VEEM : Half Year Accounts and Appendix 4D

For personal use only

VEEM LTD	APPENDIX 4D
A.C.N. 008 944 009	HALF YEAR REPORT
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

___________________________

DAVID JAMES RICH

COMPANY SECRETARY

Dated: 21 February 2022

RESULTS FOR ANNOUNCEMENT TO THE MARKET
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	9 March 2022
dividend
Amount per security	$0.0007
Total dividend	$95,000
Amount per security of foreign sourced dividend or	N/A
distribution
Details of any dividend reinvestment plans in	N/A
operation

For personal use only

VEEM LTD	APPENDIX 4D
A.C.N. 008 944 009	HALF YEAR REPORT
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
	31 Dec 2021	31 Dec 2020
	$'000's	$'000's
Net Assets / (Liabilities)	42,749	35,265
Less intangible assets	(17,141)	(14,132)
Net tangible assets of the Company 1	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.

For personal use only

ABN 51 008 944 009

Financial Report for the Half-year Ended

31 December 2021

Contents

Page

For personal use only

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

CORPORATE DIRECTORY	Share Registry
Directors	Computershare Investor Services Pty Ltd
Level 11
Mr Brad Miocevich (Non-Executive Chairman)
172 St Georges Terrace,
Mr Mark Miocevich (Managing Director)
PERTH WA 6000
Mr Ian Barsden (Non-Executive Director)
Telephone:	+ 618 9323 2000
Mr Peter Torre (Independent Non-Executive Director)
Facsimile:	+ 618 9323 2033
Mr Michael Bailey (Independent Non-Executive Director)

Company Secretary	Auditors
HLB Mann Judd (WA) Partnership
Mr David Rich
Level 4
	130 Stirling Street
Registered Office	Perth WA 6000 Australia
22 Baile Rd	Telephone: [phone]
Canning Vale WA 6155	Facsimile: [phone]
Telephone: [phone]
	Stock Exchange
Website	Australian Securities Exchange
www.veem.com.au	(Home Exchange: Perth, WA)

ASX Code

VEE

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For personal use only

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	Independent Non-Executive Director
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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