to	1,826

Dividends

On 21 September 2022, the Company paid a final unfranked ordinary dividend in respect to the financial year ended 30 June 2022 of $285,000 representing a payment of $0.0021 per share.

The Directors have declared an unfranked interim dividend in respect to the 30 June 2023 year of $542,878 representing approximately 30% of Net Profit After Tax and $0.004 per share with the following relevant details:

Date the dividend is payable	19 April 2023
Record date to determine entitlement to the dividend	9 March 2023
Amount per security	$0.004
Total dividend	$542,878
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 2022.

NET TANGIBLE ASSET BACKING

NETTANGIBLEASSETBACKING	NETTANGIBLEASSETBACKING
		31 Dec 2022 **$’000’s **		31 Dec 2021 **$’000’s **
	Net Assets / (Liabilities)		45,173		42,749
Less intangible assets		(19,318)		(17,141)
Net tangible assets of the Company1		25,855		25,608
Fully paid ordinary shares on issue at Balance Date		135,719,452		135,719,452
Net tangible asset backing per issued ordinary share
as at Balance Date		19.05c		18.87c

1 Net tangible assets include right-of-use-assets of $10,307,325 and lease liabilities of $11,424,427.

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 2022

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Contents Directors’ Report Auditor’s Independence Declaration Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income Condensed Consolidated Statement of Financial Position Condensed Consolidated Statement of Cash Flows Condensed Consolidated Statement of Changes in Equity Notes to the Condensed Consolidated Financial Statements Directors’ Declaration Independent Auditor’s Review Report

Page 2 5 6 7 8 9 10 18 19

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)

Share Registry

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

Mr Michael Bailey (Independent Non-Executive Director)

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 2022. 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.

BradMiocevich	Non-Executive Chairman
Mark Miocevich	Managing Director
Ian Barsden	Non-Executive Director
Peter Torre	Independent Non-Executive Director
Michael Bailey	Independent Non-Executive Director

RESULTS OF OPERATIONS

The profit after tax for the half-year ended 31 December 2022 was $1,825,539 (31 December 2021: $330,441).

Dividends

On 21 September 2022 the Company paid a final unfranked ordinary dividend in respect to the financial year ended 30 June 2022 of $285,000 representing $0.0021 per share (2021: $585,000 unfranked).

PRINCIPAL ACTIVITIES

The principal activity of the Group 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 2023 financial year was $27.4 million, up 4% on the prior corresponding period (2022: $26.3m). Earnings before interest, tax, depreciation and amortisation (EBITDA) was $4.2 million (2022: 2.9m) and net profit after tax was $1.8m (2022: $0.3m). Cashflow from operations was $1.4m (2022: $1.2m). The Group held cash on hand of $1.4m at 31 December 2022 (30 June 2022: $2.6m) and has an undrawn overdraft facility of $3.3m.

Customer Work in Progress increased by $2.5m to $9.2m during the period, highlighting that activity levels increased far more than demonstrated only by the increase in sales.

VEEM successfully managed a tightening labour market and resultant rising costs (overtime and higher wages). Chargeable hours were up compared to the second half of FY22 and were slightly down on the corresponding first half of FY22. Propeller and gyro manufacturing are less susceptible to local labour constraints due to automation in the case of propellers and by the global supply chain that the gyro division utilises.

Raw materials prices were mixed over the period with some rising and some relatively stable after several periods of significant rises. Air freight costs have recently stabilised with sea freight costs reducing, significantly in some cases. Where there were rises in input costs, VEEM was able to pass these through to customers preserving margins. VEEM has continued actively looking for sources of supply globally in order to improve margins and lower the risks of its supply chain.

Throughout the period VEEM continued to enjoy the lower nonconformance costs derived from the foundry technical initiatives that were implemented during the 2022 financial year.

Overall, margins remained solid and overheads were well managed resulting in a material improvement in EBITDA and net profit after tax.

