VEEM LTD — Investor Presentation 2021

Mar 10, 2021

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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

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

NO LIABILITY

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

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

Past performance information in this document is given for illustration purposes only and should not be relied upon as (and i s not) an indication of future performance. Actual results could differ materially from those referred to in this document.

FORWARD-LOOKING STATEMENTS

Certain statements, beliefs and opinions contained in this document, particularly those regarding the possible or assumed fut ure financial or other performance of the Company, industry growth or other trend projections are or may be forward looking state ments. Forward-looking statements can be identified by the use of 'forward-looking' terminology, including, without limitation, the terms 'believes', 'estimates', 'anticipates', 'expects', 'predicts', 'intends', 'plans', 'propose', 'goals', 'targets', 'aims', 'outlook', 'guidance', 'forecasts' , 'may', 'will', 'would', 'could' or 'should' or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors because they relate to events and depend on circumstances that may or may not occur in the future, assumptions which may or may not prove correct, and may be beyond the Company's ability to control or predict which may cause the actual results or performance of the Company to be materially different from the results or performance expressed or implied by such forward-looking statements. Forward-looking statements are based on assumptions and contingencies and are not guarantees or predictions of future performance. No representation is made that any of these statements or forecasts will come to pass or that any forecast result will be achieved. Similarly, no representation is given that the assumptions upon which forward looking statements may be based are reasonable. None of the Company, the Lead Manager or any other Limited Party, makes any representation or warranty as to the accuracy of any forward looking statements contained in this document. Forward-looking statements speak only as at the date of this document and the Limited Parties disclaim any obligations or undertakings to release any update of, or revisions to, any forward-looking statements in this document. All dollar values contained in this document are in Australian dollars (A$) unless otherwise stated.

NOT FINANCIAL 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.

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PAST PERFORMANCE

Today’s focus

VEEM Core Businesses

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Engineering Products and Services

VEEM’s original core business still generates reliable profits and cashflow. Ongoing innovation has generated new products such as Forever Pipe which provide growth for this area of VEEM.

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Defence

VEEM has a long history as a supplier to the defence industry and is currently a supplier to ASC, Austal, Thales and others.

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Propulsion

In simple terms VEEM manufactures the world’s most advanced propellers. The fully-CNC machined propellers are sold to boat builders and users globally.

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Gyrostabilizers

VEEM Gyros are the major growth business within VEEM. VEEM Gyros have disrupted the stabilization market, providing enhanced stabilization to large vessels (up to 90m) replacing traditional fin systems.

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VEEM Gyros – The Four Pillars are in Place

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Sales & Marketing
Global Supply Chain
Engineering & Design Production Capability
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Engineering & Design

Commenced in 2011 with the purchase of a local company Halcyon. The inventor Paul Steinmann is still with us today.

First gyro installed 2015 and fitted to a superyacht in Sydney

Six models designed over three frame sizes covering a range of monohull vessels from 70 tons to 3000 tons. Biggest one due mid 2021.

This team holds the product knowledge and construction know-how. VEEM has patent protection on the key aspects of the technology that make VEEM the only volume producer of industrial grade large gyros.

Strong technical input is key to ongoing troubleshooting and ensuring complete customer satisfaction with installations.

Next steps are to enhance the current models (eg digital integration), design new models and frame sizes and consider second generation of current models incorporating lessons learnt and new technology.

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Production Capability

4,000m[2] dedicated gyro assembly hall that can handle up to $100m of gyros per annum. This includes large cranes, storage and a significant hydraulic driven gyro test rig for each frame size.

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A dedicated team of experienced trades people has been assembled for the gyro program and their skills and experience are being used to improve processes and build times as volumes increase.

The gyro production and assembly function has a dedicated management team including purchasing, inventory management, product commissioning and after-sales customer service.

There is the ability to scale up beyond the capacity of the current facility when sales volumes warrant. This is not a major capital expense using a rented facility and could be replicated closer to markets or suppliers if justified.

VEEM’s traditional engineering business, located close to the gyro facility, provides the gyro team with rapid-response precision engineering support if needed.

Now at a stage where we can and are building to a production plan rather than to order. This provides significant opportunities to increase efficiencies, thus reducing time and cost to build.

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Global Su pply Chain

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Ability to source components at or around world’s best pricing and quality.

Ability to have multiply supply sources to guarantee supply.

Natural hedge on ~55% of the costs of a gyro through purchases in USD. All sales in USD.

Dedicated procurement team in place with the back up ability to manufacture in-house if required.

Zero capital cost for growth other than inventory cost itself.

Now building to a production plan so will look to generate further savings through volume pricing and scheduling.

