VEEM LTD — Investor Presentation 2020

Mar 25, 2020

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VEEM LTD VEEM LTD INVESTOR PRESENTATION

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

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NO LIABILITY

The Company has prepared this document based on information available to it at the time of preparation, from sources believed to be reliable and subject to the qualifications in this document. To the maximum extent permitted by law, Limited Parties accept no responsibility or liability for the contents of his document and make no recommendation or warranties concerning any Public Offer. No representation or warranty, express o r implied, is made as to the fairness, accuracy, adequacy, validity, correctness or completeness of the information, opinions and conclusions contained in this document. To the maximum extent permitted by law, none of the Limited Parties accepts any responsibility or liability including, without l imitation, any liability arising from fault or negligence on the part of any person, for any loss whatsoever arising from the use of this document or its contents or otherwise arising in connection with it.

Neither of the Lead Manager, nor any of its affiliates, related bodies corporate (as that term is defined in the Corporations Act) and their respective directors, employees, officers, representatives, agents, partners, consultants and advisers have authorised, permitted or caused the issue, lodgement, submission, despatch or provision of this document, and none of them make or purport to make any statement in this document and there is no statement in this document which is based on any statement by them.

PAST PERFORMANCE

Past performance information in this document is given for illustration purposes only and should not be relied upon as (and 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', 'guida nce', '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, forwardlooking statements involve known and unknown risks, uncertainties and other factors because they relate to events and depend on circumstances that may or may not occur in the future, assumptions which may or may not prove correct, and may be beyond the Company's ability to control or predict which may cause the actual results or performance of the Company to be materially different from the results or performance expressed or implied by such forward-looking statements. Forward-looking statements are based on assumptions and contingencies and are not guarantees or predictions of future performance. No representation is made that any of these statements or forecasts will come to pass or that any forecast result will be achieved. Similarly, no representation is given that the assumptions upon which forward looking statements may be based are reasonable. None of the Company, the Lead Manager or any other Limited Party, makes any representation or warranty as to the accuracy of any forward looking statements contained in this document. Forward-looking statements speak only as at the date of this document and the Limited Parties disclaim any obligations or undertakings to release any update of, or revisions to, any forward-looking statements in this document. All dollar values contained in this document are in Australian dollars (A$) unless otherwise stated.

NOT FINANCIAL PRODUCTADVICE

No attempt has been made to independently verify the information contained in this document. You should make your own assessment in considering an investment in the Company and should not rely on this document. In all cases, you should conduct your own investigations and analysis of the financial condition, assets and liabilities, financial position and performance, profits and losses, prospects and business affairs of the Company and its business, and the contents of this document. This document is not, and should not be construed as, a recommendation by the Company, related bodies corporate (as that term is defined in the Corporations Act), or any of their respective officers, employees, directors, shareholders, partners, representatives, agents, consultants or advisers or any other party referred to in this document (each a Limited Party and, together, the Limited Parties ) to invest in the Company. The information in this document is of a general nature and does not constitute financial product advice, investment advice or any recommendation. Nothing in this document constitutes legal, financial, tax or other advice. The information in this document does not take into account the particular investment objectives, financial situation or needs of any person. You should seek legal, financial, tax and other advice appropriate to your jurisdiction.

2

VEEM Introduction

PRECISION MARINE TECHNOLOGY DISRUPTOR WITH 50+ YEARS EXPERIENCE & WORLD-CLASS WA-BASED MANUFACTURING FACILITIES

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Significant crossselling potential of gyro tech to existing defence and propulsion customers

Track record of disrupting niche marine markets and consistent R&D investment to drive innovation

VEEM develops and manufactures marine gyrostabilizer and propulsion systems

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Robust precision engineering business underpins the gyro and propulsion growth opportunities. New $9m order for submarine components from ASC

Stabilization tech is a large addressable market in which VEEM is a leading player

3

Stabilization and propulsion

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Gyroscopic Stabilization

Marine gyrostabilizers (gyros) are used to reduce the rolling of boats and ships in waves

Gyros work by generating large torques which directly oppose the dynamic rolling motion caused by waves. Gyros are replacing outdated zero speed fins as they operate at all speeds and are smoother, safer and more efficient

Propulsion

Fully CNC (computer numerical control) machined over every sq mm of the surfaces, ensuring faster, smoother and quieter performance. The only commercially available propellers manufactured in this manner.