Revenue from gyrostabilisers was $1.7m for the period, up very slightly on the prior corresponding period. Orders on hand totalled $4.8m at 31 December 2022. Significantly, November 2022 saw VEEM exhibiting at the first full-scale METSTRADE Show (Marine Equipment Trade Show) in Amsterdam since 2019. METSTRADE is the world's largest exhibition dedicated to showcasing marine equipment. The COVID-induced restrictions and slowdowns that have inhibited the marketing, selling, servicing and ultimately the adoption rates of this new technology now seem to be largely behind the Company and with the Head of Sales and Business Development - Europe now in the job for a year, qualified leads are higher than ever, both in number of units and probable value. Commercial projects such as offshore support vessels continue to be very engaged with the technology once the economic, comfort and safety aspects are understood.

The high rates of qualified leads, the evidence of take-up in the small boat recreational market (smaller than VEEM’s products) and the continued product improvements that have been made continue to give the Board confidence that the wide adoption of the technology is well on the way and VEEM is the only manufacturer with the products to capitalise on this.

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Propulsion sales increased 19% to $11.7m for the half-year and work in progress also increased $0.8m over the same period. The two new machining centres installed in FY22 were at full availability for the period with sales of VEEM propellers alone (excludes shaftlines and Conquest) being a record $10.4m, up 23% on the prior comparative period. Despite this increase, lead times did not reduce indicating continued strong demand. Three new machines have now arrived and are all expected to be fully available by the end of March 2023 providing a platform for further increases in sales over the next six month period.

Defence sales overall were up 18% to $8.0m mainly due to sales to ASC of $5.9m in relation to the Collins Class submarine full cycle docking program. Sales to Austal were lower at $1.6m with some large jobs in progress at 31 December 2022. Work in progress for defence customers also increased $1.9m over the period.

During the period, following successful delivery of the initial pilot propeller blade in early 2022, BAE Systems Australia, prime contractor for the Hunter Class Frigate Program (HCFP), placed an order with VEEM to manufacture two propeller blades and a hub under the demonstrator program. The value of the contract is $1.7 million, with the successful completion of the task by Q2 2024 ensuring VEEM qualifies as a supplier to the HCFP. Success with this project could lead to the export of equipment for other naval shipbuilding programs around the world, including other T26 programs. BAE Systems Australia is expected to issue a ‘request for proposal’ for the propeller and brake blade manufacture for the first batch of three Hunter class frigates in the coming months. Contract award is anticipated in 2024/5.

Engineering products and services revenue, excluding defence and hollow bar, was down $1.4m to $3.6m. VEEM’s hollow bar product revenue was steady at $2.4m with a significant order received from Latrobe Magnesium for their Latrobe Valley Stage 1 Demonstration Plant for delivery over the next three years. Demand generally for foundry-led, precision engineered products remains strong, partly due to the closure of several Australian foundries in recent years.

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

The accreditation of VEEM to ISO45001 Occupational Health and Safety Management Systems in FY22 led to system improvements that enabled VEEM to progressively reduce Lost Time Injuries (LTIs) to Zero in May 2022 and there have been no LTIs since.

Outlook

As demonstrated by the result for the half-year, VEEM has a robust core foundry and engineering business, including its own products, which allows it to continue to invest and support the focus on driving the growth of the disruptive VEEM Gyro product into the global marine market.

The take-up rate of gyrostabilizers in the small boat recreational market and VEEM’s increasing rates of qualified leads provides the Board with confidence that the COVID ramifications have passed and continued investments into marketing, new models and continued product development for large gyros will lead to significant revenues and profits in the coming years.

The global demand for propellers is expected to remain strong and VEEM has recently installed three new machining centres which will significantly increase manufacturing capacity from March 2023. As a result, VEEM expects sales of propellers to continue to increase in line with capacity with margins protected against cost increases by regular pricing reviews. VEEM also continues to drive improvements to its processes through R&D with the goal of improving margins and reducing exposure to labour constraints.

VEEM’s defence revenue is expected to remain strong with the deliveries under the upcoming Collins Class submarine full cycle docking to continue for at least the next quarter. Other defence work for a number of different prime contractors, including Austal, is also expected to continue with the building of patrol boats and other platforms. VEEM will continue work on the Hunter demonstrator program and will pursue other options to supply to overseas T26 programs. VEEM is also active and well positioned to take advantage of further defence work opportunities that may arise out of AUKUS.

Demand for the traditional engineering products and services is expected to continue with skilled labour shortages being the main inhibitor of revenue growth in this area. VEEM is working on a number of initiatives to minimise the labour constraints.

