Annual financial statement
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VEEM Ltd ABN: 51 008 944 009 APPENDIX 4E: PRELIMINARY FINAL REPORT 30 June 2026
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VEEM LTD A.C.N. 008 944 009 APPENDIX 4E PRELIMINARY FINAL REPORT 30 JUNE 2026 RESULTS FOR ANNOUNCEMENT TO THE MARKET This Preliminary Final Report is provided to the Australian Securities Exchange (ASX) under ASX Listing Rule 4.3A Current Reporting Period: 30 June 2026 Previous Corresponding Period: 30 June 2025 For and on behalf of the Directors TINO KAPFUMO COMPANY SECRETARY Dated: 26 August 2026 RESULTS FOR ANNOUNCEMENT TO THE MARKET Revenue and Net Profit AUD $’000’s Revenue from ordinary activities down 25% to 51,727 Loss from ordinary activities after tax attributable to members down 690% to (17,813) Net loss for the period attributable to members down 690% to (17,813) COMMENTARY ON RESULTS AND OTHER SIGNIFICANT INFORMATION COMMENTARY The Directors’ Report accompanying this Preliminary Final Report contains a review of operations and commentary on the results for the year ended 30 June 2026.
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VEEM LTD A.C.N. 008 944 009 APPENDIX 4E PRELIMINARY FINAL REPORT 30 JUNE 2026 Dividends No dividends were declared or paid during the financial year ended 30 June 2026. NET TANGIBLE ASSET BACKING 30 June 2026 $’000 30 June 2025 $’000 Net assets 49,665 54,293 Less net intangible assets 4,101 18,459 Net tangible assets of the Company 45,564 35,834 Fully paid ordinary shares on issue at balance date 146,749,372 135,980,141 Net tangible asset backing per issued ordinary share $0.310 $0.264 as at balance date1 EARNINGS PER SHARE Basic (loss)/earnings per share (cents) (12.40) 2.22 AUDIT DETAILS The accompanying financial report has been audited. 1. Net tangible assets have been calculated by including the right of use asset and associated lease liability which represents an underlying tangible asset.
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VEEM LTD ABN 51 008 944 009 Financial Report 30 June 2026
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CONTENTS Page 2 Page Corporate Information 3 Directors’ Report 4 Review of Financial and Operating Performance 6 Auditor’s Independence Declaration 16 Consolidated Statement of Profit or Loss and Other Comprehensive Income 17 Consolidated Statement of Financial Position 18 Consolidated Statement of Changes in Equity 19 Consolidated Statement of Cash Flows 20 Notes to the Consolidated Financial Statements 21 Consolidated Entity Disclosure Statement 49 Directors’ Declaration 50 Independent Auditor’s Report 51
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CORPORATE INFORMATION Page 3 ABN 51 008 944 009 Directors Brad Miocevich Non-Executive Chairman Mark Miocevich Managing Director Peter Torre Independent Non-Executive Director Angus Murnaghan Independent Non-Executive Director David Singleton Independent Non-Executive Director Company Secretary Tino Kapfumo Registered office 22 Baile Road Canning Vale WA 6155 Telephone: + 61 8 9455 9355 Principal place of business 22 Baile Road Canning Vale WA 6155 Telephone: + 61 8 9455 9355 Share registry Computershare Investor Services Pty Ltd Level 17 221 St Georges Terrace PERTH WA 6000 Telephone: +61 8 9323 2000 Facsimile: + 61 8 9323 2033 Solicitors Allens Mia Yellagonga Level 11, Tower 2 5 Spring St PERTH WA 6000 Bankers ANZ Banking Corporation Level 7, 77 St Georges Terrace PERTH WA 6000 Auditors HLB Mann Judd Level 4, 130 Stirling Street Perth WA 6000 Securities Exchange Listing VEEM Ltd shares are listed on the Australian Securities Exchange (ASX: VEE)
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DIRECTORS’ REPORT Page 4 The Directors present their report together with the financial statements of the Company and its controlled entities (“the Group”) for the financial year ended 30 June 2026. 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 year and until the date of this report are as follows. Directors were in office for this entire period unless otherwise stated. Mr John Bradley Miocevich B.Comm, FAICD Non-Executive Chairman Brad has been a Director of VEEM Ltd since 1983. Combining trade qualifications with a Commerce Degree in Finance and Banking, Brad has the unique skills suitable for the management of an engineering company. With a focus on strategic planning , he was a member of the team responsible for the acquisition of several companies over the past 25 years including S&S Foundry & Engineering and Timcast Foundry and Engineering. Taking on the role of Director Marine Propulsion in 2000, he has been the driving force in creating VEEM’s now very successful international propeller business. Brad provided the vision for VEEM’s hi ghly automated manufacturing processes making VEEM the benchmark of propeller manufacturing worldwide. Brad brings to the Board expertise in finance, manufacturing, engineering and marketing along with practical knowledge of the Company and its markets. In the 3 years immediately before the end of the financial year, Brad has not served as a Director of any other listed company. Mr Mark Miocevich B.App.Sc (Mech Eng) FIE Aust Managing Director Mark has been a director and senior manager of VEEM for over 40 years. Commencing as Production Director from 1983 and until 1995 he was responsible for the implementation of the Quality Assurance systems in 1987, the integration of S&S Foundry & Engineering into the company in 1989, and defining the Company management model based on the Australian Business Excellence framework guideline in 1994. From 1995 until present he has been the Managing Director of VEEM and for a period during that time, the Managing Director of GA Perry and a Director of Thomassen Services Australia. He was responsible for the integratio n of Timcast Foundry and Engineering into VEEM during 2002. He brings to the Board intimate knowledge of the Company, its systems and strategic plan. In the 3 years immediately before the end of the financial year, Mark has not served as a Director of any other listed company. Mr Peter Torre B.Bus (Accounting), CA, AGIA Independent Non-Executive Director Peter was appointed as a Director of the Company on 12 April 2018. Peter served as Company Secretary of the Company from September 2016 to November 2019. He is a Chartered Accountant, a Chartered Secretary and a member of the Australian Institute of Compa ny Directors. He was previously a partner of an internationally affiliated firm of Chartered Accountants. Peter is the Company Secretary of other public companies listed on the ASX, and Australian subsidiaries of overseas listed entities. In January 2026, Peter was appointed to the ASX Advisory Group on Corporate Governance. In the 3 years immediately before the end of the financial year, Peter has served as a Director of Volt Group Limited (28 April 2017 to present). Mr Angus Murnaghan BCom - UNSW Independent Non-Executive Director Angus has a Bachelor of Commerce from UNSW and is a qualified Master Mariner (Class V). Angus is highly experienced in capital markets and smaller companies with almost 40 years in the Australian equities markets in senior roles. He has worked at leadi ng finance and advisory groups including UBS, Ord Minnett, as Managing Director of Moelis & Company and Wentworth Securities including serving on the management committee of UBS. Currently Angus is a non-executive director of, and consultant to, Schoolblazer Limited (formerly Hancock and Gore Ltd). He was previously a director of emerging project software provider Total Synergy and served as a Board member of The Sporting Chance Cancer Foundation. In the 3 years immediately before the end of the financial year, Angus has served as a Director of Hancock and Gore Ltd – Renamed Schoolblazer Limited (23 February 2023 to present); H&G High Conviction Limited (1 May 2025 to present)
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DIRECTORS’ REPORT (continued) Page 5 Mr David Singleton BSc (Hons – Mech Eng), HonDEng Independent Non-Executive Director – Appointed 30 September 2025 David was appointed a Director of VEEM on 30 September 2025. He is currently a Non -Executive Director of Austin Engineering Limited, where he was Managing Director and CEO until June 2025, and Griffin Industrial, a naval and commercial vessel maintenance and sustainment business. David has extensive international executive and board experience across the maritime, defence and industrial sectors. He was previously Managing Director and CEO of Austal Limited, following seven years with the global shipbuilder, including responsibility for major naval shipbuilding operations in Australia and the United States. Earlier in his career, David was CEO of Alenia Ma rconi Systems, an international defence systems business specialising in radar, command and control systems and weapons integration. He also held senior executive roles with BAE Systems, including as Global Head of Strategy and M&A. David has served on the UK National Defence Industries Council and as a Board Member and Vice-President (Defence) of Intellect, the UK technology industry association. David holds a BSc (Hons) in Mechanical Engineering from University College London and an Honorary Doctor of Engineering from Edith Cowan University. In the 3 years immediately before the end of the financial year, David has served as a Director of Austin Engineering Limited (15 April 2019 to present). Mr Michael Bailey MSc; CEng; MRINA Independent Non-Executive Director – Retired 27 November 2025 Mike brought 50 years’ experience in areas of naval architecture, marine engineering, and project and company management. He operated in the defence and offshore oil and gas sectors in Europe, Asia and Australia with multinational and private companies and as a consultant. Mike also held the Business Development role in VEEM Engineering in the 1990s. From 2000 to 2022 Mike was instrumental in the establishment and operations of the highly successful Australian Marine Complex - Common User Facility. Mike retired from the Board of VEEM at the 2025 AGM. In the 3 years immediately before the end of the financial year, Mike had not served as a Director of any listed company. Mike had previously served as a director of AMC Management (WA) Pty Ltd, Facility Manager of the Australian Marine Complex - Common User Facility. Company Secretary Mr Tino Kapfumo BCom, CA, FGIA Chief Financial Officer and Company Secretary Tino holds a Bachelor of Commerce from the University of Western Australia and is a Chartered Accountant and Fellow of the Governance Institute of Australia. He gained experience at Big 4 and mid-tier accounting firms working with listed entities and large private companies before specialising in small and medium-sized ASX listed companies. INTERESTS IN THE SHARES OF THE COMPANY AND RELATED BODIES CORPORATE The following relevant interests in shares of the Company or a related body corporate were held by the Directors as at the date of this report unless otherwise stated. Fully paid ordinary shares Directors Number John Bradley Miocevich 68,904,8241 Mark David Miocevich 68,904,8241 Peter Patrick Torre 72,711 David Singleton - Angus Murnaghan 425,000 (1) Mr Brad Miocevich and Mr Mark Miocevich have a relevant interest in VEEM Corporation Pty Ltd ATF the Miocevich Family Trust which holds 68,904,824 fully paid ordinary shares in the Company. SHARES UNDER OPTION OR ISSUED ON EXERCISE OF OPTIONS At the date of this report there were no unissued ordinary shares or interests of the Company under option. PRINCIPAL ACTIVITIES The principal activities of the Group during the course of the year were: • Production, marketing and sales of propulsion and stabilisation systems; and • Manufacturing bespoke engineered products and services for the marine, defence and mining industries.
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DIRECTORS’ REPORT (continued) Page 6 REVIEW OF FINANCIAL AND OPERATING PERFORMANCE FINANCIAL PERFORMANCE The Board is pleased to report that after a loss in 1HFY26 the Group has returned to profitability in 2HFY26 with this expected to continue into FY27. The Group reported a Net Loss After Tax (NLAT) for FY26 of $17.8 million (2025 profit: $3.0 million) from revenue of $51.7 million (2025: $68.6 million). Earnings before interest, tax, depreciation and amortisation (EBITDA) w ere $3.6 million (2025: $9.2 million). Cash flow from operations was $4.8 million (2025: $2.9 million). The revenue decrease during the period was predominantly due to a decrease in gyro revenue to $0.1 million (2025: $9.6 million) due to a downturn in the marine market experienced in late CY2025 and early CY2026 in part due to the imposition of tariffs by the United States. A recovery began in late Q1 CY2026 and continued into Q2 CY2026 which resulted in increased propulsion revenues. Net assets decreased by $ 4.6 million to $ 49.7 million including a non-cash impairment of $24.8 million to capitalised gyro development costs and obsolete inventory . The Group held cash on hand of $ 9.4 million at 30 June 20 26 (30 June 202 5: $0.8 million) after a capital raising of $14 million before costs ; with undrawn overdraft and trade facilities of $ 7.1 million (2025: $3.0 million). During the year the Group acquired over $2.5 million of plant and equipment including: • Additional robotics • 3D Printer VEEM spent $4.5 million on formal research and development projects during FY26. VEEM will continue to commit to research and development projects as it sees necessary to remain at the forefront of the markets in which its products are sold and potent ially enter new markets. OPERATIONS VEEM continued to invest in capital equipment and research and development during the year including acquiring a dditional robotics. Such initiatives continue VEEM’s strive for efficiency and improved performance. PROPULSION Demand for VEEM’s world -leading fixed pitch propellers softened at the end of CY2025 as a result of a downturn in the marine market in part due to the uncertainty caused by tariffs. Although there was a decrease, revenue remained solid and VEEM maintained good customer relations and worked to broaden its suite of customers to offset the market dynamics in the short te rm and maximise the increase in the long term as the market resumed growth, by having a larger market share. VEEM’s propulsion revenue overall (including Shaftlines and defence) for the year was $30.5 million (2025: $35.0 million). The VEEM Extreme range was launched during the year which provides 24.1% efficiency gains from the propeller (11.9%); rudder (6.2%) and bracket (6.0%) compared to a conventional setup. A contract has been executed with Manly Fast Ferries as the launch customer with deliveries beginning in 2HFY26. Significant enquiries have been received and VEEM is working with a small selec t group as launch customers t o roll out the VEEM Extreme range. The range of customers is expected to broaden over time particularly in the slow boat market given the efficiency gains and also among carbon conscious entities. VEEM continues to develop its processes and pursue new initiatives and opportunities in relation to the propeller business. Part of VEEM’s research and development focus is to continually increase the automation of the propeller process which not only reduces time and cost but also, notably in the current environment, reduces the requirement for highly skilled labour as capacity exp ands. In line with this desire VEEM has also invested this year in additional robotics and equipment to bring further efficienc ies to the propeller manufacturing process. The construction of the factory extension was completed in June 2026 providing approximately 1,000m 2 of additional space to accommodate anticipated future growth in propulsion including VEEM Extreme products. Three CNC machines have been delivered with the installation and commissioning process well advanced and expected to be completed in Q1 FY27. Post commissioning of the machines there will remain space within the building for additional machines and equipment underwriting the Company’s growth potential over the near term. The amendment to the Sharrow agreement is currently under negotiation for a further extensio n. During this phase, Sharrow is transacting directly with customers, while VEEM is serving as the manufacturing lead. VEEM will continue to generate revenue from sales of SHARROW by VEEM propellers to Sharrow during this phase. Costs and margins are likely to vary with changes in designs. Overall VEEM expects margins to be positive. No license fee will apply during this current phase, allowing maximum investment in the manufacturing process.
