Announcement PDF EM Solutions Divestment Andreas Schwer, Managing Director & Chief Executive Officer Clive Cuthell, Chief Financial Officer & Chief Operating Officer 21 November 2024 Approved for release by the Board of Directors Disclaimer and important notices This investor presentation (Presentation) has been prepared by Electro Optic Systems Holdings Limited ACN 092 708 364 (Company or EOS) and is dated 21 November 2024. This Presentation has been prepared in connection with the binding share sale agreement (SSA) which has been entered into between EOS and CHRT Holdings Pty Ltd (a wholly-owned subsidiary of Cohort plc (an entity listed on the London AIM securities exchange)) in relation to the sale of 100% of the issued capital in the Company’s wholly-owned subsidiary E M Solutions Pty Limited (EM Solutions or EMS) (the Proposed Transaction) Summary information This Presentation contains summary information about the Company and its subsidiaries (Group) and their respective business activities which is current as at the date of this Presentation. The information in this Presentation is of a general nature and does not purport to be complete. This Presentation should be read in conjunction with the Company's other periodic and continuous disclosure information lodged with the Australian Securities Exchange (ASX) which are available at www.asx.com.au, or on the Company’s website at https://eos-aus.com. 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The information in this Presentation remains subject to change without notice. 2 Executive Summary (1 / 2) The announced divestment of EM Solutions (EMS) represents an important step in the evolution of EOS and provides the ability to recycle capital into opportunities aligned with EOS’ core competencies and high growth markets • Evolution of EOS Core business Capital discipline EOS’ business was originally founded on electro-optics and space surveillance, and this is where our core technical and commercial competencies lie • The SpaceLink venture represented a strategic pivot into the communication domain and the acquisition of EMS in 2019 formed part of that • EOS terminated the SpaceLink venture in 2022 • EOS is well progressed in implementing its strategy and transforming operations, building a platform for profitable growth • EOS sees very strong market growth in counter-drone applications and the opportunity to secure global product leadership • The defence sector is rapidly evolving, driven by the geopolitical environment and technological developments. Key megatrends include drones, automated and unmanned platforms, and space control – all segments where EOS has significant experience and a differentiated offering • EOS’ strategic intent is to focus on market segments aligned with its core technical competencies and where there is a strong growth thematic o Technologies – remote weapon systems (“RWS”), directed energy and space control o Application domains – ground-to-ground, counter-drone and space • A culture of cost discipline and cash generation has been established, enabling EOS to improve its profitably and repay debt • Order book of $386m at 30 June 2024 - excludes conditional Ukraine contracts and inclusive of contribution from EMS (represents $165m on a pro forma basis excluding EMS). See slide 20 for more details on business development activity 3 Executive Summary (2 / 2) The announced divestment of EM Solutions (EMS) represents an important step in the evolution of EOS and provides the ability to recycle capital into opportunities aligned with EOS’ core competencies and high growth markets Transaction rationale Proposed transaction Use of sale proceeds Background to Cohort Transaction timing Capital management • Over the past year EOS has undertaken a review of its portfolio and identified EMS as a high performing but non-core asset providing a significant opportunity to recycle capital to support growth in EOS’ focus areas • Following a market sounding process, EOS received a compelling offer for the acquisition of 100% of EMS • EOS has entered into a binding agreement with a wholly-owned subsidiary of Cohort plc (Cohort) to affect the sale of 100% of the issued capital of EMS for an enterprise value of $144m (subject to customary adjustments) • The transaction is expected to provide EOS with the funding flexibility and operational focus to pursue growth opportunities for both RWS and High Energy Laser Weapons in the counter-drone market • Cohort is a UK-based, AIM listed company, that supports entrepreneurial businesses to grow and innovate in defence technology, products and services. It is the parent company of six businesses that provide technology-based services and products for international defence and security customers in government and industry • The transaction is subject to satisfaction of conditions customary for a transaction of this nature including counterparties under certain material contracts providing consents, waivers or amendments in connection with the Proposed Transaction and the non-occurrence of any material adverse changes • Given FIRB approval has been obtained by Cohort for the Proposed Transaction, completion is expected within six months • The sale will automatically trigger the requirement to repay the debt facility with WHSP in full (which EOS would