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SIGNIFICANT EVENTS AFTER THE BALANCE DATE

On 22 February 2023, the Directors declared an unfranked interim dividend in respect to the 30 June 2023 year of $542,878 representing approximately 30% of the Net Profit After Tax and 0.4 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 2022.

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 22 February 2023

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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 2022, 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 22 February 2023

N G Neill Partner

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Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income for the half-year ended 31 December 2022

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 (expense)/benefit 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 2022 $ 31 December 2021 $
	27,356,646 26,297,335 236,574 262,023 5,538,368 3,763,189 (14,620,222) (13,413,155) (11,849,182) (11,844,283) (1,938,817) (2,268,371) (688,137) (748,528) (645,193) (600,783) (402,353) (318,570) (1,134,744) (855,105)
	1,852,940 273,752
	(27,401) 56,689
	1,825,539 330,441
	- -
	1,825,539 330,441
	1.35 0.24 1.35 0.24

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 Consolidated Statement of Financial Position as at 31 December 2022

Condensed Consolidated Statement of Financial Position as	at 31 December 2022
Note ASSETS Current Assets Cash and cash equivalents Trade and other receivables Inventories 6 Current tax assets 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 Derivative liability 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 2022 $ 30 June 2022 $
	1,430,766 2,632,302 10,164,050 10,328,003 21,268,218 17,592,930 80,150 182,610 1,723,035 1,192,863
	34,666,219 31,928,708
	18,305,582 17,089,330 19,318,322 18,053,058 10,307,325 11,132,417 3,442,943 2,856,829
	51,374,172 **49,131,634 **
	86,040,391 81,060,342
	9,667,037 7,945,174 1,795,019 1,832,013 2,357,862 1,387,397 12,017 192,682 1,548,565 1,491,012
	15,380,500 12,848,278
	9,175,194 8,121,339 100,929 100,929 9,875,862 10,666,864 6,334,439 5,720,922
	25,486,424 **24,610,054 **
	40,866,924 37,458,332
	45,173,467 43,602,010
	11,509,613 11,509,613 55,640 24,722 33,608,214 32,067,675
	45,173,467 43,602,010

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

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Condensed Consolidated Statement of Cash Flows for the half-year ended 31 December 2022

Note Cash flows from operating activities Receipts from customers Payments to suppliers and employees Government subsidies received 4 Interest paid Interest received 4 Income tax received/(paid) Net GST received 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 18 Proceeds from borrowings Repayments of borrowings Payments of hire purchase liabilities Payments of lease liabilities Net proceeds from issue of shares 13 Net cash flows (used in) / provided by financing activities Net (decrease)/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	31 December 2022 $ ** 31 December 2021 $**
	28,288,962 28,065,792 (26,876,238) (26,877,588) 161,200 38,506 (402,353) (318,570) 295 82 102,459 (20,333) 168,100 284,158
	1,442,425 1,172,047
	(1,021,314) (1,665,223) - 118,215 (1,428,044) (1,595,047)
	(2,449,358) (3,142,055)
	(285,000) (585,000) 2,000,000 - (600,000) (600,000) (588,769) (227,754) (733,449) (645,302) - 6,368,997
	(207,218) 4,310,941
	(1,214,151) 2,340,933 2,632,302 2,233,076 12,615 49,357
	1,430,766 4,623,366

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

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Condensed Consolidated Statement of Changes in Equity for the half-year ended 31 December 2022

Note At 1 July 2022 Profit for the half-year Other comprehensive income Total comprehensive income for the half-year Share-based payment expense recognised Hedge reserve Dividends paid 18 Balance at 31 December 2022 Note At 1 July 2021 Profit for the half-year Other comprehensive income Total comprehensive income for the half- Shares issued during the year Share issue costs Share-based payment expense recognised Dividends paid 18 Balance at 31 December 2021	Issued Capital $ Reserves $ Retained earnings $ Total $
	11,509,613 24,722 32,067,675 43,602,010 - - 1,825,539 1,825,539 - - - -
	- - 1,825,539 1,825,539 - 12,529 - 12,529 - 18,389 - 18,389 - - (285,000) (285,000)
	11,509,613 55,640 33,608,214 45,173,467
	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

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 Consolidated Financial Statements for the half-year ended 31 December 2022

1. Corporate

The half-year financial report of VEEM Ltd (“the Company”) and the entities it controlled (“the Group”) for the half-year ended 31 December 2022 was authorised for issue on 22 February 2023 in accordance with a resolution of the Directors.