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DIRECTORS’ REPORT (continued) Page 7 DEFENCE VEEM continues to be a reliable, local source of highly sophisticated critical components for the Collins Class submarines. Revenue from the submarine program was $6. 0 million (2025: $6.6 million) for FY26 which is down 9% on FY25 due to the delayed receipt of ASC orders which arrived in late CY2025 and have begun to be delivered in 2HFY26. Overall defence revenue was $12.3 million (2025: $15.6 million) down $3.3 million on FY25 predominantly due to the delayed receipt of ASC orders. During the year progress was made entering the US defence supply chain including achieving approved supplier status with HII and signing a 9-year MLA with Northrop Grumman for US$33.0m. Unfortunately, this progress was significantly hampered by the longest United States government shutdown in modern history from 1 October 2025 to 12 November 2025. Progress continues to accelerate in CY2026 with VEEM working towards qualification with several US defence contractors. VEEM has received final technical specification for the blades and hub for the Hunter Class Frigate Program (HCFP) for BAE Systems Australia and is now moving to final tender stage . VEEM is one of only two suppliers globally to be able to produce this level of precision. Success with this project and VEEM’s defence accreditations is expected to lead to further Australian defence work as well as the potential to export equipment for other naval shipbuilding programs around the world, including other Type 26 frigate programs. VEEM received the final $0.6 million due in relation to the 3D printer purchased as part of the award of $1.0 million under the Defence Industry Development Grants Program – Sovereign Industry Priorities Stream in order to build sovereign capacity. There remains a further $1.2 million to be received in 1HFY27 once installation of the two related CNC machines is complete. VEEM also continues to be awarded contracts for numerous other defence projects including army vehicles and naval projects such as patrol boats. VEEM is active in the Defence space and is well positioned to take advantage of further defence work opportunities that are n ow emerging from Hunter, Austal, AUKUS, autonomous vessel and other weapons defence programs, especially as VEEM now has an enhanced security rating obtained in 2024. GYROSTABILISERS In December a customer who had purchased 13 gyros didn’t take delivery of 2 as a result of a low level of boat sales on their behalf. In accordance with the sales agreement these 2 sales were reversed and the gyros restocked. There are no other agreements with this option. As a result, in FY26 VEEM generated revenue of $ 0.1 million (2025: $9.6 million) from sale of the units and service revenue. Sales below budget constituted an impairment indicator and an impairment test was conducted, resulting in a one-off non- cash impairment expense of $24.8 million in relation to gyro related capitalised development costs ($24.2 million) and some obsolete inventory due to launch of the Mark III ($0.6 million). VEEM has continued to invest in the development of its gyrostabiliser product over the period culminating in the launch of the Mark III which includes the following key features: • A new oiling system (patent pending) which results in the elimination of seals and means no scheduled maintenance and 20% less power usage. • Custom low friction bearings which will provide an additional 20% reduction in power consumption for small and mid-frame models. • Internal fluid galleries which remove over 60 points of failure and reduce assembly time. Increasing reliability of the more robust Mark II models has also resulted in enquiries from existing customers with other bo ats in their fleet or who are increasing their fleet. Business development continues to be a priority to both increase the number of leads received and also increase the conversio n rate. The significant development costs have now been incurred and are winding down post completion and launch of the Mark III. ENGINEERING PRODUCTS AND SERVICES The majority of VEEM’s traditional engineering business is in the manufacture of foundry -led, precision engineered products. This comprises both the manufacture of customer’s designs and the sale and manufacture of VEEM’s own hollow bar product (includes forever pipe). Demand generally for foundry -led, precision engineered products has been uncertain with skills in this area used to service increasing defence in 2HFY26, particularly fulfilment of ASC orders. Revenue from non-defence engineering products and services including hollow bar was $14.3 million (2025: $16.7 million).
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DIRECTORS’ REPORT (continued) Page 8 CORPORATE During the year $14 .0 million (before costs) was raised by the issue of fully paid ordinary shares with the Miocevich family contributing $1 .0 million. Funds received strengthened the balance sheet and provided flexibility allowing the Group to take advantage of growth opportunities in particular in US defence. The factory extension at Baile Road was completed in June with installation and commissioning of three CNC machines commencing shortly thereafter and is progressing well. Completion is on track for Q1 FY27. OUTLOOK VEEM’s continued investment in capital equipment and research and development is expected to be maintained into FY2 7 principally with the installation and commissioning of three additional CNC machines in Q1 . This is a core ten et of the Group’s philosophy and a significant contributor to improved and additional products as well as more efficient operations. VEEM’s propellers continue to be the premium product in the fixed pitch propeller market globally. This leadership is expected to be extended with the proliferation of the VEEM Extreme range which includes propellers; rudders; brackets and shaftline s. The increased offering of rudders; brackets; shaftlines and associated equipment is a significant growth lever going forward. The three additional CNC machines currently being installed and commissioned will ensure VEEM can meet the additional demand as it comes on stream. Defence revenue is expected to accelerate in FY27, in particular 1HFY27 as delivery into ASC orders on hand gathers pace leading to a stronger first half compared to second half in contrast to the past where the second half has traditionally been stronger. VEEM has achieved approved supplier status with HII; Electric Boat and Blue Forge with tendering expected to increase in FY27 with the associated flow on of orders and revenue. Other defence work for a number of different prime contractors, including Austal, is also expected to continue with the build ing of patrol boats and other platforms. VEEM will use its experience from the Hunter demonstrator program to pursue other options to leverage the high-level qualifications achieved with BAE/Kongsberg/Navy to supply other defence programs including overseas T26 programs. This is evident by the placement of an additional Kongsberg contract for $1.6 million of fixed pitch propellers for a different global defence program to be supplied over the coming years. VEEM is also active and well positioned to take advantage of further defence work opportunities that may arise out of AUKUS a nd other defence programs. The outlook for VEEM’s large marine gyrostabiliser (‘gyro’) product remains positive with VEEM holding the dominant position as the only major supplier in the large marine gyrostabiliser market. The product has continued to be developed with a robust and reliable Mark II in the market now being joined by a more advanced and modern Mark III with all its various advantages. Demand for the traditional foundry -led engineering products and services is expected to continue including VEEM’s hollow bar product. VEEM will continue to focus heavily on recruitment, maintenance and increase in labour resources through a number of initiati ves in order to ensure it has the capacity to deliver revenue growth. In terms of cost increases, VEEM has in place systems to en sure that cost increases and other factors such as exchange rates are identified as early as possible and incorporated into pricin g in order to protect margins for all products. STRATEGY VEEM’s strategy and focus is to become the global market leader in the provision of high technology marine Defence, propulsion and gyrostabilisation products to Defence craft, superyachts and large commercial craft. VEEM will also continue to manufacture bespoke specialised engineered products and services for the marine, defence, resources and other industries.
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DIRECTORS’ REPORT (continued) Page 9 KEY RISKS VEEM’s ongoing business performance is subject to a number of risks. The key risks identified are: • Changes in the market demand for VEEM’s products or services. This includes the impact of changing global economic conditions in markets such as the recreational marine market which is a major consumer of VEEM’s propellers including the impact of tariffs in the United States . VEEM monitors its markets for indicators of any change and devises plans to respond. VEEM proactively works to keep its products at the forefront of its markets both technically and in relation to pricing. • Rising input costs such as raw materials ; freight and labour impacting margins. VEEM has in place systems to ensure that cost increases and other factors such as exchange rates are identified as early as possible and incorporated into pricing in order to protect margins for all products. • Availability of labour in Western Australia impacting capacity. VEEM has in place a number of initiatives to manage this risk. • The rate of adoption of the Company’s large marine gyrostabili ser technology impacting revenue and profit growth . VEEM is working to maximise the adoption of its gyrostabiliser technology through marketing, pricing and after-sales attention. In addition, continued development of the product including the recently launched Mark III is expected to accelerate adoption. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS Other than as disclosed elsewhere in this report, there have been no significant changes in the state of affairs of the Group to the date of this report. SIGNIFICANT EVENTS AFTER BALANCE DATE No matters or circumstances have arisen since the end of the financial year which have significantly affected or may signific antly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years apart from those listed below: 1. On 27 July 2026 the Company announced its Chief Executive Officer Trevor Raman had advised the Board of his intention to step down and pursue other career opportunities. LIKELY DEVELOPMENTS AND EXPECTED RESULTS The Group will continue with its strategy as set out above. ENVIRONMENTAL LEGISLATION The Group is not subject to any significant environmental legislation. DIVIDENDS No dividends were declared or paid during the financial year ended 30 June 2026. INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS The Company has agreed to indemnify all the Directors of the Company and the Chief Executive Officer and Chief Financial Officer for any liabilities to another person (other than the Company or related body corporate) that may arise from their position as Directors or officers of the Company and its controlled entities, except where the liability arises out of conduct involving a lack of good faith. During the financial year the Company paid a premium in respect of a contract insuring the Directors and officers of the Company and its controlled entities against any liability incurred in the course of their duties to the extent permitted by the Corpo rations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium. REMUNERATION REPORT - AUDITED This report, which forms part of the Directors’ report, outlines the remuneration arrangements in place for the key managemen t personnel (“KMP”) of VEEM Ltd for the financial year ended 30 June 202 6. The information provided in this remuneration report has been audited as required by Section 308(3C) of the Corporations Act 2001. The remuneration report details the remuneration arrangements for KMP who are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company, directly or indirectly, including any Director (whether executive or otherwise) of the Company.
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DIRECTORS’ REPORT (continued) Page 10 KEY MANAGEMENT PERSONNEL The Key Management Personnel set out below were the only key management personnel of the Group during or since the end of the financial year. Directors Brad Miocevich Chairman (Non-Executive) Mark Miocevich Managing Director Michael Bailey Independent Non-Executive Director – Retired 27 November 2025 Peter Torre Independent Non-Executive Director Angus Murnaghan Independent Non-Executive Director David Singleton Independent Non-Executive Director – Appointed 30 September 2025 Executives Trevor Raman Chief Executive Officer Tinotenda Kapfumo Chief Financial Officer and Company Secretary The named persons held their current positions for the whole of the financial year and to the date of this report unless otherwise stated. REMUNERATION PHILOSOPHY The performance of the Group depends upon the quality of the Directors and executives. The philosophy of the Group in determining remuneration levels is to set competitive remuneration packages to attract and retain high calibre employees. REMUNERATION COMMITTEE The Group did not have a separate Remuneration and Nomination Committee during the year. The full Board fulfilled the role typically undertaken by a Remuneration Committee and was responsible for determining and reviewing compensation arrangements for the Directors and other KMP. The Board assesses the appropriateness of the nature and amount of remuneration of Directors and executives on a periodic basis by reference to relevant employment market conditions with an overall objective of ensuring maximum stakeholder benefit from the retention of a high-quality Board and executive team. REMUNERATION STRUCTURE In accordance with best practice corporate governance, the structure of non -executive Director and executive remuneration is separate and distinct. USE OF REMUNERATION CONSULTANTS Independent external advice is sought from remuneration consultants as required. A Benchmarking Report was undertaken to ensure the level of remuneration for the Group’s Managing Director was in line with market and commensurate with the role being undertaken in July 2021. NON-EXECUTIVE DIRECTOR REMUNERATION The Board seeks to set aggregate remuneration at a level that provides the Group with the ability to attract and retain Directors of the highest calibre, whilst incurring a cost that is acceptable to shareholders. The ASX Listing Rules specify that the aggregate remuneration of non-executive Directors shall be determined from time to time by a general meeting. The aggregate remuneration of non-executive Directors is set at $600,000 as approved at the 2025 annual general meeting. The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is apportioned amongst Directors is reviewed annually leading up to the Company’s Annual General Meeting. The Board considers advice from external shareholders as well as the fees paid to non -executive Directors of comparable companies when undertaking the annual review process. Each Director receives a fee for being a Director of the Company. Given there are no committees currently in place, no additional fees are paid.