have otherwise repaid in October 2025 from organic cash flows). The total repayable is currently $64.4m • Following this repayment, EOS will have no borrowings and have the balance sheet strength to support future growth • It is anticipated that capital gains tax generated by the Proposed Transaction will be largely offset by existing tax losses in the EOS group 4 Market Conditions – Geopolitical Backdrop Geopolitical uncertainty continues to create very supportive market conditions Global defence spending increased by 9% to a record US$2.4tn in 2023 Entrenched conflict in Ukraine and broadening conflict in Middle East Source: SIPRI Military Expenditure Database, Apr. 2024. NATO Defence Expenditure annual change (%) Evolving geopolitical situation and increasing tensions between nations in several regions Source: NATO Press Release June 2024 5 Market Conditions - Technological Wide-ranging technological shifts in the defence industry are expected to continue THEME DESCRIPTION RECENT MEDIA Low-cost, mass-produced drones Readily available and easy to operate Difficult to detect and defeat with conventional defences Asymmetric conflict – cheap to deploy, expensive to defeat Mass manufactured drones • • • • AI and autonomous swarms • Autonomous swarms of drones function in groups • Communication within swarm allows a cohesive unit operation • Technology can quickly respond to changing battlefield conditions Innovative counterdrone solutions e.g. laser weapons • Drone proliferation creates counter-drone demand • Drone innovation drives counter-drone development • Requires evolution from traditional rocket and missile air defence Space as a contested domain • Space critical to surveillance, navigation and communication • Space capabilities provide an asymmetric military advantage • Protection/Disruption of Space capabilities now seen as critical 6 Key Megatrend – Drone Warfare Drone Warfare has been a disruptive force in recent conflicts and is evolving at an accelerating pace Significant Ongoing Growth in Drone Warfare • Creating asymmetric conflicts, favouring more agile forces • Easy to attack high value targets – infrastructure, munitions, ships, HQ etc • Low-cost method of attack • Difficult to defend against • Used by all sides Ongoing Technological Development • Diverse technologies – short and long range, FPV etc. • Developments in shielding and inertial/visual navigation making impervious to Electronic Warfare (EW) countermeasures • Future includes autonomous, swarm attacks capable of oversaturating the airspace Wide Threat Recognition • “The D.O.D. has been doing things the same way since World War Two. Occasionally, when we have a conflict, we innovate. But what we’re looking at here is being able to change the culture to keep up with not this strategic competition but also modern technology. We can’t be on these ten-to-twenty-year development cycles. That’s not going to work” – Eric Pahon, Office of the Deputy Secretary of Defense (USA) 7 Effective counter-drone strategies require a layered response EOS is developing products that form part of comprehensive, layered, counter-drone systems 0.5km 1km 2km 3km 4km 5km 6km 7km 8km 9km 10km Electronic Warfare (EW) EOS CURRENT FOCUS Remote Weapon System Directed Energy 50-100kW APKWS (Rocket) SHORAD Missile Rapidly evolving threat technology Group I Group II Group III Key criteria Range Acquisition Cost Accuracy Operating Cost Effectiveness Cost per Drone Kill 8 High Energy Laser Weapon Update EOS continues to pursue significant opportunities in the High Energy Laser Weapon market • Emerging and urgent market need for laser-based drone, rocket, artillery, mortar, air and missile defence • The rapid proliferation of drones and other unmanned warfighting systems has created significant new markets for affordable counter-drone capabilities to protect military and other strategic assets from these low-cost asymmetric threats • High energy laser weapons emerging for defending against large numbers of inexpensive drones due to: • Ability to engage targets instantly (at the speed of light) with high precision, limiting collateral damage • Unlimited ammunition magazines based on power supply • Low cost per shot • EOS has deep expertise with weapons systems, tracking and laser-optics • EOS has developed a 36-54kW prototype laser weapon and demonstrated it during August 2023 • EOS is now in advanced negotiations with 2 parties to manufacture and commercialise 50-150kW systems 9 EOS Future Strategic Focus Areas The emergence of drone warfare on the battlefield is supporting a generational shift for counter-drone solutions. High RWS Defence Systems Directed Energy Space Control Space Systems Unmanned Turrets Land RWS Land/Naval/ CUAS Low Power DE 1-2kW Low Power Laser High Power DE up to 200kW Space Control High Power Laser Space Awareness Growth Outlook Counter Drone Directed Energy Moderate Defence Systems Counter-Drone Low High Emerging Low Product Maturity 10 Summary of Investment Opportunities EOS has several attractive opportunities to accelerate business growth. These will be funded through EM Solutions divestment, and as far as possible, customer partnerships. We will continue to exercise strategic and capital discipline Opportunity RWS Counter Drone High Energy Laser Weapon M&A Total Focus • Artificial