AUSTAL LIMITED — AGM Information 2012

Nov 29, 2012

2012 Annual General Meeting

==> picture [92 x 44] intentionally omitted <==

==> picture [720 x 388] intentionally omitted <==

----- Start of picture text -----

Click to edit Master title style
----- End of picture text -----

John Rothwell, Chairman

30 November 2012

2012 Annual General Meeting

==> picture [109 x 54] intentionally omitted <==

Andrew Bellamy, Chief Executive Officer

30 November 2012

A year of transition

==> picture [92 x 44] intentionally omitted <==

• Difficulties in the first half of FY2012 as Austal progressed through its transition phase in calendar year 2011

• Significant improvement in the second half of FY2012, driven by Austal USA as lessons learned on JHSV 1 were implemented

• Right sized Australia operations – shift towards defence with commencement of Cape Class vessel and commercial vessel capability moved to the Philippines

• Recovery is continuing – revenue growth and improving EBIT margins expected in FY2013

==> picture [660 x 171] intentionally omitted <==

----- Start of picture text -----

Revenue ($m) EBIT ($m) NPAT ($m)
FY 2011 FY 2012 FY 2011 FY 2012 FY 2011 FY 2012
20.5 20.6 14.1 14.0
385.6
7.8
251.2 252.6 267.4 1.6
-4.0
-3.0
H1 H2 H1 H2 H1 H2
----- End of picture text -----

SHIPS  SYSTEMS  SUPPORT

3

Major achievements

==> picture [92 x 44] intentionally omitted <==

• Major new contract awards:

• LCS 10 and 12 – US$691m

• JHSV 8 and 9 – US$321.7m

• Cape Class Patrol Boats – AU$330m

• Opened new commercial vessel manufacturing facility in the Philippines

• Doubled manufacturing footprint in the US

• Established strategic business units

• Better aligns costs and revenue

• Enhances transparency in performance

==> picture [347 x 242] intentionally omitted <==

• Expanded support and service capability

• Acquisition of Hydraulink NT and its associated business KM Engineering in Darwin (in October 2012)

• Opened Marine Support Base in Henderson

SHIPS  SYSTEMS  SUPPORT

4

Financials

==> picture [109 x 54] intentionally omitted <==

SHIPS  SYSTEMS  SUPPORT

5

Summary

Income statement	FY12 ($m)	FY11 ($m)
Revenue	653.0	503.8
EBIT	16.6	22.1
NPAT	11.0	21.9
EPS	6.01¢	11.9¢

Balance sheet	end FY12 ($m)	end FY11 ($m)
Total assets	826.0	674.6
Cash	51.8	42.3
Restricted cash	52.9	128.8
Receivables	96.2	22.0
Inventories	193.5	177.9
Property, plant & equipment	370.4	208.3
Total liabilities	548.9	400.4
Trade creditors	128.6	52.8
Go Zone Bonds	219.4	209.7
Other interest bearing	46.0	16.8
Government grants	52.3	45.5
Net assets	277.0	274.2

==> picture [92 x 44] intentionally omitted <==

FY2012 results

• Revenue growth of $149m, driven by growth in US

• Offset by first in class issues on first JHSV and low activity levels at Henderson Shipyard

Balance sheet summary

• Growth in asset base, reflecting increasing scale of US business

• PP&E – investment in US facilities and Philippines expansion

• Impact of two stock vessels on the strength of our balance sheet

• Subsequent to year end, announced an $86 million entitlement offer to significantly strengthen balance sheet and reduce indebtedness

SHIPS  SYSTEMS  SUPPORT

6

Segment breakdown

USA	FY2012 ($m)	FY2011 ($m)
Revenue	570.3	343.9
EBIT*	20.8	30.1
EBIT margin (%)*	3.6%	8.7%
PBT*	13.5	25.9

• YoY revenue growth reflects increase size and scale

• Significant improvement in the second half:

• H2 v H1 – revenue up 49%, EBIT up 136%

• $100m capex completed on time and to budget

Philippines	FY2012 ($m)	FY2011 ($m)
Revenue	1.9	–
EBIT	(0.8)	–
EBIT margin (%)	n/a	–
PBT	(0.8)	–