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DIRECTORS’ REPORT (continued) Page 11 SENIOR MANAGER AND EXECUTIVE DIRECTOR REMUNERATION Remuneration consisted of reasonable fixed remuneration and a performance rights and option plan during the year. FIXED REMUNERATION Fixed remuneration is reviewed annually by the Board. The process consists of a review of relevant comparative remuneration i n the market and internally and, where appropriate, external advice on policies and practices. The Board has access to external , independent advice where necessary. Senior managers are given the opportunity to receive their fixed (primary) remuneration in a variety of forms including cash and fringe benefits such as motor vehicles and expense payment plans. It is intended that the manner of payment chosen will be optimal for the recipient without creating undue cost for the Group. The fixed remuneration component is detailed in Key Management Personnel remuneration tables for the years ended 30 June 2026 and 30 June 2025. PERFORMANCE RIGHTS AND OPTIONS PLAN In August 2024 the Company granted 133,581 performance rights to Trevor Raman (Chief Executive Officer ) and 78,406 performance rights to Tino Kapfumo (Chief Financial Officer). At 30 June 202 6 these were the only performance rights on issue to key management personnel and there were no other performance rights granted or cancelled during the year. The key terms of the Performance Rights on issue to key management personnel are as follows: FY25 Performance rights • Tranche 1: 12 months after the start date and the 30-day volume weighted average share price (VWAP) of the Company has reached $1.98. This can occur at any point to expiry. • Tranche 2: 24 months after the start date and the 30-day volume weighted average share price (VWAP) of the Company has reached $2.28. This can occur at any point to expiry. • Tranche 3: 36 months after the start date and the 30-day volume weighted average share price (VWAP) of the Company has reached $2.62. This can occur at any point to expiry. • All Performance Rights have an accelerated vesting condition on a change of control event at any time up to expiry. • All Performance Rights expire 31 August 2027. 2025 ANNUAL GENERAL MEETING The Remuneration Report for the year ended 30 June 2025 was approved by in excess of 99% of shareholder votes cast. PERFORMANCE ON SHAREHOLDER WEALTH In considering the Group’s performance and benefits for shareholder wealth, the Board has regarded the following indices in respect of the current and previous four financial years: 2026 2025 2024 2023 2022 EPS (cents per share) (12.40) 2.22 5.15 3.03 0.93 Dividends (cents per share) - 0.23 1.54 0.91 0.43 Net (loss)/profit after tax ($k) (17,813) 3,019 6,986 4,112 1,266 Share price ($) 0.47 0.83 1.75 0.40 0.38
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DIRECTORS’ REPORT (continued) Page 12 EMPLOYMENT CONTRACTS Details of employment contracts with executive KMP as at the date of this report: NAME TERM OF AGREEMENT AND TERMINATION PROVISIONS BASE SALARY TERMINATION BENEFIT M. Miocevich Managing Director This agreement has no set term. Termination of the agreement is 1 months’ notice by the Executive or 3 months’ notice by the Company and includes a 6-month restraint of trade. Base: $572,068 per annum plus minimum statutory superannuation 3 Months’ salary T. Raman Chief Executive Officer This agreement has no set term. Termination of the agreement is 3 months’ notice by the Executive or the Company and includes a 6-month restraint of trade. Base: $471,000 per annum inclusive of minimum statutory superannuation 3 Months’ salary T. Kapfumo Chief Financial Officer This agreement has no set term. Termination of the agreement is 3 months’ notice by the Executive or the Company and includes a 6-month restraint of trade. Base: $315,000 per annum inclusive of minimum statutory superannuation 3 Months’ salary Executive remuneration consisted of fixed and variable remuneration during the year to 30 June 202 6. The Group continues to assess the structure of executive remuneration to ensure it appropriately incentivises key management.
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DIRECTORS’ REPORT (continued) Page 13 REMUNERATION OF KEY MANAGEMENT PERSONNEL Key Management Personnel remuneration for the years ended 30 June 2025 and 30 June 2026: Short-term employee benefits Post- employment benefits Long-term benefits Share based payments Relative proportions of remuneration of KMP that are linked to performance Salary & fees Bonus Non- monetary benefits Other Superannuation Long service leave Total Fixed remuneration Remuneration linked to performance 30 June 2026 $ $ $ $ $ $ $ $ % % Directors Bradley Miocevich 136,151 - - - 16,338 - - 152,489 100% - Mark Miocevich 574,200 - - - 30,000 9,569 - 613,769 100% - Michael Bailey* 28,816 - - - 3,458 - - 32,274 100% - Peter Torre 76,992 - - - - - - 76,992 100% - Angus Murnaghan 68,744 - - - 8,249 - - 76,993 100% - David Singleton** 55,328 - - - 2,481 - - 57,809 100% - Total Director remuneration 940,231 - - - 60,526 9,569 - 1,010,326 Executive Trevor Raman 440,958 - - - 30,000 - 34,481 505,439 93% 7% Tino Kapfumo 284,831 - - - 29,732 - 15,991 330,554 95% 5% Total Executive remuneration 725,789 - - - 59,732 - 50,472 835,993 Total 1,666,020 - - - 120,258 9,569 50,472 1,846,319 Short-term employee benefits Post- employment benefits Long-term benefits Share based payments Relative proportions of remuneration of KMP that are linked to performance Salary & fees Bonus Non- monetary benefits Other Superannuation Long service leave Total Fixed remuneration Remuneration linked to performance 30 June 2025 $ $ $ $ $ $ $ $ % % Directors Bradley Miocevich 136,118 - - - 15,653 - - 151,771 100% - Mark Miocevich 574,513 - - - 29,932 (4,333) - 600,112 100% - Michael Bailey 68,512 - - - 7,879 - - 76,391 100% - Peter Torre 75,000 - - - - - - 75,000 100% - Angus Murnaghan 68,512 - - - 7,879 - - 76,391 100% - Total Director remuneration 922,655 - - - 61,343 (4,333) - 979,665 Executive Trevor Raman 437,233 - - - 29,932 - 82,721 549,886 85% 15% Tino Kapfumo 245,998 - - - 28,290 - 14,658 288,946 95% 5% Total Executive remuneration 683,231 - - - 58,222 - 97,379 838,832 Total 1,605,886 - - - 119,565 (4,333) 97,379 1,818,497 *Mr Michael Bailey ceased to be a director on 27 November 2025 ** Mr David Singleton was appointed a director on 30 September 2025
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DIRECTORS’ REPORT (continued) Page 14 FULLY PAID ORDINARY SHARES Balance beginning of year Granted as compensation Received on exercise of rights Net change other Balance year end 30 June 2026 Number Number Number Number Number Directors Bradley Miocevich* 68,135,593 - - 769,231 68,904,824 Mark Miocevich* 68,135,593 - - 769,231 68,904,824 Michael Bailey** 115,423 - - - 115,423 Peter Torre 72,711 - - - 72,711 Angus Murnaghan 425,000 - - - 425,000 David Singleton*** - - - - - Executive Trevor Raman 233,389 - - (213,750) 19,639 Tino Kapfumo 41,750 - - - 41,750 Balance at beginning of year Granted as compensation Received on exercise of rights Net change other Balance year end 30 June 2025 Number Number Number Number Number Directors Bradley Miocevich* 68,135,593 - - - 68,135,593 Mark Miocevich* 68,135,593 - - - 68,135,593 Michael Bailey 115,423 - - - 115,423 Peter Torre 72,711 - - - 72,711 Angus Murnaghan*** 400,000 - - 25,000 425,000 Executive Trevor Raman*** 13,783 - 102,554 117,052 233,389 Tino Kapfumo*** 41,750 - - - 41,750 * Mr Brad Miocevich and Mr Mark Miocevich have a relevant interest in VEEM Corporation Pty Ltd ATF the Miocevich Family Trust which holds 68,904,824 fully paid ordinary shares in the Company. ** As at date of cessation *** Beginning balance is at date of appointment PERFORMANCE RIGHTS Balance beginning of year Granted as compensation Exercise Cancelled Balance year end 30 June 2026 Number Number Number Number Number Executive Trevor Raman 133,581 - - - 133,581 Tino Kapfumo 78,406 - - - 78,406 Balance beginning of year Granted as compensation Exercise Lapsed Balance year end 30 June 2025 Number Number Number Number Number Executive Trevor Raman 307,692 133,581 (102,554) (205,138) 133,581 Tino Kapfumo - 78,406 - - 78,406
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DIRECTORS’ REPORT (continued) Page 15 OTHER RELATED PARTY TRANSACTIONS The Group has two lease agreements with Voyka Pty Ltd, an entity controlled by an entity related to Mr Mark Miocevich and Mr Brad Miocevich. The Group pays Voyka Pty Ltd current monthly rent of $195,264 monthly excluding GST which is exclusive of any outgoings including rates, taxes, insurance premiums and maintenance costs. The leases end in 2029 and are on commercial terms. During the year Mr Mark Miocevich purchased goods and services worth $ 3,610 (2025: $1,156). An entity related to Mr Brad Miocevich provided services of $nil (2025: $12,057) and purchased goods and services worth $ 940 (2025: $810). All these orders were on normal commercial terms. Lumos Marketing, which is owned by a related party of Mr Mark Miocevich, provided $115,034 (2025: $112,000) of marketing services to the Group on normal commercial terms. Qback Pty Ltd, which is part owned by a related party of Mr Mark Miocevich and Mr Brad Miocevich and is part owned by Mr Mark Miocevich, provided $9,538 (2025: $13,750) of corporate services to the Group on normal commercial terms. There was one related party of Mr Mark Miocevich employed during the financial year on normal commercial terms. END OF REMUNERATION REPORT DIRECTORS’ MEETINGS The number of meetings of Directors held during the year and the number of meetings attended by each Director were as follows: Meetings Held Eligible to Attend Meetings Attended Number of meetings held: 16 Number of meetings attended: Brad Miocevich 16 15 Mark Miocevich 16 16 Michael Bailey 7 7 Peter Torre 16 15 Angus Murnaghan 16 16 David Singleton 10 10 PROCEEDINGS ON BEHALF OF THE COMPANY No person has applied for leave of court to bring proceedings on behalf of the Company or intervene in any proceedings to whi ch the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. NON-AUDIT SERVICES Details of amounts paid or payable to the auditor for non-audit services provided during the year by the auditor are outlined in Note 23 to the financial statements. The Directors are satisfied that the provision of non -audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are of the opinion that the services do not compromise the auditor’s independence as all non -audit services have been reviewed to ensure that they do not impact the impartiality and objectivity of the auditor and none of the services unde rmine the general principles relating to auditor independence as set out in Code of Conduct APES 110: Code of Ethics for Professional Accountants issued by the Accounting Professional & Ethical Standards Board. AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES Section 307C of the Corporations Act 2001 requires our auditors, HLB Mann Judd, to provide the Directors of the Company with an Independence Declaration in relation to the audit of the annual report. This Independence Declaration is set out on page 1 6 and forms part of this Directors’ report for the year ended 30 June 2026. Signed in accordance with a resolution of the Directors. Mark David Miocevich Managing Director Perth, 26 August 2026
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Page 16 AUDI TOR’S INDEPENDENCE DECLARATION A s lead auditor for the audit of the consolidated financial report of VEEM Ltd for the year ended 30 June 2026, I declare that to the best of my knowledge and belief, there have been no contraventions of: a) t he auditor independence requirements of the Corporations Act 2001 in relation to the audit; and b) any applicable code of professional conduct in relation to the audit. Pe rth, Western Australia 26 August 2026 D B Healy Partner
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CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2026 Page 17 2026 ($) 2025 ($) Notes Continuing operations Revenue 2 51,726,593 68,621,820 Government subsidies 2 72,523 44,161 Foreign exchange gains (net) 55,010 140,033 Changes in inventories of finished goods and work in progress 3,829,853 (1,358,209) Raw materials and consumables purchases (19,265,729) (24,892,089) Employee benefits expense (25,957,947) (26,798,042) Depreciation and amortisation expense (4,357,400) (4,894,031) Impairment 12 (24,800,106) - Repairs and maintenance expenses (1,501,781) (1,574,812) Occupancy expense (1,498,331) (1,560,134) Borrowing costs expense (1,002,580) (1,239,958) Other expenses 2 (3,876,280) (3,432,207) (Loss)/Profit before income tax expense (26,576,175) 3,056,532 Income tax benefit/(expense) 3 8,762,934 (37,845) Net (loss)/profit for the year (17,813,241) 3,018,687 Other comprehensive income, net of income tax Items that may be reclassified subsequently to profit or loss Cash flow hedges – effective portion of changes in fair value (59,813) 126,902 Foreign operations – foreign currency translation reserve difference (10,022) 6,611 (69,835) 133,513 Items that will not be reclassified to profit or loss - - Other comprehensive (loss)/income for the year, net of tax (69,835) 133,513 Total comprehensive (loss)/income for the year (17,883,076) 3,152,200 Earnings per share Basic (loss)/earnings per share (cents per share) Diluted (loss)/earnings per share (cents per share) 5 5 (12.40) (12.40) 2.22 2.22 The above Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2026 Page 18 2026 ($) 2025 ($) Notes ASSETS Current assets Cash and cash equivalents 7 9,373,391 813,355 Trade and other receivables 8 12,192,465 13,845,292 Inventories 9 23,209,185 26,191,531 Other assets 10 1,958,280 1,879,620 Derivative financial assets 20 98,984 18,800 Current tax assets 3 233,506 298,462 Total current assets 47,065,811 43,047,060 Non-current assets Property, plant and equipment 11 21,352,961 21,152,322 Deferred tax assets 3 8,661,729 3,238,401 Intangible assets 12 84,797 23,206,295 Right-of-use-asset 13 5,370,787 6,575,180 Total non-current assets 35,470,274 54,172,198 Total assets 82,536,085 97,219,258 LIABILITIES Current liabilities Trade and other payables 14 6,986,023 8,451,174 Borrowings – current 15 2,267,646 6,264,092 Provisions 17 4,128,536 4,064,881 Lease liabilities - current 16 2,141,255 1,875,121 Total current liabilities 15,523,460 20,655,268 Non-current liabilities Borrowings – non current 15 8,330,172 8,291,499 Deferred tax liabilities 3 4,645,434 7,985,093 Provisions 17 203,764 100,929 Lease liabilities – non current 16 4,168,045 5,893,379 Total non-current liabilities 17,347,415 22,270,900 Total liabilities 32,870,875 42,926,168 Net assets 49,665,210 54,293,090 EQUITY Issued capital 18 24,798,022 11,663,412 Reserves 19 375,710 324,959 Retained earnings 24,491,478 42,304,719 Total equity 49,665,210 54,293,090 The above Statement of Financial Position should be read in conjunction with the accompanying notes.
