AUSTAL LIMITED — AGM Information 2011

Oct 19, 2011

2011 Annual General Meeting

October 21, 2011

AUSTRALIA’S PRIME DEFENCE CONTRACTOR

SHIPS SYSTEMS SUPPORT

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Agenda
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• Results highlights and key events

• Group financial summary

• Current order backlog

• U.S. Navy update

• Strategy overview

• Summary

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Results highlights
and key events
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AUD $M	2011	2010	Change
Revenue	503.9	521.4	(3%)
EBIT	19.8	51.2	(61%)
Net profit after tax	21.9 8 5 ce ts	37.1	(41%)
EPS	11.9 cents	20.3 cents	(168%)

Key events during the H2 2011

• Adverse macroeconomic conditions directly reflected in results

• Award of contracts for JHSV 6 and 7

• Award of contract for 2[ND] LCS, USS Montgomery , from the 10 ship block buy contract

• Bornholmer Faergen 113m Catamaran delivered in June. Austal’s largest ever catamaran

• Strategy review completed - new initiatives underway

• Post year end award of $330m Cape Class Patrol Boat Project

• Dividend declared – 6 cents fully franked

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Balance Sheet
Review
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AUD $M	2011 2010 Change
Total Assets Cash Restricted cash Inventories Property, plant & equipment	674.6 648.1 4%
	42.3 29.0 46% 129.8 1.1 11,700% 177.9 275.3 (35%) 208.3 217.7 (4%)
Total Liabilities Bank loans Go Zone Bond Government Grants	400.4 378.8 6%
	9.1 41.4 (78%) 209.7 70.0 200% 45.5 59.9 (24%)
Equity	274.2 269.4 2%

• Underlying balance sheet remains strong

• Unrestricted cash has improved over the prior year and is supported by access to substantial unused working capital facilities

• Go Zone Bonds (US$225M) have been raised to fund the US facility expansion

			Austal USA
	Austal USA		**(In USD) **
USD $M	2011	2010	Change
Revenue	333.4	235.5	42%
EBIT	19.7	20.9	(6%)
EBIT %	6% 8 5 ce ts	9%	(14%)
PBT	13.6	16.5	(18%)

• Revenue growth reflects growth in activity levels at Austal USA (2 LCSs and 3 JHSVs under construction at June 2011)

• EBIT margin has been adversely impacted by the delay in award of LCS block buy contract and “first-in-class” overruns on JHSV1

• Business is gearing up for steady state production of 2 LCSs and 2 JHSVs per annum

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Austal Australia
(Excl. Service)
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AUD $M	2011	2010	Change
Revenue	144.2	219.7	(34%)
EBIT	(8.0)	27.6	(129%)
EBIT %	(6%)	13%	(143%)
PBT	(8.6)	27.1	(132%)

• Substantial revenue and operating profit reduction results from the sustained adverse international market conditions

• Australian redundancy costs totalled $3.4m. Henderson is now right-sized for Cape Class Patrol Boat project.

• Opportunities in resources sector which leverage Austal’s modular manufacturing skills are being pursued.

Service

AUD $M	2011	2010	Change
Revenue	15.7	41.6 0 0	(62%)
EBIT	1.8	2.7 0 0	(33%) 00%
EBIT %	11%	6%	77%
PBT	1.8	2.7	(33%)

• Reduction in revenue results from the refocusing of the business on profitable contracts

• Important part of future strategy to support LCS and JHSV globally. In addition to supporting RAN Armidale Class Patrol Boats, will also support Cape Class Patrol Boats

• Diversifying into resources sector opportunities and defence systems opportunities

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Vessels completed
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Leonora Christina

Jean De la Valette

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Trinidad & Tobago Water Taxis

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Liberty & Perle Express

Over $1.2B Currently Under Current Order Contract Backlog approx

• 1 X 35m Monohull ferry for Mary D Enterprises (New Caledonia)