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 Group are described in the Directors’ Report.

2. Basis of Preparation and Accounting Policies

(a) Basis of preparation

These general purpose condensed consolidated financial statements for the half-year ended 31 December 2022 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 Group 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 2022 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 2022

In the half-year ended 31 December 2022, the Directors have reviewed all of the new and revised Standards and Interpretations issued by the AASB that are relevant to the Group and effective for reporting periods beginning on or after 1 July 2022 and none of these were considered to have a material impact on the Group. Therefore, no change is necessary to the Group’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 2022. 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 by the Group and, therefore, no change is necessary to its accounting policies.

No other new standards, amendments to standards or interpretations are expected to affect the Group '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 Group’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 2022.

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Notes to the Condensed Consolidated Financial Statements for the half-year ended 31 December 2022

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 Group has two customers where the revenue was in excess of 10% of the Group’s revenue. These customers generated 33% (December 2021: 1 Customer for 19%) of the Group’s revenue for the half-year.

Although the Group is managed as a single business segment, sales revenue of $27,356,646 (December 2021: $26,297,335) can be broken down into the following sales categories. Propulsion and stabilisation consist of the manufacture of new propellers, shaft lines, gyrostabilisers and marine ride control fins. The sales in this category were $15,012,077 (December 2021: $15,587,064). Defence related sales for HY2023 totalled $8,059,887 (December 2021: $6,807,188) with $1,731,829 (December 2021: $3,469,943) of those sales being both within the defence and propulsion/stabilization categories. Sales of engineering products and services (non-defence) for the period were $6,016,510 (December 2021: $7,373,026).

4. Revenue

Revenue from contracts with customers

Revenue from contracts with customers
Sales revenue • Revenue – point in time • Revenue – over time Other revenue • Government subsidies – Manufacturing Modernisation Fund • Apprentice subsidies • Interest received • Commissions received • Scrap metal • Net foreign exchange gain Other Expenses Insurance Advertising, marketing and travel expense Other general expenses	6 months to 31 December 2022 $ 6 months to 31 December 2021 $ 2,132,093 2,025,281 25,224,553 24,272,054
	27,356,646 26,297,335
	- 38,506 161,200 117,312 295 82 830 607 15,720 18,314 58,529 87,202
	236,574 262,023
	(261,913) (224,250) (265,582) (139,490) (607,249) (491,365)
	(1,134,744) (855,105)

5. Other Expenses

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Notes to the Condensed Consolidated Financial Statements for the half-year ended 31 December 2022

6. Inventories

Inventories
Work in progress – over time Work in progress – point in time Less: Progress billings Goods for resale, raw materials and stores at cost	31 December 2022 $ 30 June 2022 $ 8,642,264 6,339,411 5,079,388 2,710,818
	13,721,652 9,050,229 (7,206,983) (6,690,719)
	6,514,669 2,359,510 14,753,549 15,233,420
	21,268,218 17,592,930

7. Financial and Risk Management

Foreign exchange risk

The Group’s foreign exchange risk management strategy remains as set out in Note 20 of the annual financial statements for the year ended 30 June 2022. The Group operates in multiple currencies and is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the US$.

Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the functional currency of the relevant entity.

Foreign exchange forwards

The Group uses foreign currency forwards to hedge its exposure to foreign currency risk. The Group has determined the fair value of the foreign currency forwards by calculating the present value of future cash flows based on observable forward exchange rates at the balance date. As the forward contracts are used to hedge forecast transactions, the Group designates the full change in fair value of the forward contract as the hedging instrument and recognizes gains and losses relating to the effective portion of the change in fair value of the entire forward contract in the cash flow hedge reserve within equity.

As at 31 December 2022 there were forward exchange contracts in place for USD 3,816,903, EUR 235,000 and GBP 330,638 (30 June 2022: USD 3,655,453, EUR 105,000 and GBP 42,350).