Propellers are now a precision machined part, not a hand finished approximation of the design. Side to side, boat to boat, year to year, they are identical.

VEEM’s innovative pattern-less molding techniques are able to deliver precise bespoke propeller designs with industry leading performance at no extra cost

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4

Successful Sale of World’s Largest Gyro for Damen Shipyards

VEEM has just completed the world’s largest gyrostabilizer for Europe’s second largest ship builder, Damen Shipyards.

Damen builds more than 175 vessels annually and is active across the entire spectrum of maritime industries.

VEEM Gryo Stabilizers were extensively trialed by Damen, after which VEEM secured an order for the VG1000SD in early 2019.

The 20 metric tonne gyro will be installed into Damen’s new Fast Crew Supplier, FCS 7011, which is currently under construction.

Completion of the VG1000 SD validates the use of gyros in large vessels and is proof of market acceptance.

The VG1000 SD was launched on 6 March 2020 in conjunction with the opening of VEEM’s new gyro facility in Canning Vale.

Completed VG1000 SD gyrostabilizer

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Significant addressable market – awareness increased, uptake expected following successful VG1000 SD sale to Damen Shipyards

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VEEM’s gyro stabilizers are designed for medium sized vessels including superyachts, ferries, def ence & commercial vessels

Significant opportunity to use developed technology for smaller vessels.

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Currently, VEEM is the only player operating in the large gyro market, with primary competition coming from lesser stabilization alternatives such as fins

Princess Yachts Princess Yachts

Fins have historically been the main stabilizing technology used for sea vessels but don’t work at all speeds, are inefficient, unsafe and expensive to maintain

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Superyacht Market Snapshot

Data source: SuperYacht Times

Current order book of 737 vessels[#] represents a target market of over US$273M for Gyro Sales . Expected fleet growth of 2.5% (CAGR) next five years. Current addressable superyacht operating fleet* of 9,081 vessels provides a large retrofit market.

0 50 100 150 200 250 300 350 400		Construction book of superyachts by size (1 Jan 2020)*	Construction book of superyachts by size (1 Jan 2020)*	Construction book of superyachts by size (1 Jan 2020)*	Construction book of superyachts by size (1 Jan 2020)*	Construction book of superyachts by size (1 Jan 2020)*	Construction book of superyachts by size (1 Jan 2020)*
		2016 24-30m		2017 30-45m	2018 45-60m	2019 60-75m	2020 75-90

	Vessel Size (length)	Operating Fleet Total Vessels*	Order Book# 1 Jan 2020	VEEM Gyro Model**
	24 - 30m	4,905	322	VG120 SD
	30 - 45m	3,181	275	VG145 SD
	45 - 60m	699	95	VG260 SD
	60 - 75m	213	44	VG1000 SD
	75 - 90m	83	28	VG1000 SD (multiple)

**This table groups vessels in to sizes that would typically be suited to a particular Gyro model. This is for guidance only and it should be noted that optimal Gyro sizing can depend on many vessel factors, including hull shape, stability characteristics, displacement, available space and intended usage profile.

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Gyro’s expected to be the driving force

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$3.34m orders for
delivery in FY20 on
Sales of VEEM Gyros hand, including first
VG1000 SD for
Damen Shipyards
3.34
2.09
FIRST VG145 AND
VG260 SOLD
1.03
0.98
SALE OF FIRST
VG120
0.58
0.46
0.42
0.01
Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Jun-19 Dec-19 Jun-20
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• Note may vary due to fluctuations in the AUD:USD exchange rate as all sales are denominated in USD. The $3.34m is based on an exchange rate of 0.59.