Intelligence (AI) and Advanced Software development • Develop products with longer range, better accuracy and lower costs • Improved passive and active detection capabilities • Integrate wider array of weapons and effectors to improve range of use-cases, range, accuracy and choice • Invest in demonstration models and global demonstrations for market development and growth • Continue to target cash flow positive customer projects • Increase working capital reserves to provide flexibility • Continue to partner with customers on product development spend • • • • Invest in demonstrator unit/s to accelerate market development and growth Further improve software integration including detect, identify, track and fire Increased investment in laser component inventory Continue to partner with customers on product development spend • Consider bolt-on acquisitions where investment criteria are met • M&A to be used to fill capability gaps and/or de-risk supply chain $m Investment Timeframe 40 - 60 1-3 years 40 - 70 2-5 years 20 - 70 100-200 11 Conclusion EOS aims to become a global leader in Counter-Drone, High Energy Laser Weapons and Space Control. We will continue to exercise discipline Future Outlook • EOS is a growth business with a focus on value creation by capitalising on high growth opportunities • EOS will be in a strong financial position post divestment of EMS to accelerate focused transformation of the company • EOS is a disciplined allocator of capital (utilise capital to support core growth initiatives whilst continuing to evaluate opportunities for partnering and third-party funding) Conclusion • Discussion / Q&A • Thank you for your support RWS Defence Systems High Energy Laser Weapons Space Control 12 Appendix 1 – Background to EMS Background to EMS EMS primarily designs, builds, deploys and maintains on-the-move satellite communication equipment systems for defence forces Background EMS today • Acquired by EOS in 2019 in a scrip-based transaction which valued EMS at ~$26m • It has operated predominantly as a standalone business that supported the EOS SpaceLink venture which was terminated in 2022 • EOS portfolio review confirmed EMS to be a high performing, but non-core asset • No connections or operating synergies with other EOS operations • Supported by rapid pace of industry development • Growing naval SatCom demand with near term performance underpinned the SEA 1442 contract • High growth business with strong cash flow generation • Total LTM Jun-24 revenue of $74m with largest ever order book of diversified revenue secured over 2024-2029 Diversified market offering Products Services SATCOM Terminals RF Subsystems Contract Manufacturing & Design Sustainment Designed for clients who demand resilient and assured communications operating in high threat environments Assembly of radio components such as microwave filters, oscillators, mixers and power amplifiers Tailored design, engineering and contract manufacturing of electronic components Repairs and maintenance across product life cycles 14 Appendix 2 – EOS Background Enabling Technologies and Synergies Software and Artificial Intelligence, closely integrated with complex hardware and optical solutions, will become key differentiators RWS Defence Systems Directed Energy Space Systems • EOS’ go-forward businesses share common technology platforms and create compelling synergies • Software and increasingly, artificial intelligence will become a key differentiator and competitive advantage Software Software Optical Tracking Electro-Optics High Agility Gimbals Large Telescopes Laser Technology Adaptive Optics 16 Remote Weapon Systems Product Range EOS is developing a wider range of RWS products to meet evolving needs Sensor Unit Truck Ultralight RWS R150 Light RWS R400 Common Range of Platforms and Applications Protected UGV Vehicle Medium RWS R600 Heavy RWS R800 Light Turret T1600 Common Control Interfaces Multi-Mission Sensors MLRS CUAS 17 Update on EOS Transformation Strong markets have supported our turnaround and continue to create significant future growth opportunities for EOS. Ongoing Ukraine and Middle East conflicts and need for NATO militaries to rearm creating an enduring growth driver Markets Products Sales Capability • Global military spend up 9% in ‘23 • Commercialising existing IP aligned to evolving market needs • New commercial leadership • EVP Defence Australia • EVP Defence International • EOS US CEO & local Board • Key drivers: • Geopolitical tensions • Technology • Key long-term growth areas: • Drone warfare • RWS • High Energy Laser Weapons • Automation and Unmanned Platforms • Space Control • New products launched: • R150 RWS • R800 RWS • Slinger Counter-Drone RWS • High Energy Laser Weapon • New products in development: • Next-gen RWS with AI • Counter-drone software integ’n • New capability in Europe • Focus on critical markets: • Europe • Middle East • North America Order Book • Contract backlog: • $386m at Jun 241 • Recent wins in 2024 • Focus on growing order book • Ongoing sales work • Ukraine – direct & donors • Europe • Middle East • North America • Australia • Disciplined investment spending; targeted 3rd-party funding Traditional sales lead times are 1-3 years - several opportunities continue to develop positively 1: Excludes conditional contracts and inclusive of contribution