VEEM : Investor Presentation - Company Update

19 APRIL 2022

VEEM LTD

INVESTOR PRESENTATION

VEEM LTD

MARCH 2020

INVESTOR UPDATE

PRINCESS YACHTS

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

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 PRODUCT ADVICE

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.

Summary Update

• • VEEM holds the dominant position as the only major supplier in the large marine gyro market, which is estimated at US$1.1bn for new builds and US$13.5bn for retrofits (current fleet). In FY22 to date VEEM has sold $3.4m of gyros and has orders on hand of $3.1m. Number of units sold for FY22 is expected to exceed FY21. Leads are also very strong, providing a high level of confidence around future sales.

• • VEEM is pleased to report a 50% increase in propeller manufacturing capability after installing two new propeller CNC machining centres and re-allocating a third CNC machining centre from its Industrial division. This increase brings the total amount of propeller machining centres to nine and creates the ability to generate over $2m a month in propeller sales.

  Westport Yachts

• • Deliveries for the next submarine full-cycle docking program (order worth $9m) have commenced and VEEM is also delivering ride control and propulsion for Austal patrol boats. VEEM is well-positioned to benefit from the promised significant investments in defence and naval shipbuilding in particular, with the Hunter Class Frigate propeller pilot being a current example.

• • The tight labour market and COVID issues have resulted in lower capacity (hours) due to skills shortages and increased costs. Raw material, labour and freight cost increases have generally now been passed on to customers through price rises which will assist in mitigating the impact during the final quarter of the year. The challenge of continued freight and raw materials cost increases mean future price rises are inevitable.

• • Gyros and propellers do not require a large amount of highly skilled labour to expand due to automation, a global supply chain and a production line skill set.

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

Gyrostabilizers

• • VEEM holds the dominant position as the only major supplier in the large marine gyrostabilizer market, which is estimated at US$1.1bn for new builds and US$13.5bn for retrofits (current fleet).

• • Significant capital investment and intellectual expertise requirements now provide major barriers to entry for competitors. VEEM is exploiting this by driving sales growth and taking its robust technology into smaller frames to compete against the recreational products.

• • The recent addition of new key senior and customer-facing staff, in the very large European market in particular, has already resulted in an increase in the volume and quality of leads and enquiries from European customers and shipyards.

• • Orders and sales for FY21 totalled 12 units and YTD FY22 is already at 12 units indicating sales volumes are increasing with lumpiness in sales value caused by vast differences in the value of the individual gyro units ranging from US$250k to US$1.2m.

• • Damen's new walk to work vessel, the FCS 7011 (the VEEM VG520SD is the "secret weapon"), is expected to have its global gala launch in the Netherlands in the next month. The vessel is designed to revolutionise offshore crew transfers.

• • The significant volume and quality of leads provides confidence that future orders and sales are coming and VEEM will continue to build inventory of complete units in line with lead trends in order to meet expectations.

Propulsion

• • Demand expected to continue to grow due to increased demand globally. Many yards booked out to 2023-4.

• • Increased propeller manufacturing capability by installing two new propeller CNC machining centres and re allocating a third CNC machining centre from the industrial division.

• • Recent completion of the LCS program for Austal provided the ability to re-allocate this machine from the industrial division.

• • This increase brings the total amount of propeller machining centres to nine and creates the ability to generate over $2m a month in propeller sales.

• • A further three smaller machines scheduled for delivery in December 2022 will increase capacity to 12 machines, double what was operational at 31December 2021.

• • New key superyacht builders have added VEEM as primary supplier and are requesting possible long term, volume based contracts. Of note is the increasing demand for large diameter superyacht propellers.

• • Second price rise this financial year has been implemented to account for the continued rises in labour, freight and raw materials/commodity costs.

• • Rising raw materials costs, freight and, to some extent, labour will require monitoring and price adjustments to ensure VEEM continues to offer its premium product at competitive prices while maintaining gross margins.

"We are delighted to see such sustained activity in the propeller market with strong demand from our OEM customers, most of which have production booked well into 2024. The global demand for our CNC machined propellers is growing and VEEM must continue to meet this demand by increasing production capability. Combining this with our continuous production improvement program means that VEEM propellers are becoming cheaper in real terms, further fuelling demand."

VEEM Managing Director, Mark Miocevich