8. Other Assets

Other Assets
Prepayments Suppliers paid in advance	31 December 2022 $ 30 June 2022 $ 927,406 446,057 795,629 746,806
	1,723,035 1,192,863

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Notes to the Condensed Consolidated Financial Statements for the half-year ended 31 December 2022

9. Property, Plant and Equipment

As at 30 June 2022 Cost Accumulated depreciation Closing carrying amount Half-year ended 31 December 2022 Opening carrying amount Additions Disposals Depreciation and amortisation charge Closing carrying amount As at 31 December 2022 Cost Accumulated Depreciation Carrying amount	Plant and Equipment Motor Vehicles Computer Equipment Capital Work in Progress Total $ $ $ $ $ 42,801,525 662,767 1,785,906 1,121,444 46,371,642 (27,247,133) (516,704) (1,518,475) - (29,282,312)
	15,554,392 146,063 267,431 1,121,444 17,089,330
	15,554,392 146,063 267,431 1,121,444 17,089,330 1,694,386 - 26,062 446,751 2,167,199 - - - - - (888,785) (10,733) (51,429) - (950,947)
	16,359,993 135,330 242,064 1,568,195 18,305,582
	44,495,911 662,767 1,811,968 1,568,195 48,538,841 (28,135,918) (527,437) (1,569,904) - (30,233,259)
	16,359,993 135,330 242,064 1,568,195 18,305,582

10. Intangible Assets

As at 30 June 2022 Cost Accumulated amortisation Closing carrying amount Half-year ended 31 December 2022 Opening carrying amount Additions Amortisation Closing carrying amount As at 31 December 2022 Cost Accumulated amortisation Carrying amount	Other Intellectual Property Product Development Total $ $ $ 956,395 19,722,319 20,678,714 (712,721) (1,912,935) (2,625,656)
	243,674 17,809,384 18,053,058
	243,674 17,809,384 18,053,058 78,087 1,299,441 1,377,528 (83,588) (28,676) (112,264)
	238,173 19,080,149 19,318,322
	1,034,482 21,021,760 22,056,242 (796,309) (1,941,611) (2,737,920)
	238,173 19,080,149 19,318,322

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Notes to the Condensed Consolidated Financial Statements for the half-year ended 31 December 2022

11. Trade and Other Payables

Trade and Other Payables
Trade payables (i) Annual leave payable GST payable Other creditors	31 December 2022 $ 30 June 2022 $ 6,333,647 4,411,999 2,019,258 1,964,988 235,457 442,802 1,078,675 1,125,385
	9,667,037 7,945,174

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

12. Borrowings

Current Floating rate loan facility (a) Hire purchase liability Less: Unexpired charges Non-current Floating rate loan facility (a) Loan facility – Daily Rate (b) Hire purchase liability Less: Unexpired charges	31 December 2022 $ 30 June 2022 $ 1,200,000 400,000 1,342,460 1,112,917 (184,598) (125,520)
	2,357,862 1,387,397
	600,000 400,000 5,000,000 5,000,000 3,849,608 3,301,915 (274,414) (180,576)
	9,175,194 8,121,339

• a) The Group has a Floating Rate Loan Facility with a limit of $1,800,000. The Loan Facility is repayable by 1 July 2024. $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 1.30% per annum is charged monthly and a line fee of 0.50% per annum of the Facility Limit is payable quarterly in arrears. The interest rate at the end of the period was 4.365% (June 2022: 1.88%). The facility is reviewed on an annual basis. At 31 December 2022, the Group had $nil (June 2022: 2,000,000) available in undrawn committed borrowing facilities under the Loan Facility in respect of which all conditions precedent had been met.

• b) The Group has a Loan Facility – Daily Rate with a limit of $5,000,000. The Loan Facility is repayable on the termination date of 1 October 2024. Interest at the base rate plus 1.65% per annum is charged and paid monthly. The interest rate at the end of the period was 4.72% ( June 2022: 2.84%). The facility is fully drawn and is reviewed on an annual basis.

• c) The Group has an Overdraft Facility with a limit of $3,400,000. Interest at the base rate plus 2.60% per annum is charged monthly. A line fee of 0.50% per annum of the Facility Limit is payable quarterly in arrears. The facility is reviewed on an annual basis. At 31 December 2022, the Group had available $3,277,030 of undrawn overdraft facilities. In addition, there is an Electronic Payments Facility with a limit of $300,000. At 31 December 2022, the Group had available $300,000 under this facility included in net cash on hand.