from EMS. Represents $165m on a pro forma basis excluding EMS 18 Recent Product Developments and Growth Opportunities EOS has recently launched several products to capitalise on key macro drivers and enable future growth Forecast Indicative revenue timing * Macro Drivers Product Recent activity C-UAS Autonomy UGV R150 Light-weight System • Formal production launch in 2023 • Suitable for light vehicles • Bids currently submitted in SE Asia and EU NATO Counter-Drone Kinetic System • • • • Economic Large R800 Remote Weapon System • Launched in 2023 • Low-cost and heavy firepower • Negotiations currently underway with potential launch customer 2024-26 C-UAS Integrated CounterDrone Laser Dazzler • Launched in October 2023 • Capable of disrupting incoming drones • Demonstrated at recent 2024 NATO Sandbox event 2025-27 C-UAS Launched “Slinger” in 1H 2023 Proven, world-leading accuracy Evaluation orders including to Diehl Germany Demonstrations underway in N. America and Middle East 2024-25 2024-25 * The global defence industry supports innovation – product development can take five years and more, with commercial launches taking two to three years or more to reach maturity. 19 Market Development Update Growing the order book continues to be our key focus; several opportunities are developing positively; European growth is targeted Geography Australia Potential Size (A$m) >100 Maturity Remote Weapon Systems Advanced Contract negotiations continue with Hanwha in relation to the supply of RWS for the Land 400 Phase 3 project. Ukraine ~181 Advanced Discussion continues with Ukrainian end-users and customers. Local situation is fluid and subject to changing battlefield priorities and evolving donor attitudes. Ukrainian budget funding remains a challenge. Europe 50- 100 Evaluation Continuing to work on opportunities to leverage demand from European countries for donation to Ukraine. Geography International Potential Size (A$m) 50 - 100 Australia N. America 10 – 50 Evaluation N. America / Middle East <10 Evaluation Evaluation orders for Slinger product received from customers in North America and Middle East. Europe >100 Preliminary Ongoing interest from European customers for light-weight R150 solution for protection of logistics vehicles. Maturity Definition Work continues on upcoming bid for follow-on order of next-generation R400 in Middle East. • • • >500 Preliminary High Energy Laser Weapon Advanced • Commercial discussions continued with a number of potential customers for its High Energy Laser Weapon system. • In particular, discussions with two potential international customers are at a more advanced stage. • These discussions are ongoing and could result in new customer agreements being signed during 2024 or later. Space Technologies Working with a North American company looking to integrate EOS’ R800 onto Stryker vehicles for potential donation to Ukraine. Middle East Maturity <10 Evaluation Continue to build on recently announced contracts with ADF Joint Capability Division. Advanced: Contract under negotiation or negotiated and conditional Evaluation: Customer is performing assessments of product and/or discussions are underway Preliminary: Bid being prepared or submitted as part of initial customer discussions Note: there is no certainty that any particular outcome or transaction will result from these discussions and negotiations 20 EOS Space Technologies EOS specialises in applying EOS developed optical sensors and effectors to detect, track and characterise objects in space Summary Demonstrated Capability • EOS designs and manufactures bespoke world-leading beam director telescopes • EOS has decades of experience in Satellite Laser Ranging (SLR), Debris Laser Ranging (DLR) and Space Domain Awareness (SDA) • World leader in accuracy, using laser technology to track objects in space: • Hardware • Software • Data • Domain expertise - people Laser Ranging Capabilities Telescope Capabilities • Geochang, S Korea • Coonabarabran, Australia Telescope Capabilities Enclosure Capabilities • Doi Inthanon, Thailand • San Jose, USA • EOS produces highly accurate beam directors suitable for passive and high energy laser applications 21 Glossary Term Description Term Description ADF Australian Defence Force ISR Intelligence, surveillance and reconnaissance Adaptive Optics Technique of precisely deforming a mirror in order to compensate for (atmospheric) light distortion kW Kilo Watts APKWS Advanced Precision Kill Weapon System LCMP Low-cost, mass-produced CRAM Counter Rocket, Artillery and Mortar MLRS Multiple Launch Rocket System CUAS Counter Unmanned Aerial System NATO North Atlantic Treaty Organization DE Directed Energy NDS National Defence Strategy DLR Debris Laser Ranging NG AGT Northrop Grumman Agnostic Gun Truck D.O.D Department of Defence RWS Remote Weapon System DSR Defence Strategic Review SatCom Satellite Communications EMS EM Solutions Pty Ltd SDA Space Domain Awareness EVP Executive Vice President SLR Space Laser Ranging FPV First Person View UGV Unmanned Ground Vehicle FIRB Foreign Investment Review Board USV Unmanned Surface Vehicle HELW High Energy Laser Weapon V SHORAD Very Short Range Air Defence System IED Improvised Explosive Device IFV Infantry Fighting Vehicle IIP Integrated Investment Program ITAR International Traffic in Arms Regulations 22