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2026 Page 19 Note Issued Capital $ Reserves $ Retained earnings $ Total $ At 1 July 2024 11,541,213 141,703 40,600,612 52,283,528 Profit for the year - - 3,018,687 3,018,687 Other comprehensive loss, net of income tax - 133,513 - 133,513 Total comprehensive income for the year - 133,513 3,018,687 3,152,200 Shares issued during the year 122,199 (122,199) - - Share-based payment expense recognised - 215,542 - 215,542 Performance rights lapsed - (43,600) 43,600 - Dividends paid 6 - - (1,358,180) (1,358,180) Balance at 30 June 2025 11,663,412 324,959 42,304,719 54,293,090 Loss for the year - - (17,813,241) (17,813,241) Other comprehensive loss, net of income tax - (69,835) - (69,835) Total comprehensive loss for the year - (69,835) (17,813,241) (17,883,076) Shares issued during the year 14,000,000 - - 14,000,000 Share issue costs (865,390) - - (865,390) Share-based payment expense recognised - 120,586 - 120,586 Balance at 30 June 2026 24,798,022 375,710 24,491,478 49,665,210 The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
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Page 20 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2026 2026 ($) 2025 ($) Notes Cash flows from operating activities Receipts from customers 64,451,485 64,726,474 Payments to suppliers and employees (57,320,966) (60,095,290) Government grants and subsidies received 72,523 44,161 Other receipts 236,929 51,779 Interest paid (1,002,580) (1,239,958) Interest received 153,078 500 Income tax received 64,904 58,588 Net GST paid (1,816,856) (599,796) Net cash flows provided by operating activities 7 4,838,517 2,946,458 Cash flows from investing activities Payments for property, plant and equipment (1,362,368) (931,828) Payments for intangible assets (412,791) (812,189) Proceeds from government grants 660,000 1,320,000 Proceeds from sale of property, plant & equipment 10,500 - Net cash flows used in investing activities (1,104,659) (424,017) Cash flows from financing activities Proceeds from issue of shares 14,000,000 - Share issue costs (865,390) - Dividends paid 6 - (1,358,180) Payments of lease liabilities 7 (1,887,807) (1,744,373) Proceeds from borrowings 7 2,297,219 4,112,761 Repayment of borrowings 7 (3,911,182) (3,324,713) Repayment of hire purchase liabilities 7 (2,252,092) (2,102,275) Net cash flows provided/(used) in financing activities 7,380,748 (4,416,780) Net Increase / (decrease) in cash and cash equivalents 11,114,606 (1,894,339) Cash and cash equivalents at the beginning of the year, net of overdraft (1,718,124) 170,558 Effect of exchange rate fluctuations on cash held (23,091) 5,657 Cash and cash equivalents at the end of the year, net of overdraft 7 9,373,391 (1,718,124) The above Statement of Cash Flows should be read in conjunction with the accompanying notes.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2026 Page 21 NOTE 1: STATEMENT OF MATERIAL ACCOUNTING POLICIES (a) BASIS OF PREPARATION These financial statements are consolidated general purpose financial statements of VEEM Ltd (“the Company”) and its controlled entities (“the Group”), which have been prepared in accordance with the requirements of the Corporations Act 2001, Accounting Standards and Interpretations and comply with other requirements of the law. The accounting policies detailed below have been consistently applied to all of the years presented unless otherwise stated. For the purpose of preparing the financial statements, the Group is a for-profit entity. The financial statements have been prepared on a historical cost basis except for where applicable derivative financial instruments . Historical cost is based on the fair values of the consideration given in exchange for goods and services. The Company is a listed public Company, incorporated in Australia and operating in Australia selling into domestic and global markets. The Group’s principal activities are described in the Directors’ Report. Where necessary comparatives have been amended to be consistent with current year treatment. Going concern This report has been prepared on the going concern basis, which contemplates continuity of normal business activities and the realisation of assets and settlements of liabilities in the ordinary course of business. (b) ADOPTION OF THE REVISED STANDARDS Standards and Interpretations applicable to 30 June 2026 In the year ended 30 June 2026, 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 the reporting period beginning on or after 1 July 2025. As a result of this review, the Directors have determined that there is no material impact of the Standard s and Interpretations issued on the Group and, therefore, no change is necessary to its 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 ye ar ended 30 June 2026. As a result of this review, the Directors have determined that there is no material impact of the Standards 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) STATEMENT OF COMPLIANCE The financial report was authorised for issue by the Board of VEEM Ltd on 26 August 2026. The financial report complies with Australian Accounting Standards, which include Australian equivalents to International Fin ancial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the financial report, comprising the financial statements and notes thereto, complies with International Financial Reporting Standards (IFRS). (d) SIGNIFICANT ACCOUNTING JUDGMENTS AND KEY ESTIMATES The preparation of the 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. Leases The Group has leases for the main warehouse and related facilities, an office and production building. The lease liabilities are secured by the related underlying assets. In applying AASB16 the Group used the following practical expedients: • The use of a single discount rate to a portfolio of leases with similar characteristics. • The exclusion of initial direct costs for the measurement of the right-of-use-asset at the date of initial application. • The use of hindsight in determining the lease term where the contract contains options to extend or terminate.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2026 Page 22 NOTE 1: STATEMENT OF MATERIAL ACCOUNTING POLICIES (continued) Amortisation of product development Product development is amortised based on units of production as the Board has determined that this appropriately apportions the costs of development across the units produced to meet customer orders and building of inventory to meet future orders. Recovery of deferred tax assets Deferred tax assets are recognised for deductible temporary differences as management considers that it is probable that sufficient future tax profits will be available to utilise those temporary differences. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits. Inventories Management estimates the net realisable values of inventories, taking into account the most reliable evidence available at ea ch reporting date. The future realisation of these inventories may be affected by future technology or other market-driven changes that may reduce future selling prices. Capitalisation of internally developed products Distinguishing the research and development phases of new products and determining whether the recognition requirements for the capitalisation of development costs are met requires judgement. After capitalisation, management monitors whether the recognition requirements continue to be met and whether there are any indicators that capitalised costs may be impaired. The Group assesses at each balance date whether there is an indication that an asset may be impaired. If any such indication exists, the Group makes an estimate of the asset’s recoverable amount, being the higher of its fair value less costs to sell and its value in use. The value in use requires an estimation of the recoverable amount of the cash generating units to which the assets are allocated. Impairment The Group assessed impairment using value in use ('VIU') with a discounted cashflow model over a 5 year cashflow period and a discount rate of 13.9%. Refer to Note 12 for further details. (e) SEGMENT REPORTING Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors of VEEM Ltd. The Board 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 operational 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 profit or loss and other 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. (f) FOREIGN CURRENCY TRANSLATION Both the functional and presentation currency of VEEM Ltd is Australian dollars. The functional currency of VEEM Marine (Europe) B.V is Euro. The functional currency of GMB Engineering Pvt Ltd is Indian Rupee. Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchang e ruling at the balance date. All exchange differences in the financial report are taken to profit or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. As at the balance date the assets and liabilities of the subsidiaries are translated into the presentation currency of VEEM Ltd at the rate of exchange ruling at the balance date and its statement of profit or loss and other comprehensive income is transla ted at the average exchange rate for the year.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2026 Page 23 NOTE 1: STATEMENT OF MATERIAL ACCOUNTING POLICIES (continued) The exchange differences arising on the translation are taken directly to the foreign currency translation reserve in equity. On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign oper ation is recognised in profit or loss. (g) REVENUE RECOGNITION Revenue from contracts with customers is measured at fair value of the consideration received or receivable. Amounts disclose d as revenue are net of returns, trade allowances, rebates and amounts collected on behalf of third parties. Contract liabiliti es are recognised where applicable in relation to sales. Point in time recognition - sale of goods – propulsion & stabilisation Revenue is recognised when the goods are delivered and titles have passed, at which time all the following conditions are satisfied: • the Group has transferred to the buyer the significant risks and rewards of ownership of the goods; • the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; • the amount of revenue can be measured reliably; • it is probable that the economic benefits associated with the transaction will flow to the Group; and • the costs incurred or to be incurred in respect of the transaction can be measured reliably. Over time recognition - Sale of goods and rendering of services - mining & industrial engineering, propulsion & stabilisation and defence In determining whether performance obligations are satisfied over time the Group considers the following: • Legal control is often retained by the customer; • VEEM products and services are highly specialised and often do not have an alternate use; and • Contracts are established with customers so that VEEM has an enforceable right to payment for performance completed to date, including profit margin. Revenue is recognised by reference to the stage of completion of the performance obligation. The stage of completion of the performance obligation is determined as follows: • Contract income is recognised by reference to the total actual costs incurred at the end of the reporting period relative to the proportion of the total costs expected to be incurred over the life of the performance obligation; • Servicing fees are recognised by reference to the proportion of the total cost of providing the service for the product sold; and • Revenue from time and material contracts are recognised at the contractual rates as labour hours are delivered and direct expenses are incurred. (h) LEASES Where the Group is a lessee, the Group recognises a right-of-use asset and a corresponding liability at the date which the lease asset is available for use by the Group (i.e., commencement date). Each lease payment is allocated between the liability and the finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a consistent period rate of interest on the remaining balance of the liability for each period. The lease liability is initially measured at the present value of the lease payments that are not paid at commencement date, discounted using the rate implied in the lease. If this rate is not readily determinable, the Group uses its incremental borrowing rate. Lease payments included in the initial measurement of the lease liability consist of: • Fixed lease payments less any lease incentives receivable; • Variable lease payments that depend on an index or rate, initially measured using the index or rate at commencement date; • Any amounts expected to be payable by the Group under residual value guarantees; • The exercise price of purchase options, if the Group is reasonably certain to exercise the options; and • Termination penalties of the lease term reflect the exercise of an option to terminate the lease. Extension options are included in a number of property leases across the Group. In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option. Extension options are only included in the lease term if, at commencement date, it is reasonably certain that the options will be exercised.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2026 Page 24 NOTE 1: STATEMENT OF MATERIAL ACCOUNTING POLICIES (continued) Subsequent to initial recognition, the lease liability is measured by increasing the carrying amount to reflect interest on t he lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made. The l ease liability is remeasured (with a corresponding adjustment to the right-of-use asset) whenever there is a change in the lease term (including assessments relating to extension and termination options), lease payments due to changes in an index or rate, or expected payments under guaranteed residual values. Right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before commencement date, less any lease incentives received and any initial direct costs. These right -of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses. Where the terms of a lease require the Group to restore the underlying asset, or the Group has an obligation to dismantle and remove a leased asset, a provision is recognised and measured in accordance with AASB 137. To the extent that the costs relate to a right-of-use asset, the costs are included in the related right-of-use asset. Right-of-use assets are depreciated on a straight-line basis over the term of the lease (or the useful life of the leased asset if this is shorter). Depreciation starts on commencement date of the lease. Where leases have a term of less than 12 months or relate to low value assets, the Group has applied the optional exemptions to not capitalise these leases and instead account for the lease expense on a straight-line basis over the lease term. (i) INCOME TAX The income tax expense or benefit for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary difference and to unused tax losses. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance date. Deferred income tax is provided on all temporary differences at the balance date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognised for all taxable temporary differences except: • when the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or • when the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary di fferences and the carry-forward of unused tax credits and unused tax losses can be utilised, except: • when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss. The carrying amount of deferred income tax assets is reviewed at each balance date and reduced to the extent that it is no lo nger probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each balance date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asse t is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance date.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2026 Page 25 NOTE 1: STATEMENT OF MATERIAL ACCOUNTING POLICIES (continued) Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss. Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority. (j) IMPAIRMENT OF TANGIBLE AND INTANGIBLE ASSETS The Group assesses at each balance date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of its fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets and the asset's value in use cannot be estimated to be close to its fair value. In such cases the asset is tested for impairment as part of the cash -generating unit to which it belongs. When the carrying amount of an asset or cash -generating unit exceeds its recoverable amount, the asset or cash-generating unit is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre -tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses relatin g to continuing operations are recognised in those expense categories consistent with the function of the impaired asset unless th e asset is carried at revalued amount (in which case the impairment loss is treated as a revaluation decrease). An assessment is also made at each balance date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previousl y recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to it s recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase. After such a reversal the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, o n a systematic basis over its remaining useful life. (k) TRADE AND OTHER RECEIVABLES Trade receivables are measured on initial recognition at fair value and are subsequently measured at amortised cost using the effective interest rate method, less any allowance for impairment. Trade receivables are generally due for settlement within periods ranging from 15 days to 90 days after the month in which they arise. Impairment of trade receivables is continually reviewed and those that are considered to be uncollectible are written off by reducing the carrying amount directly. An allowance account is used when there is objective evidence that the Group will not be able to collect all amounts due according to the original contractual terms. Factors considered by the Group in making this determination include known significant financial difficulties of the debtor, review of financial information and significant delinquency in making contractual payments to the Group. The impairment allowance is set equal to the difference between the carrying amount of the receivable and the present value of estimated future cash flows, discounted at the original effective interest rate. Where receivables are short -term discounting is not applied in determining the allowance. The amount of the impairment loss is recognised in the statement of profit or loss and other comprehensive income within othe r expenses. When a trade receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in the statement of profit or loss and other comprehensive income. (l) INVENTORIES Raw material, stores and work in progress Raw materials, stores and work in progress are stated at the lower of cost and net realisable value. Cost comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the bas is of normal operating capacity. Costs are assigned to individual items of stock mainly on the basis of average cost. Contract work in progress Contract work in progress is stated at cost plus attributable profit to date (based on percentage of completion of each contract) less progress billings. Cost includes all costs directly related to specific contracts and an allocation of overhead expenses incu rred in connection with the Group’s contract operations. Where a loss on completion is indicated that loss is brought to account in the current year. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion an d the estimated costs necessary to make the sale.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2026 Page 26 NOTE 1: STATEMENT OF MATERIAL ACCOUNTING POLICIES (continued) (m) DERECOGNITION OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES Financial assets A financial asset (or, where applicable, a part of a financial asset or part of a Group of similar financial assets) is de-recognised when: • the rights to receive cash flows from the asset have expired; • the Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a ‘pass-through’ arrangement; or • the Group has transferred its rights to receive cash flows from the asset and either: - has transferred substantially all the risks and rewards of the asset; or - has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. When the Group has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Group’s continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration received that the Group could be required to repay. When continuing involvement takes the form of a written and/or purchased option (including a cash -settled option or similar provision) on the transferred asset, the extent of the Group’s continuing involvement is the amount of the transferred asset that the Group may repurchase, except that in the case of a written put option (including a cash -settled option or similar provision) on an asset measured at fair value, the extent of the Group’s continuing involvement is limited to the lower of the fair value of the transferred asset and the option exercise price. Financial liabilities A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the ter ms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss. (n) PROPERTY, PLANT AND EQUIPMENT Plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses. Such cost includes the cost of replacing parts that are eligible for capitalisation when the cost of replacing the parts is incurred. Similarly, when each major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement only if it is eligible for capitalisation. Depreciation is calculated on a straight-line basis over the estimated useful life of the assets as follows: Motor vehicles 3-10 years Plant and equipment 5-20 years Computer equipment 3-5 years The assets' residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each financial year end. Impairment The carrying values of plant and equipment are reviewed for impairment at each balance date, with recoverable amount being estimated when events or changes in circumstances indicate that the carrying value may be impaired. The recoverable amount of plant and equipment is the higher of fair value less costs to sell and value in use. In assessing v alue in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, recoverable amount is determined for the cash -generating unit to which the asset belongs, unless the asset's value in use can be estimated to approximate fair value. An impairment ex ists when the carrying value of an asset or cash -generating unit exceeds its estimated recoverable amount. The asset or cash - generating unit is then written down to its recoverable amount.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2026 Page 27 NOTE 1: STATEMENT OF MATERIAL ACCOUNTING POLICIES (continued) For plant and equipment, impairment losses are recognised in the statement of profit or loss and other comprehensive income. De-recognition and disposal An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is derecognised. (o) INTANGIBLE ASSETS Intangible assets acquired separately Intangible assets acquired separately are recorded at cost less accumulated amortisation and impairment. Amortisation is charged on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method is reviewed at the end of each annual reporting period, with any changes in these accounting estimates being accounted for on a prospective basis. Internally generated intangible assets Expenditure on research activities is recognised as an expense in the period in which it is incurred. Where no internally gen erated intangible asset can be recognised, development expenditure is recognised as an expense in the period as incurred. An intangible asset arising from development (or from the development phase of an internal project) is recognised if, and only if, all of the following have been demonstrated: • The technical feasibility of completing the intangible asset so that it will be available for use or sale; • The intention to complete the intangible asset and use or sell it; • The ability to use or sell the intangible asset; • How the intangible asset will generate probable future economic benefits; • The availability of adequate technical, financial and other resources to complete development and to use or sell the intangible asset; and • The ability to measure reliably the expenditure attributable to the intangible asset during its development. The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Subsequent to initial recognition, internally -generated intangible assets are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets acquired separately. The following useful lives are used in the calculation of amortisation: Patents 2 – 10 years Product Development Expenditure Units of production Software 10 years Right-of-use assets A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the cost of inventorie s, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset. Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the asset, whichever is the shorter. Where the Group expects to obtain ownership of the leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right -of-use assets are subject to impairment or adjusted for any remeasurement of lease liabilities. The Group has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as incurred.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2026 Page 28 NOTE 1: STATEMENT OF MATERIAL ACCOUNTING POLICIES (continued) (p) TRADE AND OTHER PAYABLES Trade payables and other payables are carried at amortised cost and represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. Trade and other payables are presented as current liabilities unless payment is not due within 12 months. (q) BORROWINGS Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in pro fit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilit ies are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of t he facility to which it relates. Borrowings are removed from the statement of financial position when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other income or finance costs. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period. (r) PROVISIONS Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not recognised for future operating losses. When the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of profit or loss and other comprehensive income net of any reimbursement. Provisions are measured at the present value or management’s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. If the effect of the time value of money is material, provisions are discounted using a current pre -tax rate that reflects the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as an interest expense. Onerous contracts Present obligations arising under onerous contracts are recognised and measured as provisions. An onerous contract is considered to exist where the Group has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received from the contract. Warranties Provisions for the expected cost of warranty obligations under local sale of goods legislation are recognised at the date of sale of the relevant products, at the Directors’ best estimate of the expenditure required to settle the Group’s obligation. Commissioning Costs Provisions for the expected cost of commissioning gyrostabilisers are recognised where the sale is inclusive of commissioning. Lease restoration provision A provision has been made for the present value of anticipated costs for future restoration of leased premises. The provision includes future cost estimates associated with the end of the lease term. The calculation of this provision requires assumptions such as application of end dates and cost estimates. The provision recognised for each site is periodically reviewed and updated base d on the facts and circumstances available at the time. Changes to the estimated future costs for sites are recognised in the stat ement of financial position by adjusting the asset and the provision. Reductions in the provision that exceed the carrying amount o f the asset will be recognised in profit or loss.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2026 Page 29 NOTE 1: STATEMENT OF MATERIAL ACCOUNTING POLICIES (continued) Annual leave The liability for annual leave is measured as the value of the expected future payments to be made in respect of services provided by employees up to the balance date. Long service leave The liability for long service leave is measured as the present value of expected future payments to be made in respect of services provided by employees up to the balance date. Consideration is given to expected future wage and salary levels, experience of employee departures and period of service. Expected future payments are discounted using market yields at the balance date on national government bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows. (s) DIVIDENDS Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period. (t) EARNINGS PER SHARE Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude any costs of servicing equity (other than dividends), divided by the weighted average number of ordinary shares, adjusted for any bonus element. Diluted earnings per share are calculated, where applicable, as net profit attributable to members of the parent, adjusted for: • costs of servicing equity (other than dividends); • the after-tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and • other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares; divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element. (u) DERIVATIVE FINANCIAL INSTRUMENTS Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently rem easured to their fair value at each reporting date. The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. Cash flow hedges: Cash flow hedges are used to cover the Group's exposure to variability in cash flows that is attributable to particular risks associated with a recognised asset or liability or a firm commitment which could affect profit or loss. The effective portion of the gain or loss on the hedging instrument is recognised in other comprehensive income through the cash flow hedge reserve in equity, whilst the ineffective portion is recognised in profit or loss. Amounts taken to equity are transferred out of equity and included in th e measurement of the hedged transaction when the forecast transaction occurs. Cash flow hedges are tested for effectiveness on a regular basis both retrospectively and prospectively to ensure that each h edge is highly effective and continues to be designated as a cash flow hedge. If the forecast transaction is no longer expected to occur, the amounts recognised in equity are transferred to profit or loss. If the hedging instrument is sold, terminated, expires, exercised without replacement or rollover, or if the hedge becomes ineffective and is no longer a designated hedge, the amounts previously recognised in equity remain in equity until the forecast tran saction occurs. The Group subsequently measures derivative financial instruments at fair value. Gains and losses on derivative financial instruments that do not qualify for hedge accounting are recognised in the Profit and Loss for the period. Amounts recognised in equity are reclassified from reserves into the cost of the underlying transaction and recognised in the Profit and Loss when the underlying transactions affects the Profit and Loss. The ineffective portion of any change in the fair value of the instrument is recognised in the Profit and Loss immediately. Where a derivative financial instrument is designated as a fair value hedge changes in the fair value of the underlying asset or liability attributable to the hedge risk , and gains and losses on the derivative financial instrument are recognised in the Profit and Loss for the period.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2026 Page 30 NOTE 1: STATEMENT OF MATERIAL ACCOUNTING POLICIES (continued) (v) BASIS OF CONSOLIDATION Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. A list of controlled entities is contained in Note 22 to the financial statements. As at reporting date, the assets and liabilities of all controlled entities have been incorporated into the consolidated fina ncial statements as well as their results for the year then ended. The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of profit or l oss and other comprehensive income from the effective date of acquisition and up to the effective date of disposal, as appropriate. The acquisition method of accounting is used to account for business combinations by the Group. Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting pol icies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of profit or loss and other comprehensive income, statement of changes in equity and statement of financial position respectively. Changes in the Group’s interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non -controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non -controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company. When the Group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. Amounts previously recognised in other comprehensive income in relation to the subsidiary are accounted for (i.e. reclassified to profit or loss or transferred dire ctly to retained earnings) in the same manner as would be required if the relevant assets or liabilities were disposed of. (w) GOVERNMENT GRANTS The Group recognises grants only when there is a reasonable assurance that the Group will comply with any conditions attached to the grant and that the grant will be received. Government grants related to assets are recognised as a reduction to the capital cost of the asset, reducing depreciation recorded over the asset’s useful life. NOTE 2: REVENUE AND EXPENSES Revenue from contracts with customers 2026 ($) 2025 ($) Sales revenue • Revenue – point in time 451,353 9,978,107 • Revenue – over time 51,038,311 58,591,934 51,489,664 68,570,041 Other revenue 236,929 51,779 51,726,593 68,621,820 Government Subsidies • Apprentice subsidies • Government subsidies 69,016 3,507 39,661 4,500 72,523 44,161 During the year, the Group recognised revenue of $16,183,112 (2025: $11,391,064) in relation to the prior years’ work in progress. The Group has progress billings at 30 June 2026 of $8,662,992 (2025: $1,908,203), refer to Note 9.