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VEEM – a global leader in the propulsion market

A recognised global market leader in marine propulsion

Despite being a key component in boats and ships, outside of VEEM the industry has lacked innovation and continues to adhere to restrictive ‘off-the-shelf’ pattern molding manufacturing

VEEM has a global patent on the Interceptor pitch adjustment system. VEEM maintains its global leading position through its fully CNC machined manufacturing techniques and automated robotic technology

As an innovative propeller manufacturer, VEEM has the opportunity to take more market share through improved manufacturing processes and designs

VEEM utilises patented pattern-less molding and manufacturing techniques which can cast any propeller shape, providing bespoke propellers to its customers at no extra cost

Fully CNC machined VEEMStar propeller with Patented Interceptor pitch adjustment system

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Robust precision engineering business provides platform for growth

Underpinning VEEM’s high-growth gyros and propulsion products is a robust, high-end precision engineering business that has developed and innovated for more than 50 years

Core engineering business is profitable, with long-term agreements and relationships with customers delivering recurring income

We have built a specialised business that provides a strong platform for growth with a diverse customer base including defence, marine and resources clients

Solid year-on-year financial performance over the past 51 years

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10

$9M Submarine Component Contract with ASC

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VEEM has secured a $9 million order from ASC for specialised submarine components as part of the maintenance program for the Collins Class submarines.

Award of the contract demonstrates the strong base of recurring demand for VEEM’s highly specialised defence engineering.

Work has commenced at VEEM’s Canning Vale facility in WA, with first deliveries expected in late 2020.

VEEM has a significant track record of successfully completed contract work for the ASC.

The contract highlights the VEEM’s ability to meet the stringent standards required for defence contracts.

11

VEEM is building on over 50 years’ history at the cutting edge of precision marine technology

VEEM is building on over 50 years’ history at the cutting edge of precision marine technology	VEEM is building on over 50 years’ history at the cutting edge of precision marine technology
Operations Commence Quality System accreditation and implementation of ERP System Successful sea trials with Damen Shipyards Conquest Propellers released Gyro released VEEM Ltd established New workshops combining Osborne Park into Canning Vale IPS workshops acquired Integrated SS Foundry and VEEM Corp
1968 1982 1987 1989 1994 1995 2000 2001 2002 2005/06 2006/07 2008 2012 2015 20	16 2017 2018 2020
Miocevich brothers assume control of the business Acquired SS Engineering Completion of VG1000 SD for Damen Shipyards VEEM pays first dividend as a public company VEEM lists on the ASX Fast loop manufacturing process implemented and four year $30m LCS contract with Austal Ships Interceptor style propeller released, an d patents obtained Timcast acquired Propeller Export commenced ABE framework adopted

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World-class manufacturing facilities

VEEM’s purpose-built workshops are state-of-the-art and cover approximately 14,500m[2 (] including the new gyro facility officially opened 6 March 2020)

The company’s plant and equipment is sophisticated and heavily utilizes CNC and robotic technology.

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Key facilities and units include:

• Dynamic balancing, fabrication/ welding, drive shafts

• CNC and manual machining

• Foundry sand casting/patternmaking

• Industrial fitting

• Foundry metal melting/laboratory services

• Research and Development

• Centrifugal casting

• Propeller machining and finishing

13

COVID-19 Impact

Revenue and Defence work remains on earnings track guidance withdrawn

New $9 million contract with ASC for specialised submarine components

Currently performing well, withdrawn due to general uncertainty

All facilities remain fully operational

Best practice hygiene and safety measures are in place. Expected to remain open.

Order book Minimal currently impact on full supply chain

Only a small number of orders Suppliers are impacted to date operational, freight moving

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14

VEEM – reaching its inflection point

VEEM will continue to cement itself as the market leader in the production of large gyros. Sales and enquiries are expected to continue to grow at an accelerating rate.

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Market acceptance of the VEEM gyro range has accelerated through a period of sea trials and demonstration, highlighted by the VG1000 SD sale to Damen Shipyards

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Product development is focused on a systematic, long-term view eg. smaller gyros, shaftlines, forever pipe. Continuous development of manufacturing processes.

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Precision engineering, defence and propulsion work will continue to underpin VEEM’s operations, with defence work continuing for several key customers – new $9m ASC contract

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15

Corporate Overview

Corporate Snapshot(24 March 2020)
ASX Code	VEE
Share Price	$0.445
Market Capitalisation	$58m
Shares on Issue	130m

Substantial Shareholders
Miocevich Family	61.54%
Perennial Value Management	13.43%
Celeste Funds Management	5.72%

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12-month Share Price Performance
4 $0.70
3.5
$0.60
3
$0.50
2.5
$0.40
2
$0.30
1.5
$0.20
1
$0.10
0.5
0 $0.00
Millions
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16

VEEM LTD

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Contact

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