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Sales & Marketing
Initially the marketing effort had to be focused on educating the
industry players on what the gyro was and could do. Part of this
was taking the VEEM boat to Europe. Sale of VEEM Gyros ($m)
$4.0
Second phase was to be able to work with ship builders to help them
integrate a gyro into their design and articulate the benefits to their client. $3.5
$3.0
Strong experienced sales manager in place and looking to expand
the team. $2.5
$2.0
Many of the superyacht builders have now ordered gyros and repeat orders
are expected as customer feedback endorses the gyro as a “must have”. $1.5
$1.0
The sale of two VG1000SD VEEM Gyros and a 3 year supply
agreement with Damen Shipyards were major steps in the takeup $0.5
from the commercial market.
$0.0
Jun-18 Dec-18 Jun-19 Dec-19 Jun-20 Dec-20 E
Current orders in hand of $5m with $3.5m so far for delivery FY2021.
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Significant Supply Agreement with Damen Shipyards

VEEM signed a three-year frame agreement with Damen Shipyards for the supply of VEEM Gyros.

Damen sells 175 small ships per year, including 20 FCS vessels. They are the largest small ship builder in the world and the second large shipbuilder in Europe.

On top of new builds, retrofitting a VEEM Gyro to an existing FCS vessel is generally straightforward and there is a significant fleet of FCS vessels already in service. The retrofit market is huge.

Damen will offer the VEEM Gyro as an option on its FCS vessels and will continue to work with VEEM to incorporate VEEM Gyros into additional Damen platforms and vessels in the near term.

Damen’s adoption of the VEEM Gyro technology is a major step in terms of acceptance in the large commercial market and follows Damen’s initial two orders of VEEM’s VG1000SD gyros in 2019 and 2020 which were for FCS vessels.

The addition of the VEEM Gyro to the FCS vessel is expected to increase the customer’s commercial return due to the significantly increased number of operating days per annum and replacement of helicopters for crew transfers.

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Damen FCS Vessel
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“We have found through rigorous testing that VEEM Gyros are very complementary technology to our designs in terms of safety, comfort and performance. Now we have the frame agreement with VEEM, Damen will commence offering VEEM Gyros to customers as an option on our FCS range.

“Damen will continue to work with VEEM to incorporate the VEEM Gyros into additional Damen platforms and vessels in the near term.”

Mr David Stibbe, Corporate Manager, Damen Shipyards

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Summary Gyro Outlook – Sales Trend Expected to Continue

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Defence take-up is expected to mature over a longer period of time due to the conservative nature of this industry. VEEM will continue to educate the defence industry on the product with a longer-term view to wide-spread take-up.

Additional stabilization enhances the commercial argument for installing a gyrostabilizer through more operating days and safer, more efficient operation. We expect the take up of gyrostabilizers on commercial vessels to increase particularly after the upcoming sea trials of the VG1000SD VEEM Gyros.

Superyacht market take-up of the product is expected to increase rapidly as more vessels with gyrostabilizers join the global fleet and word spreads as to the effectiveness of the stabilization. Repeat orders from luxury yacht builders are being received.

With the Damen supply agreement already in place, the rapid adoption of the technology on larger vessels is expected to continue with more shipbuilders offering a VEEM gyrostabilizer as an option and endusers increasing their demand for the enhanced experience that a more stable vessel provides.

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VEEM Gyro Customers – Who’s Who of Prestige Shipbuilders

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New gyro facility running as designed. Estimate can handle up to
$100m of orders per annum. Now building to plan and not order, to
increase efficiencies.
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Outlook – Traditional VEEM Core Businesses

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PROPULSION

• Expected to grow due to increased demand globally.

• VEEM has ordered two new CNC machine centres to increase capacity to meet demand.

• Increased sales of new propulsion products such as shaftlines.

• Propulsion is an area of innovation for VEEM with a focus on finding further ways to make the world-leading propellers more efficiently, hence continuing to offer the premium product at reasonable prices while maintaining gross margins.

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DEFENCE

• FY2021 will be a solid year for defence with the bulk of the $9 million submarine component contract with ASC being delivered.

• VEEM expects to continue to win defence-related contracts where casting and precision engineering is required.

• Federal government’s increased drive for local content, on naval vessels in particular, is expected to drive growth.

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ENGINEERING PRODUCTS & SERVICES

• Continuing to bid on work across the country where utilisation of the Company’s foundry and precision machining capability enables VEEM to provide specialist solutions for customers.

• Forever pipe is expected to continue to increase its presence in overseas markets.

• Continued innovation to improve product offering in this area.

• Maintaining the engineering capability and expertise also supports the marine and defence businesses.

The outlook remains subject to the future impacts of the COVID-19 pandemic.

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Corporate Overview

Corporate Snapshot
ASX Code	VEE
Share Price(5 Mar 2021)	$1.00
Market Capitalisation (5 Mar 2021)	$130m
Shares on Issue	130m
Substantial Shareholders
Miocevich Family	61.54%
Perennial Value Management	13.12%

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12-MONTH SHARE PRICE PERFORMANCE
2
1.8 $1.00
1.6
$0.80
1.4
1.2
$0.60
1
0.8
$0.40
0.6
0.4
$0.20
0.2
0 $0.00
Volume Close
Millions
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VEEM LTD

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Contact

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