• 1 X 41m Catamaran ferry for Vale (New Caledonia)

• 7 X 103m Joint High Speed Vessels for U.S. Navy

• 3 X 127m Littoral Combat Ships for U.S. Navy

• LCS Technical Services for U.S. Navy

• Service contracts in Trinidad and Tobago, Oman, Australia and USA

• • 8 X Cape Class Patrol Boats for Australian Customs

• 3 X 21m Wind farm vessels for Turbine Transfers

• 44 X Modular units for Nomad

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LCS Update
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• LCS 4 Coronado 77% complete and on budget

• LCS 6 design work is underway and fabrication will commence in February 2012

• LCS 8 will commence in September 2012

• Contractual dates for future awards lock in 2 awards per annum by 31 March for each year between 2012 and 2015

Average revenue stream of US$600M pa from 2013 to 2017

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JHSV update
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• JHSV 1 launched in September, on time but behind budget

• Lessons learned from first vessel applied to subsequent hulls with substantial cost improvements

• JHSV 2 52% complete

• JHSV 3 to 7 fully contracted, with construction of JHSV 3 underway

• JHSV 8 & 9 to be awarded by February 2012, JHSV 10 to follow by February 2013

Average revenue stream of US$280M pa from 2012 to 2015

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PROGRESS

Austal USA Expansion

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Strategy
Overview
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• Backdrop of high Australian dollar, weak European and U.S. economies and increasing competition for labour in Australia.

• Strategic initiatives:

• Regionalise manufacturing capacity in Asia and potentially Europe

• Continue to develop new products for emerging new markets, to be constructed in regional manufacturing facilities

• Leverage prime defence contracting credentials

• Focus Australian manufacturing facilities and resources on defence vessel manufacture and support

• Continue to grow and develop the international service business

• Leverage existing defence systems capabilities to broaden and grow new revenue streams

• Apply modular manufacturing skills to adjacent sectors, such as minerals, oil and gas

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Strategic
Initiatives
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Regionalise Manufacturing

 Enables the Company to compete in specific segments of the international commercial vessel market where demand remains strong

• fast crew transfer boats

• work boats

• small ferries

• Austal has considerable intellectual property suitable for these markets

 Agreement signed with intent to acquire shipyard in the Philippines

• Expected to complete acquisition this quarter

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Strategic
Initiatives
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Product Development

 Wind Express

 LNG powered ferries

• Multi-role vessels

• Medium speed vessels

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Strategic
Initiatives
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Henderson - Defence Focus

• Review conducted in May 2011

• Leverage prime contracting credentials

• Henderson operations to be focussed towards the manufacture and support of defence vessels

• Large commercial vessel capability retained

• Austal awarded Cape Class Patrol Boat contract in August 2011

• Future opportunities include 20 vessel Royal Australian Navy SEA 1180 program

• Export of defence platforms

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Strategic
Initiatives
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Systems and Support

• Leverage existing defence systems capabilities to pursue new opportunities

• Defence systems opportunities has potential to deliver significant recurrent income

• Submit tender for SEA 1442 – ANZAC Communications Upgrade Proposal

• Command and control product to be introduced to Cape Class Patrol Boat platform

• Service infrastructure to expand to support U.S. Navy shipbuilding

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Strategic
Initiatives
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Adjacent Sectors

 Capitalise on local resources opportunities

 Utilise modular manufacturing skills, facilities and workforce

 Engineering and project management expertise

 Contract awarded in August 2011 to supply modular accommodation units for the resources sector

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Summary
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• Transition year for Austal:

• US operations are growing in accordance with plan and will deliver revenue in the order of US$550m in 2012

• Regionalising commercial manufacturing facilities

• Henderson operations to focus on defence with CCPB as the lead order

• Systems and support will be a strategic focus

• Service infrastructure to expand to support U.S. Navy shipbuilding programmes

• Modular manufacturing skills are attracting resources sector opportunities