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2026 Page 31 NOTE 2: REVENUE AND EXPENSES (continued) The Group has contract assets, being work in progress (recognised over time) at 30 June 2026 of $10,857,118 (2025: $8,863,804). The Group recognises revenue from contracts with customers based on the following performance: - the completion of the contracted work-scope following factory acceptance testing in accordance with contract terms and conditions; and - when applicable, completion of contracted milestones and transfer of title generally based on milestone 1 - material acquisition, and/or milestone 2 - completion of casting metal pour, and/or milestone 3 - factory acceptance testing (FAT) The majority of customer contracts are from the private sector and this accounted for approximately 88% (2025: 90%) of the revenue during FY2026. Sales to government instrumentalities accounted for 12% (2025: 10%). The geographic distribution of sales for FY2026 was approximately 58% (2025: 55%) derived from customers within Australia and the remaining 42% (2025: 45%) were derived predominantly from customers in the USA, Sweden, Italy and UK. Contracts are received and executed generally within 12 months and hence are considered short term contracts. Period contract s (those that extend greater than 1 year) with customers are executed by discrete purchase orders for required shipments and hence still fall within the definition for short term contracts. The majority of sales are generated by direct contracts with customers. During the year sales agents were utilised in Europe, MENA, Hong Kong, Turkey and South America (gyrostabilisers only) to introduce enquiries and leads. Contracts are then established directly between VEEM Ltd and the customer. Distributors are utilised for propeller sales in the USA, France , Costa Rica and Australia, where the distributors purchase from and contract directly with VEEM Ltd. Other expenses 2026 ($) 2025 ($) Insurance 566,995 554,155 Advertising and marketing 1,689,503 952,575 Bank Charges 71,346 69,769 Accounting and secretarial 401,790 417,188 Non-executive director fees 404,132 393,109 Share based payments 120,586 215,542 Other general expenses 621,928 829,869 3,876,280 3,432,207 NOTE 3: INCOME TAX Income tax recognised in profit or loss The major components of tax expense are: 2026 ($) 2025 ($) Current tax (benefit)/expense (7,042,612) 1,838,939 Deferred tax (benefit)/expense relating to the origination and reversal of temporary differences (1,720,322) (1,801,094) Total tax (benefit)/expense (8,762,934) 37,845
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2026 Page 32 NOTE 3: INCOME TAX (continued) 2026 ($) 2025 ($) The prima facie income tax expense on pre-tax accounting profit from operations reconciles to the income tax expense in the financial statements as follows: Accounting (loss)/profit before income tax (26,576,175) 3,056,532 Income tax (benefit)/expense calculated at FY2025: 30% (FY2024: 30%) (7,972,853) 916,960 Tax effect of amounts which are not deductible/(taxable) in calculating taxable income: • Prior year (over)/under provision of income tax 40 - • Effect of expenses that are not deductible in determining taxable profit 930,241 921,979 • Effect of concessions – research and development (1,720,362) (1,801,094) Income tax (benefit)/expense reported in the statement of profit or loss and other comprehensive income (8,762,934) 37,845 The tax rate used in the above reconciliation is the corporate tax rate of 30% payable by Australian corporate entities with turnover greater than $50 million on taxable profits under Australian tax law. Current tax receivables comprise: 2026 ($) 2025 ($) Income tax receivable/(payable) 233,506 298,462 Deferred tax assets comprise: Annual leave payable 702,990 676,518 Provisions 541,531 542,946 Accrued expenses 117,747 253,041 Timing difference between Right of Use assets and Lease liabilities 342,683 388,275 Unrealised foreign exchange gain 91,024 - Patents 97,090 - Tax Losses 4,593,064 - Unclaimed research and development concessions 2,175,600 1,377,621 8,661,729 3,238,401 Deferred tax liabilities comprise: Depreciable property, plant and equipment 4,645,434 7,846,152 Prepayments - 80,264 Patents - 8,356 Unrealised foreign exchange loss - 50,321 4,645,434 7,985,093 Reconciliation of deferred tax assets/ (liabilities): Opening balance Charged to income Closing balance 30 June 2026 ($) ___ ($) ($) Accrued expenses 253,041 (135,294) 117,747 Annual leave payable 676,518 26,472 702,990 Provisions 542,946 (1,415) 541,531 Property, plant and equipment (7,846,152) 3,200,718 (4,645,434) Prepayments (80,264) 80,264 - Unrealised foreign exchange (gain) / loss (50,321) 141,345 91,024 Patents (8,356) 105,446 97,090 Unclaimed research and development concessions 1,377,621 797,979 2,175,600 Tax Losses - 4,593,064 4,593,064 Timing difference between Right of Use assets and Lease Liabilities 388,275 (45,592) 342,683 (4,746,692) 8,762,987 4,016,295
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2026 Page 33 NOTE 3: INCOME TAX (continued) Opening balance Charged to income Closing balance 30 June 2025 ($) _($)__ ($) ($) Accrued expenses 140,022 113,019 253,041 Annual leave payable 655,288 21,230 676,518 Provisions 534,253 8,693 542,946 Property, plant and equipment (7,549,119) (297,033) (7,846,152) Unrealised foreign exchange (gain) / loss - (80,264) (80,264) Black hole expenditure and borrowing costs (8,565) (41,756) (50,321) Patents 43 (43) - Losses carried forward 39,535 (47,891) (8,356) Unclaimed research and development concessions 1,086,537 291,084 1,377,621 Timing difference between Right of Use assets and Lease liabilities 395,006 (6,731) 388,275 (4,707,000) (39,692) (4,746,692) NOTE 4: SEGMENT REPORTING Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors of VEEM Ltd. The Board has determined the operating segments based on the reports reviewed by the Board of Directors that are used to make strategic decisions. The Board of Directors review internal management reports on a monthly basis that are consistent with the information provided in the statement of profit or loss and other 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 3 customers (2025: nil) where the revenue from those customers was in excess of 10% of the Group’s revenue. Although the Group is managed as a single business segment, sales revenue of $ 51.5 million (2025: $68.6 million) can be broken down into the following sales categories. Propulsion and stabili sation consist of the manufacture of new propellers, shaft lines, gyrostabilisers, and marine ride control fins. The sales in this category were $30.6 million (2025: $44.6 million). Defence related sales for FY2026 totalled $12.3 million (2025: $15.6 million) with $5.7 million (2025: $8.2 million) of those sales being both within the defence and propulsion/stabili sation categories. Sales of engineering products and services (non -defence) for FY202 6 were $14.3 million (2025: $16.7 million). NOTE 5: EARNINGS PER SHARE Basic and diluted earnings per share 2026 2025 Cents per share Cents per share Basic (loss)/earnings per share (12.40) 2.22 Diluted (loss)/earnings per share (12.40) 2.22 The earnings and weighted average number of ordinary shares used in the calculation of basic and diluted earnings per share is as follows: 2026 ($) 2025 ($) Earnings Earnings from continuing operations (17,813,241) 3,018,687 Number Number Weighted average number of ordinary shares for the purpose of basic earnings per share 143,666,126 135,844,492 Effect of dilution - - Weighted average number of ordinary shares on issue adjusted for the effect of dilution 143,666,126 135,844,492
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2026 Page 34 NOTE 6: DIVIDENDS 2026 ($) 2025 ($) Fully franked dividends paid - - Unfranked dividends paid - 1,358,180 Total dividends paid - 1,358,180 Balance of franking account at period end adjusted for franking credits arising from the payment of provision for income tax and dividends recognised as receivables, franking debits arising from payment of proposed dividends and franking credits may be prevented from distribution in a subsequent financial year. - - NOTE 7: CASH AND CASH EQUIVALENTS 2026 ($) 2025 ($) Cash on hand 800 800 Cash at bank 9,372,591 812,555 Cash and cash equivalent in the statement of financial position 9,373,391 813,355 Bank overdraft (Note 15) - (2,531,479) Cash and cash equivalent in the statement of cash flows 9,373,391 (1,718,124) Cash at bank earns interest at floating rates based on daily bank deposit rates. Reconciliation to the Statement of Cash Flows: For the purposes of the statement of cash flows, cash and cash equivalents comprise cash on hand and at bank and investments in money market instruments, net of outstanding bank overdrafts. Non-cash financing and investing activities The Group purchased assets with a value of $2,420,517 (2025: $825,282) which were financed through hire purchase and asset finance facilities. Cash balances not available for use All cash balances are available for use. Reconciliation of profit for the year to net cash flows from operating activities 2026 ($) 2025 ($) Net (loss)/profit for the year (17,813,241) 3,018,687 Adjusted for non-cash items Depreciation and amortisation expense 4,357,400 4,894,031 Impairment 24,800,106 - Profit/(loss) on sale/disposal of assets (10,500) - Foreign exchange (gain)/loss (55,010) (140,033) Share based payments 120,586 215,542 Changes in operating assets and liabilities Trade and other receivables 1,652,827 (640,791) Inventories (includes change in progress billings) 2,982,346 (3,940,280) Trade and other payables (2,448,797) (847,505) Provisions 63,655 99,746 Current and deferred tax (8,698,030) 310,304 GST payable (112,825) (23,243) Net cash inflow from operating activities 4,838,517 2,946,458
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2026 Page 35 NOTE 7: CASH AND CASH EQUIVALENTS (continued) Changes in liabilities arising from financing activities Bank loans ($) Hire Purchase liability ($) Lease liability ($) Total ($) Balance as at 30 June 2004 5,767,795 6,770,349 9,440,957 21,979,101 Net cash from (used in) financing activities 762,961 (2,102,275) (1,744,373) (3,083,687) Remeasurement of lease liability - - 71,916 71,916 Acquisition of plant and equipment by means of hire purchase - 825,282 - 825,282 Balance as at 30 June 2025 6,530,756 5,493,356 7,768,500 19,792,612 Net cash from/ (used in) financing activities (1,613,963) (2,252,092) (1,887,807) (5,753,862) Acquisition of plant and equipment by means of finance 1,987,180 452,581 - 2,439,761 Remeasurement of lease liabilities - - 428,607 428,607 Balance as at 30 June 2026 6,903,973 3,693,845 6,309,300 16,907,118 NOTE 8: TRADE AND OTHER RECEIVABLES 2026 ($) 2025 ($) Trade receivables (a) 12,130,242 13,808,275 Other receivables 62,223 37,017 12,192,465 13,845,292 (a) the credit period on sales of goods and rendering of services is 15-90 days after the month in which they arise. Aging of past due but not impaired 2026 ($) 2025 ($) 60 – 90 days 6,530 373,070 90 – 120 days 396,049 171,423 Total 402,579 544,493 Expected credit losses The Group applies the AASB 9 simplified model of recognising lifetime expected credit losses for all trade receivables as these items do not have a significant financing component. In measuring the expected credit losses, the trade receivables have been assessed on a collective basis as they possess shared credit risk characteristics. They have been grouped based on the days past due and also according to the geographical location of customers. The expected loss rates are based on the payment profile for sales over the past 48 months before 30 June 2026 and 30 June 2025 respectively as well as the corresponding historical credit losses during that period. The historical rates are adjusted to reflect current and forwarding looking macroeconomic factors affecting the customer’s ability to settle the amount outstanding. Trade receivables are written off when there is no reasonable expectation of recovery. Failure to make payments within 180 days from the invoice date and failure to engage with the Company on alternative payment arrangements are considered indicators of low reasonable expectation of recovery. During the period $nil of receivables were written off (2025: $nil). Where commercially sensible and available, VEEM Ltd takes out credit insurance against its overseas receivables. On the above basis, a provision for expected credit losses as at 30 June 2026 is not required as it is not material to the financial statements (30 June 2025: Nil).
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2026 Page 36 NOTE 9: INVENTORIES 2026 ($) 2025 ($) Work in progress – over time 10,857,118 8,863,804 Work in progress – point in time 5,679,992 4,937,077 16,537,110 13,800,881 Less: progress billings (8,662,992) (1,908,203) 7,874,118 11,892,678 Goods for resale, raw materials and stores 15,335,067 14,298,853 23,209,185 26,191,531 During the year, the Group recognised revenue of $16,183,112 (2025: $11,391,064) in relation to the prior years’ work in progress. During the year $0.6m in obsolete and unusable gyro stock was identified as a result of the launch of the Mark III gyro which has been impaired. NOTE 10: OTHER ASSETS 2026 ($) 2025 ($) Prepayments 462,431 1,242,378 Suppliers paid in advance 1,495,849 637,242 1,958,280 1,879,620 NOTE 11: PROPERTY, PLANT AND EQUIPMENT Plant and Equipment Motor Vehicles Capital Work in Progress Computer Equipment Total ($) ($) ($) ($) ($) As at 30 June 2025 Cost 54,345,906 736,968 85,195 1,878,953 57,047,022 Accumulated depreciation (33,561,137) (587,222) - (1,746,341) (35,894,700) Closing carrying amount 20,784,769 149,746 85,195 132,612 21,152,322 Year ended 30 June 2026 Opening carrying amount 20,784,769 149,746 85,195 132,612 21,152,322 Additions 1,922,185 104,306 465,634 62,628 2,554,753 Transfers 430,165 - (430,165) - - Depreciation charge (2,284,903) (32,961) - (36,250) (2,354,114) Closing carrying amount 20,852,216 221,091 120,664 158,990 21,352,961 As at 30 June 2026 Cost 56,698,254 757,893 120,664 1,941,581 59,518,392 Accumulated Depreciation (35,846,038) (536,802) - (1,782,591) (38,165,431) Carrying amount 20,852,216 221,091 120,664 158,990 21,352,961
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2026 Page 37 NOTE 12: INTANGIBLE ASSETS Other Intellectual Property Product Development Total ($) ($) ($) As at 30 June 2025 Cost 1,483,103 26,998,658 28,481,761 Accumulated amortisation (1,130,855) (4,144,611) (5,275,466) Closing carrying amount 352,248 22,854,047 23,206,295 Year ended 30 June 2026 Opening carrying amount 352,248 22,854,047 23,206,295 Net additions - 1,322,219 1,322,219 Amortisation charge (267,451) - (267,451) Impairment - (24,176,266) (24,176,266) Closing carrying amount 84,797 - 84,797 As at 30 June 2026 Cost 1,483,103 27,830,885 29,313,988 Accumulated amortisation and impairment (1,398,306) (27,830,885) (29,229,191) Carrying amount 84,797 - 84,797 Impairment The Group performs impairment testing of its intangible assets when indicators of impairment exist. At 31 December 2025 it was determined there were indicators of impairment of the gyro capitalised product development costs as a result of the low levels of sales in 1HFY26 compared to budget. For impairment testing purposes the Group identified the CGU which is the smallest identifiable group of assets that generate cash flows largely independent of cash inflows of other assets or group of assets. For the year ended 30 June 2026, the Group applied a value in use (‘VIU’) discounted cash flow methodology to assess the recoverable amount of the capitalised development costs. The inputs to the valuation included 5-year cash flows and a discount rate of 13.9%. The estimated recoverable amount of the capitalised development cost CGU is $24.8m below the carrying value. The total impairment expense of $24.2m was allocated across the CGU assets excluding any assets where impairment would reduce the carrying amount below the fair value. The discount rate used in the impairment test reflects current market assessment of the time value of money, risk-adjusted cash flows and other risks specific to the relevant market in which the CGU operates. The forecast cash flows are derived from management approved profit and cash flow forecasts and do not include restructuring activities that the Group has not yet committed to or possible future investments. In developing forecast cash flows, management has considered and used a range of judgements and assumptions relating to forecast sales, revenue growth including competitor activity and overhead costs. An increase in the discount rate of 1% to 14.9% would result in a reduction of VIU of $90k. As a result of the impairment assessment, $0.6m in obsolete and unusable stock (Refer note 9) was identified as a result of the launch of the Mark III gyro which has been impaired bringing total impairment to $24.8m.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2026 Page 38 NOTE 13: RIGHT-OF-USE ASSETS 2026 ($) 2025 ($) As at 30 June 2026 Cost 17,143,544 16,612,103 Accumulated depreciation (11,772,757) (10,036,923) Carrying amount 5,370,787 6,575,180 Reconciliation - Premises 2026 ($) 2025 ($) Opening balance 6,575,180 8,225,199 Remeasurement of lease liability (a) 23,999 71,916 Lease modification (b) 404,608 - Remeasurement of lease restoration (c) 102,835 - Depreciation (1,735,835) (1,721,935) Closing balance 5,370,787 6,575,180 (a) A rent review during the 2026 financial year required a re-measurement of the lease liability which resulted in an increase in the lease liability and right of use asset of $23,999. (b) In June 2026 the factory extension was completed and handed over to VEEM. This increased floor space was a modification to the lease which resulted in an increase in the lease liability and right of use asset of $404,608. (c) A remeasurement of the lease restoration provision resulted in an increase in the right of use asset and provision for restoration of $102,835. NOTE 14: TRADE AND OTHER PAYABLES (CURRENT) 2026 ($) 2025 ($) Trade payables (a) 4,811,625 5,420,611 Net GST payable 176,890 289,715 Other creditors 1,997,508 2,740,848 6,986,023 8,451,174 (a) Trade payables are non-interest bearing and are normally settled on 30-day terms. Information regarding the interest rate, foreign exchange and liquidity risk exposure is set out in Note 20. NOTE 15: BORROWINGS 2026 ($) 2025 ($) Current Overdraft (a) - 2,531,479 Trade Loan Facility (b) - 1,530,756 Asset finance facility (d) 348,582 - Hire purchase liability 2,128,034 2,514,067 Less: Unexpired charges (208,970) (312,210) 2,267,646 6,264,092 Non-current Loan facility – Daily Rate (c) 5,000,000 5,000,000 Asset finance facility (d) 1,555,392 - Hire purchase liability 1,922,196 3,562,864 Less: Unexpired charges (147,416) (271,365) 8,330,172 8,291,499