The bank overdraft and commercial facilities are secured by a registered first mortgage over the assets and undertakings of the Group. The Group complied with all banking covenants during the financial year.

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Notes to the Condensed Consolidated Financial Statements for the half-year ended 31 December 2022

Financing facilities available

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

Total facilities • Overdraft Facility • Loan facility – Daily Rate • Electronic Payments Facility • Floating rate loan facility • Commercial Card Facility Facilities used at balance date • Overdraft Facility • Loan facility – Daily Rate • Floating rate loan facility • Commercial Card Facility Facilities unused at balance date • Overdraft Facility • Loan facility – Daily rate • Floating rate loan facility • Electronic Payments Facility • Commercial Card Facility Total facilities • Facilities used at balance date • Facilities unused at balance date	31 December 2022 $ 30 June 2022 $ 3,400,000 3,400,000 5,000,000 5,000,000 300,000 300,000 1,800,000 2,400,000 50,000 50,000
	10,550,000 11,150,000
	122,970 - 5,000,000 5,000,000 1,800,000 400,000 13,682 -
	6,936,652 5,400,000
	3,277,030 3,400,000 - - - 2,000,000 300,000 300,000 36,318 50,000
	3,613,348 5,750,000
	6,936,652 5,400,000 3,613,348 5,750,000
	10,550,000 11,150,000

The carrying value of plant and equipment held under hire purchase contracts at 31 December 2022 is $5,492,057 (June 2022: $4,761,734). Additions during the year include $1,145,883 (June 2022: $4,123,136) of plant and equipment held under hire purchase contracts.

13. Issued Capital

(a) Issued and paid up capital

135,719,452 Ordinary shares issued and fully paid	31 December 2022 $ 30 June 2022 $
	11,509,613 11,509,613

(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 2022 Year to 30 June 2022 No. $ No. $ 135,719,452 11,509,613 130,000,000 5,140,616 - - 5,719,452 6,368,997
	135,719,452 11,509,613 135,719,452 11,509,613

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Notes to the Condensed Consolidated Financial Statements for the half-year ended 31 December 2022

14. Reserves

Share Based Payments Reserve (Note 15) Hedge Reserve	31 December 2022 $ 30 June 2022 $ 37,251 24,722 18,389 -
	55,640 24,722

15. 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 2022	Granted during period	Exercised during period	Forfeited / lapsed during period	Balance 31 December 2022
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.

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

16. Contingent Liabilities & Commitments

ontingent 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 net minimum lease payments Represented by: Current Non-current	31 December 2022 $ 30 June 2022 $ 1,342,460 1,112,917 3,849,607 3,301,915
	5,192,067 4,414,832 (459,011) (306,096)
	4,733,056 4,108,736
	1,157,863 987,397 3,575,193 3,121,339
	4,733,056 4,108,736

Capital commitments

At 31 December 2022 the Group had $3,215,925 of capital commitments (June 2022: $4,038,050) which it expects to finance through hire purchase arrangements.

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Notes to the Condensed Consolidated Financial Statements for the half-year ended 31 December 2022

17. Subsequent Events

On 22 February 2023, the Directors declared an unfranked interim dividend in respect to the 30 June 2023 year of $542,878 representing 30% of the Net Profit After Tax and 0.4 cents per share.

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

18. Dividends

Unfranked dividends paid	6 months to 31 December 2022 $ 6 months to 31 December 2021 $ 285,000 585,000

19. 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 liability of $12,017 (30 June 2022: $192,682) 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 Group’s financial position as at 31 December 2022 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 22 February 2023

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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 consolidated statement of financial position as at 31 December 2022, the condensed consolidated statement of profit or loss and other comprehensive income, the condensed consolidated statement of changes in equity and the condensed consolidated 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, for the Group comprising the company and the entities it controlled at the half-year end or from time to time during the half-year.

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 Group’s financial position as at 31 December 2022 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.

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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 Group’s financial position as at 31 December 2022 and 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 Chartered Accountants

N G Neill Partner

Perth, Western Australia 22 February 2023

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