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2026 Page 39 NOTE 15: BORROWINGS (continued) (a) The Group has an Overdraft Facility with a limit of $4,000,000 which was unchanged during the financial year. 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 30 June 2026, the Group had available $4,000,000 of undrawn overdraft facilities (June 2025: $2,531,479). In addition, there is an Electronic Payments Facility with a limit of $300,000. At 30 June 2026, the Group had available $300,000 under this facility (June 2025: $300,000). (b) The Group has a trade loan facility to support its import trade arrangements. The facility had a limit of $3,100,000 and each drawdown is repayable in 150 days. Interest is at the base rate plus 1. 25% per annum. A line fee of 0. 75% per annum of the Facility Limit is payable quarterly in arrears. (c) 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 2027. Interest at the base rate plus 1.65% per annum is charged and paid monthly. The interest rate is currently at 6.01% (June 2025: 5.31%). The facility is fully drawn and is reviewed on an annual basis. (d) During the financial year the Group obtained an asset finance facility of $ 1,960,000 to facilitate the settlement of the purchase of a 3D printer. Interest is 6.21% per annum. The loan terminates on 29 April 2031. The 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. Financing facilities available At balance date, the following financing facilities had been negotiated and were available: The carrying value of plant and equipment held under hire purchase contracts and asset finance facilities at 30 June 2026 is $10,367,784 (2025: $9,493,827). Additions during the year include $2,420,517 (2025: $825,282) of plant and equipment held under hire purchase contracts and asset finance facilities. 2026 ($) 2025 ($) Total facilities • Overdraft facility 4,000,000 4,000,000 • Loan facility – Daily Rate 5,000,000 5,000,000 • Trade Loan facility 3,100,000 3,100,000 • Asset finance facility 1,903,973 - • Electronic payments facility 300,000 300,000 • Commercial card facility 100,000 100,000 14,403,973 12,500,000 Facilities used at balance date • Overdraft facility - 2,531,479 • Loan facility – Daily Rate 5,000,000 5,000,000 • Trade Loan facility - 1,530,756 • Asset finance facility 1,903,973 - • Electronic payments facility - - • Commercial card facility - - 6,903,973 9,062,235 Facilities unused at balance date • Overdraft facility 4,000,000 1,468,521 • Loan facility – Daily Rate - - • Trade Loan facility 3,100,000 1,569,244 • Asset finance facility - - • Electronic payments facility 300,000 300,000 • Commercial card facility 100,000 100,000 7,500,000 3,437,765 Total facilities • Facilities used at balance date 6,903,973 9,062,235 • Facilities unused at balance date 7,500,000 3,437,765 14,403,973 12,500,000
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2026 Page 40 NOTE 16: LEASE LIABILITIES 2026 ($) 2025 ($) Current liabilities 2,141,255 1,875,121 Non-current liabilities 4,168,045 5,893,379 6,309,300 7,768,500 Reconciliation – Leased Premises 2026 ($) 2025 ($) Opening Balance 7,768,500 9,440,957 Principal repayments (1,887,807) (1,744,373) Lease modification 404,608 - Remeasurement of lease liability 23,999 71,916 Closing balance 30 June 2026 6,309,300 7,768,500 The average lease term to expiry is 4 years. Underlying assets serve as security for the related lease liabilities. A maturity analysis of future minimum lease payments is presented below: Lease payments due 30 June 2026 <1 year 1-5 years >5 years Total $ $ $ $ Net present values 2,141,255 4,168,044 - 6,309,299 Interest 192,560 145,715 - 338,275 Lease payments 2,333,815 4,313,759 - 6,647,574 Total cash outflow relating to leases for the period ended 30 June 2026 was $2,128,746 (202 5: $2,045,314) of which $1,887,807 (202 5: $1,744,373) related to principal payments and $240,939 (2025: $300,941) related to interest. NOTE 17: PROVISIONS 2026 ($) 2025 ($) Current Annual Leave 2,323,432 2,255,060 Long service leave 1,636,925 1,612,305 After sales 107,100 115,600 Commissioning 61,079 81,916 4,128,536 4,064,881 Non-Current Lease restoration 203,764 100,929 203,764 100,929 2026 ($) 2025 ($) Employee benefits (a) Balance at beginning of year 3,867,365 3,549,697 Net movements 92,992 317,668 Balance at the end of year - Current 3,960,357 3,867,365 (a) The provision for employee benefits represents annual and long service leave entitlements accrued. Provision for restoration Balance at beginning of year 100,929 100,929 Net movements 102,835 - Balance at the end of the year - Non-current 203,764 100,929
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2026 Page 41 NOTE 17: PROVISIONS (continued) Provision for after sales Balance at beginning of year 115,600 294,061 Net movements (8,500) (178,461) Balance at the end of the year - Current 107,100 115,600 Provision for commissioning Balance at beginning of year 81,916 121,377 Net movements (20,837) (39,461) Balance at the end of the year -Current 61,079 81,916 NOTE 18: ISSUED CAPITAL a.) Issued and paid-up capital 2026 ($) 2025 ($) 146,749,372 (2025: 135,980,141) Ordinary shares issued and fully paid 24,798,022 11,663,412 Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote. Ordinary shares have no par value and the Company does not have a limited amount of authorised capital. b.) Movements in ordinary shares on issue Year to 30 June 2026 Year to 30 June 2025 No. $ No. $ Movements in ordinary shares on issue Opening balance 135,980,141 11,663,412 135,719,452 11,541,213 Issue of ordinary shares under placement 10,769,231 13,134,610 260,689 122,199 Closing balance 146,749,372 24,798,022 135,980,141 11,663,412 NOTE 19: RESERVES 2026 ($) 2025 ($) Share based payment reserve 278,363 157,777 Cash flow hedge reserve 98,182 157,994 Foreign currency translation reserve (835) 9,188 375,710 324,959 Share based payment reserve The share-based payments reserve is used to record the value of equity instruments issued to Directors, employees and qualifying contractors as part of their remuneration. During the year the Group had a share-based payment Performance Rights and Options Plan which provided that the Board of the Group may, from time to time, in its absolute discretion, make an offer to any Eligible Participant to apply for Performance Rights or Options, upon the terms set out in the Performance Rights and Options Plan and upon such additional terms and conditions as the Board determined.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2026 Page 42 NOTE 19: RESERVES (continued) In exercising that discretion, the Board may have regard to the following (without limitation): (i) The Eligible Participant’s length of service with the Group; (ii) The contribution made by the Eligible Participant to the Group; (iii) The potential contribution of the Eligible Participant to the Group; or (iv) Any other matter the Board considers relevant. The share-based payment reserve 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. T he values calculated do not take into account the probability of rights being forfeited prior to vesting, as VEEM Ltd revises it s estimate of the number of share rights expected to be eligible to vest at each reporting date. FY25 Performance rights Tranche Grant date Latest Vesting date Expiry date FV per right ($) 1 Jul 2025 Granted during period Exercised during period Cancelled during period 30 June 2026 1.1 6 Aug 2024 31 Aug 2027 31 Aug 2027 0.77 44,523 - - - 44,523 1.2 6 Aug 2024 31 Aug 2027 31 Aug 2027 0.65 24,883 - - - 24,883 1.3 6 Aug 2024 31 Aug 2027 31 Aug 2027 0.65 29,036 - - - 29,036 1.4 6 Aug 2024 31 Aug 2027 31 Aug 2027 0.91 26,133 - - - 26,133 1.5 6 Aug 2024 31 Aug 2027 31 Aug 2027 0.77 26,133 - - - 26,133 2.1 6 Aug 2024 31 Aug 2027 31 Aug 2027 0.61 44,523 - - - 44,523 2.2 6 Aug 2024 31 Aug 2027 31 Aug 2027 0.50 24,883 - - - 24,883 2.3 6 Aug 2024 31 Aug 2027 31 Aug 2027 0.50 29,036 - - - 29,036 2.4 6 Aug 2024 31 Aug 2027 31 Aug 2027 0.72 26,133 - - - 26,133 2.5 6 Aug 2024 31 Aug 2027 31 Aug 2027 0.61 26,133 - - - 26,133 3.1 6 Aug 2024 31 Aug 2027 31 Aug 2027 0.46 44,535 - - - 44,535 3.2 6 Aug 2024 31 Aug 2027 31 Aug 2027 0.30 24,891 - - - 24,891 3.3 6 Aug 2024 31 Aug 2027 31 Aug 2027 0.38 29,045 - - - 29,045 3.4 6 Aug 2024 31 Aug 2027 31 Aug 2027 0.55 26,140 - - - 26,140 3.5 6 Aug 2024 31 Aug 2027 31 Aug 2027 0.46 26,140 - - - 26,140 The share rights will vest as follows: 1. Tranche 1: 12 months after the start date and the 30-day volume weighted average share price (VWAP) of the Company has reached $1.98. This can occur at any point to expiry. 2. Tranche 2: 24 months after the start date and the 30-day volume weighted average share price (VWAP) of the Company has reached $2.28. This can occur at any point to expiry. 3. Tranche 3: 36 months after the start date and the 30-day volume weighted average share price (VWAP) of the Company has reached $2.62. This can occur at any point to expiry. Valuation assumptions Tranche 1 Tranche 2 Tranche 3 Valuation Date 6-Aug-24 6-Aug-24 6-Aug-24 Spot Price ($) $1.70 $1.70 $1.70 Exercise Price ($) nil nil nil Expected future volatility (%) 62.4% 62.4% 62.4% Risk free rate (%) 3.75% 3.75% 3.75%
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2026 Page 43 NOTE 19: RESERVES (continued) During the period a share-based payment expense of $120,586 was recorded (2025: $215,542). Cash flow hedge reserve This reserve records the portion of the gain or loss on hedging instruments in cash flow hedges that are determined to be effective hedges. Foreign currency translation reserve This reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries. NOTE 20: FINANCIAL INSTRUMENTS Capital risk management The Group manages its capital to ensure it will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of debt, cash and cash equivalents and equity attributable to equity holders of the Group, comprising issued capital and retained earnings. The Group is not subject to externally imposed capital requirements. Operating cash flows are used to maintain and expand operations, as well as to make routine expenditures such as tax, dividends and general administrative outgoings. Gearing levels are reviewed by the Board on a regular basis in line with budgets and forecasts, the cost of capital and the risks associated with each class of capital. Categories of financial instruments 2026 ($) 2025 ($) Financial assets Cash and cash equivalents 9,373,391 813,355 Trade and other receivables 12,192,465 13,845,292 Derivative asset 98,984 18,800 Financial liabilities Trade and other payables 6,986,023 8,451,174 Trade loan facility - 1,530,756 Loan facility – Daily Rate 5,000,000 5,000,000 Hire purchase liability 3,693,844 5,493,356 Lease liability 6,309,300 7,768,500 Bank Overdraft - 2,531,479 Asset finance facility 1,903,937 - Financial risk management objectives The Group is exposed to market risks (including foreign currency risk, fair value risk and interest rate risk), credit risk and liquidity risk.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2026 Page 44 NOTE 20: FINANCIAL INSTRUMENTS (continued) Foreign currency risk management The Group undertakes certain transactions denominated in foreign currencies, hence exposures to exchange rate fluctuations arise. The Group’s main exposures are to US Dollar (USD), Euro (EUR) and Great British Pound (GBP) currency fluctuations impacting cash on hand, debtors and creditors. VEEM has a global supply program and a large portion of the USD and GBP exposures are reduced by the Group’s operations having a natural hedge with materials purchased and sold in the same currency, with the major exposure being to the US Dollar exchange rate. Propeller sales are denominated 38% in USD (2025: 42%), 9% in GBP (2025: 8%) and 14% in EUR (2025: 15%) hence increases in propeller sales will increase exposure to exchange rate movements. As all gyrostabiliser sales are in USD, and only part of the costs provides a natural hedge, the exposure to USD will increase in line with gyrostabiliser revenue increases. The Board has adopted a policy of hedging net foreign currency exposures using forward contracts. As at 30 June 202 6 there were forward exchange contracts in place for USD1,184,250; EUR775,000 and GBP2,675,000 (30 June 2025: USD3,452,192; EUR480,000 and GBP4 25,000). For fair value hedges, any gain or loss from ineffective hedging instruments at fair value is adjusted against the carrying amount of the hedged item and recognised in profit or loss. There is a derivative asset of $98,984 (30 June 202 5 : $18,800) recorded in relation to these forward exchange contracts recorded at fair value, the fair value is a Level 2 input in the fair value hierarchy. Cash ($) Receivables ($) Payable ($) Total Asset /(Liability) ($) USD 775,953 1,454,066 (41,853) 2,188,166 • Impact of a 5% increase to profit or loss 109,408 • Impact of a 5% decrease to profit or loss (109,408) EUR 360,802 869,554 (20,636) 1,209,720 • Impact of a 5% increase to profit or loss 60,486 • Impact of a 5% decrease to profit or loss (60,486) GBP 398,708 630,140 (2,168,499) (1,139,651) • Impact of a 5% increase to profit or loss 56,983 • Impact of a 5% decrease to profit or loss (56,983) INR 22,296 - (11,160) 11,136 • Impact of a 5% increase to profit or loss 557 • Impact of a 5% decrease to profit or loss (557) The Group also manages market risk generally by keeping abreast of factors affecting its market on a continual basis. Business improvement practices continually evolve. Interest rate risk management The Group is exposed to interest rate risk as it borrows funds at both fixed and floating interest rates. The risk is managed by the Group by maintaining an appropriate mix between fixed and floating rate borrowings. The Group’s exposures to interest rate risk on financial assets and financial liabilities are detailed in the interest rate risk sensitivity analysis section of this note. Interest rate risk sensitivity analysis The sensitivity analyses below have been determined based on the exposure to interest rates for non-derivative instruments at the balance date and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period. A 100 basis point (2025: 100 basis points) increase or decrease has been used to assess the sensitivity to interest rate risk as this represents management’s assessment of the potential change in interest rates. If interest rates had been 100 basis points higher or lower throughout the year, and all other variables were held constant, the Group’s net profit would increase by $ 50,000 and decrease by $ 50,000 (2025: $90,622) respectively. This is attributable to the Group’s exposure to interest rates on its variable rate borrowings. The Group’s sensitivity to interest rates on its variable rate debt instruments has decreased as the level of fixed rate debt has increased and level of variable rate debt decreased since 30 June 2025. Interest rates on Hire Purchase agreements and the asset finance facility are fixed for the term of the agreement
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2026 Page 45 NOTE 20: FINANCIAL INSTRUMENTS (continued) Credit risk management Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties, and obtaining sufficient collateral or credit insurance where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group conducts due diligence on all counterparties before extending them credit including utilising information supplied by independent rating agencies where readily available and, if not available, the Group uses publicly available financial information. The Group’s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties where appropriate . Credit exposure is controlled by counterparty limits that are reviewed and approved by management annually. The Group does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit ratings assigned by international credit rating agencies. Where commercially sensible and available, VEEM Ltd takes out credit insurance against its overseas receivables and selected Australian receivables. The carrying amount of financial assets recorded in the financial statements, net of any allowance for losses, represents the Group’s maximum exposure to credit risk without taking account of the value of any collateral obtained. Liquidity risk management Ultimate responsibility for liquidity risk management rests with the Board of Directors, who have built an appropriate liquidity risk management framework for the management of the Group’s short, medium and long -term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. Included in not e 15 is a listing of additional undrawn facilities that the Group has at its disposal as part of its management of liquidity risk. The following table details the Group’s expected contractual maturity for its non-derivative financial liabilities. These have been drawn up based on undiscounted contractual maturities of the financial liabilities based on the earliest date the Group can be required to repay. The tables include both interest and principal cash flows. 1 year or less 1–5 years 5+ years 30 June 2026 % $ $ $ Non-interest bearing – Trade and other payables 6,986,023 - - Fixed interest rate – Hire purchase liabilities 6.73 2,128,034 1,922,196 - Fixed interest rate – Lease liabilities 3.61 2,141,255 4,168,044 - Loan facility – Daily Rate 6.01 - 5,000,000 - Asset finance facility 6.21 348,581 1,555,392 - Trade Loan Facility - - - - Bank overdraft - - - - 11,603,893 12,645,632 - 1 year or less 1–5 years 5+ years 30 June 2025 % $ $ $ Non-interest bearing – Trade and other payables 8,451,173 - - Fixed interest rate – Hire purchase liabilities 6.73 2,514,067 3,562,864 - Fixed interest rate – Lease liabilities 3.45 2,122,552 6,228,536 - Loan facility – Daily Rate 5.31 - 5,000,000 - Trade Loan Facility 4.91 1,530,756 - - Bank overdraft 6.26 2,531,479 - - 17,150,027 14,791,400 -
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2026 Page 46 NOTE 20: FINANCIAL INSTRUMENTS (continued) Fair value measurement The directors consider that the carrying value of the financial assets and liabilities as recognised in the financial statements approximate their fair values. Future minimum payments under hire purchase contracts together with the present value of the net minimum contract payments are as follows: 2026 ($) 2025 ($) Hire purchase commitments payable - within one year 2,128,034 2,514,067 - after one year but not more than five years 1,922,196 3,562,864 Minimum hire purchase payments 4,050,230 6,076,931 Less: Unexpired charges (356,386) (583,575) Present value of net minimum lease payments 3,693,844 5,493,356 Represented by: Current 1,919,064 2,201,857 Non-current 1,774,780 3,291,499 3,693,844 5,493,356 Capital commitments At 30 June 2026 the Group had $5,350,295 of capital commitments (2025: $4,963,609). NOTE 21: RELATED PARTY DISCLOSURE The Group’s related parties include key management personnel and their related entities as described below. The aggregate compensation for Directors and other key management personnel of the Group are set out below: 2026 ($) 2025 ($) Short-term employee benefits 1,666,020 1,605,886 Long term benefits 129,827 115,232 Share based payments 50,472 97,379 1,846,319 1,818,497 Key management personnel transactions The Group has two lease agreements with Voyka Pty Ltd, an entity controlled by an entity related to Mr Mark Miocevich and Mr Brad Miocevich. The Group pays Voyka Pty Ltd current monthly rent of $195,264 monthly excluding GST which is exclusive of any outgoings including rates, taxes, insurance premiums and maintenance costs. The leases end in 2029 and are on commercial terms. During the year VEEM provided services to Voyka Pty to the value of $424,624 on commercial terms. During the year Mr Mark Miocevich purchased goods and services worth $ 3,610 (2025: $1,156). An entity related to Mr Brad Miocevich provided services of $ 0 (2025: $12,057) and purchased goods and services worth $ 940 (2025: $810). All these orders were on normal commercial terms. Lumos Marketing, which is owned by a related party of Mr Mark Miocevich, provided $ 115,034 (2025: $112,000) of marketing services to the Group on normal commercial terms. Qback Pty Ltd, which is part owned by related party of Mr Mark Miocevich and Mr Brad Miocevich and part owned by Mr Mark Miocevich, provided $9,538 (2025: $13,750) of corporate services to the Group on normal commercial terms. There was one related party of Mr. Mark Miocevich employed during the financial year on normal commercial terms.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2026 Page 47 NOTE 22: SUBSIDIARIES AND JOINT VENTURES Name of subsidiary / joint venture Principal activity Place of incorporation and operation Proportion of ownership interest and voting power held by the Group 2026 2025 Microtherm Pty Ltd Research and development into the treating of liver cancer with multiple heat sources. Australia 50% 50% VEEM Marine (Europe) B.V Marketing, sales and after- sales service of marine propulsion and stabilisation products and systems Netherlands and Europe 100% 100% GMB Engineering Pvt Ltd Purchase of consumables and spare parts. India 100% 100% Microtherm Pty Ltd did not have any transactions during the financial year or balances at 30 June 202 6 and has not been consolidated. NOTE 23: AUDITOR’S REMUNERATION The auditor of VEEM Limited is HLB Mann Judd. 2026 ($) 2025 ($) Audit or review of the financial statements 128,857 105,195 Tax compliance services 22,320 21,650 Other services 295 - 151,472 126,845 Tax and financial statement preparation services provided by network firms of the auditor HLB Den Hartog 5,125 5,874 NOTE 24: SUBSEQUENT EVENTS No matters or circumstances have arisen since the end of the financial year which have significantly affected or may significantly affect the operations of the Group, the results of those operations, or state of affairs of the Group in future financial years apart from those listed below: 1. On 27 July 2026 the Company announced its Chief Executive Officer Trevor Raman had advised the Board of his intention to step down and pursue other career opportunities. NOTE 25: CONTINGENCIES The Group has no contingent liabilities as at 30 June 2026 (2025: $326,515). The Group has no material contingent assets as at 30 June 2026 (2025: $Nil).
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2026 Page 48 NOTE 26: PARENT ENTITY INFORMATION Information relating to VEEM Limited, the parent entity, is detailed below: 2026 ($) 2025 ($) ASSETS Current 47,141,400 43,024,877 Non-current 35,373,092 54,172,109 Total assets 82,514,492 97,196,986 LIABILITIES Current 15,544,172 20,652,131 Non-current 17,250,232 22,321,177 Total liabilities 32,794,404 42,973,308 Net assets 49,720,088 54,223,678 EQUITY Issued capital 24,798,022 11,663,412 Reserves 366,403 318,332 Retained earnings 24,555,663 42,241,934 Total equity 49,720,088 54,223,678 INCOME Net (loss)/profit after tax (17,686,271) 3,015,271 Total comprehensive (loss)/income (17,746,084) 3,150,983 CONTINGENT LIABILITIES AND COMMITMENTS Commitments and contingent liabilities identified are as per those detailed within Notes 20 and 25. GUARANTEES ENTERED INTO BY THE PARENT ENTITY The parent has not entered into any guarantees in relation to debts of its subsidiaries in the year ended 30 June 2026 (2025: nil).
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Page 49 CONSOLIDATED ENTITY DISCLOSURE STATEMENT AS AT 30 JUNE 2026 Basis of preparation The consolidated entity disclosure statement has been prepared in accordance with the s295(3A)(a) of the Corporations Act 2001 and includes the required information for VEEM Limited and the entities it controls in accordance with AASB 10 Consolidated Financial Statements. Tax Residency S295(3A)(vi) of the Corporations Act 2001 defines tax residency as having the meaning in the Income Tax Assessment Act 1997. The determination of tax residency may involve judgement as there are different interpretations that could be adopted and which could give rise to different conclusions regarding residency. In determining tax residency, the Group has applied the following interpretations: Australian Tax Residency Current legislation and judicial precedent has been applied, including having regard to the Tax Commissioner’s public guidance. Foreign tax residency Where appropriate, independent tax advisers have been engaged to assist in the determination of tax residence to ensure applicable foreign tax legislation has been complied with. Name of Entity Type Participation in JV Country of incorporation Ownership Residency Foreign jurisdiction VEEM Ltd Body Corporate n/a Australia n/a Australian n/a VEEM Marine (Europe) B.V. Body Corporate n/a Netherlands 100% Dual Netherlands Microtherm Pty Ltd Body Corporate Participant in JV Australia 50% Australian n/a GMB Engineering Pvt Ltd Body Corporate n/a India 100% Foreign India
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DIRECTORS’ DECLARATION Page 50 1. In the opinion of the Directors of VEEM Limited (the ‘Company’): a. the accompanying financial statements and notes are in accordance with the Corporations Act 2001 including: i. giving a true and fair view of the Group’s financial position as at 30 June 2026 and of its performance for the year ended; and ii. complying with Australian Accounting Standards, the Corporations Regulations 2001, professional reporting requirements and other mandatory requirements. b. the consolidated entity disclosure statement is true and correct. c. there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. d. the financial statements and notes thereto are in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board. 2. This declaration has been made after receiving the declarations required to be made to the Directors in accordance with Section 295A of the Corporations Act 2001 for the financial year ended 30 June 2026. This declaration is signed in accordance with a resolution of the board of Directors. Mark David Miocevich Managing Director Dated this 26th Day of August 2026
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Page 51 INDEPENDENT AUDITOR’S REPORT To the Members of VEEM Ltd Report on the Audit of the Financial Report Opinion We have audited the financial report of VEEM Ltd (“the Company”) and its controlled entities (“the Group”), which comprises the consolidated statement of financial position as at 3 0 June 2026, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, notes to the financial statements, including material accounting polic y information , the consolidated entity disclosure statement and the directors’ declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: (a) giving a true and fair view of the Group’s financial position as at 30 June 2026 and of its financial performance for the year then ended; and (b) complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group 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 audit s of the financial report of public interest entities in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.
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Page 52 Key Audit Matter How our audit addressed the key audit matter Carrying amount of the intangible asset (product development expenditure) Note 12 of the financial report The Group recognised an intangible asset of $24.2M pre impairment in relation to capitalised expenditure on the development of gyroscopic stabilizers (“gyrostabilizer”). During the year, indicators of impairment were identified as a result of the low levels of sales compared to budget. The Group assessed impairment by estimating the recoverable value using value in use, the estimated recoverable amount of the capitalised development cost CGU was $24.8m below the carrying value. Accordingly the intangible asset was fully impaired and $0.6 million in obsolete and unusable stock has also been impaired bringing total impairment to $24.8m. We focused on this area as a key audit matter as it is determined to be most important to the users of the financial statements and the impact on year end result. Our procedures included, but were not limited to, the following: - We assessed management's identification of impairment indicators and evaluated the basis for concluding that an impairment assessment was required; - We evaluated the appropriateness of management's determination of the relevant cash- generating unit used for the impairment assessment; - We assessed the value- in-use model and challenged key assumptions used by management, including the discount rate, forecast revenue, future cash flows and growth expectations, by comparing these assumptions to historical performance and other supporting evidence; - We tested the mathematical accuracy of the impairment model and performed sensitivity analyses over key assumptions; - We assessed the basis for the inventory write-down and tested a sample of inventory items identified as obsolete or unusable; - We assessed the adequacy of the disclosures included in the financial statements in respect of the impairment recognised during the year. Revenue Recognition Note 2 of the financial report The Group has two distinct categories of revenue being revenue with performance obligations recognised at a point in time and revenue with performance obligations recognised over time. We focused on this area as a key audit matter due to the number and type of estimation events that may occur over the course of a contract life, leading to complex and judgemental revenue recognition and the direct impact on year end result. Our procedures included but were not limited to the following: - We examined and tested the Group’s key controls over revenue and related work-in-progress; - We assessed a sample of the Group’s key contracts to determine if we concurred with management’s assessment of performance obligations, the transaction price and any contract liabilities that may arise, the allocation of the transaction price, and when to recognise revenue, either at a point in time, or over time; - For a sample of contracts designated for over time revenue recognition, we assessed the methodology
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Page 53 Key Audit Matter How our audit addressed the key audit matter and accuracy of recognising profit at the stage of completion at balance date; - We substantiated revenue transactions on a sample basis by agreeing the transaction to the customer’s contract, purchase order, sales invoice, delivery docket, customer certification report, and bank receipt, where relevant; and - We assessed the adequacy of the Group’s disclosures in the financial report. Other Information The directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 30 June 2026, but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report, or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the Financial Report The directors of the Company are responsible for the preparation of: (a) the financial report (other than the consolidated entity disclosure statement) that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001; and (b) the consolidated entity disclosure statement that is true and correct in accordance with the Corporations Act 2001, and for such internal control as the directors determine is necessary to enable the preparation of : (a) the financial report (other than the consolidated entity disclosure statement) that gives a true and fair view and is free from material misstatement, whether due to fraud or error; and (b) the consolidated entity disclosure statement that is true and correct and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
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Page 54 concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: − Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. − Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. − Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. − Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. − Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters.
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Page 55 We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. REPORT ON THE REMUNERATION REPORT Opinion on the Remuneration Report We have audited the Remuneration Report included within the Directors’ Report for the year ended 30 June 2026. In our opinion, the Remuneration Report of VEEM Ltd. for the year ended 3 0 June 2026 complies with Section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with Section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. HLB Mann Judd D B Healy Chartered Accountants Partner Perth, Western Australia 26 August 2026