• Commenced operations in February 2012

• More competitive in the global commercial vessel market

• Labour force of 200, with less that 10% expatriates

==> picture [92 x 44] intentionally omitted <==

Henderson	FY2012 ($m)	FY2011 ($m)
Revenue	49.0	133.9
EBIT	(13.6)	(10.1)
EBIT margin (%)	n/a	n/a
PBT	(9.2)	(8.6)

• Challenging macro environment – repositioned to defence

• Workforce and overheads right-sized

• Rationalised manufacturing footprint and realised surplus assets in Group earnings

Service & Systems^	FY2012 ($m)	FY2011 ($m)
Revenue	19.4#	16.3
EBIT	1.6	0.9
EBIT margin (%)	8.2%	5.5%
PBT	1.6	1.8

• Enhanced focus on the quality of business reflected in the results

• Ongoing work, particularly in defence maintenance contracts

• adjusted for training grant reimbursement

Segment report $30.2m, less ‘Hull 130’ ($10.9m) = $19.4m

^ results exclude WestPac Express charter

SHIPS  SYSTEMS  SUPPORT

7

Capital expenditure

==> picture [92 x 44] intentionally omitted <==

Project	2012a ($m)	2013 estimate ($m)	2013 estimate ($m)	2013 estimate ($m)	2013 estimate ($m)	2013 estimate ($m)
		USA	HSO	PSO	Service & Systems	Total
Production, plant and equipment	24.6	7.6	–	1.3	–	8.9
Building/facilities	92.2	12.9	–	4.4	–	17.3
IT	1.1	1.8	0.8	0.5	–	3.1
Other	–	–	0.1	0.2	0.2	0.5
Total	117.9	22.3	0.9	6.4	0.2	29.8

• Major capital expenditure programs completed in FY2012 (expansion of USA & Philippines)

• Minor estimated spend for FY2013 includes:

• Philippines Shipyard Operation (PSO) – land reclamation to facilitate anticipated expansion and also expansion of production tooling to deliver on contracted projects

• USA – stage one of outfit yard, completion of office complex and US Navy building, and ongoing production tooling to complete fit-out of new facilities

• Capex to be funded through renegotiated facilities and US Government grants –strengthened balance sheet provides Austal financial flexibility

SHIPS  SYSTEMS  SUPPORT

8

Entitlement offer

==> picture [92 x 44] intentionally omitted <==

• 9 for 10 entitlement offer to raise up to approximately A$86 million in new shares at $0.50:

• Completed $65 million institutional component on 23 November – closed oversubscribed with strong demand from existing and new investors

• Retail shareholders given equal opportunity to participate, raising up to approximately A$21 million – opens today and closes 17 December 2012

• Funds used to reduce Austal’s indebtedness – pro forma Net Debt / FY13 EBITDA less than 1.9x as at September 2012 (using the mid-point of guidance)

• Significantly strengthens our balance sheet to pursue the growth platform we now have in place and deliver on our $2.3 billion order book

• Capital raising performed following capital expenditure program to deliver on our strategy of moving into defence-related vessel construction and reposition our civil vessel construction

• Also renegotiated our banking facility – now three-year term to replace short-term 18 month banking arrangements

• Expected to remain comfortably within banking covenants

SHIPS  SYSTEMS  SUPPORT

9

O erations U date p p

==> picture [109 x 54] intentionally omitted <==

SHIPS  SYSTEMS  SUPPORT

10

Network of shipyards and support facilities

==> picture [92 x 44] intentionally omitted <==

==> picture [683 x 387] intentionally omitted <==

SHIPS  SYSTEMS  SUPPORT

11

Order book

• Order book sits at $2.3 billion as at September

• 2012 – secures revenue until 2016, including:

• Joint High Speed Vessels for US Navy x9 contracted (out of 10 vessel award)

• Littoral Combat Ships for US Navy x4 contracted (our of 10 vessel award), plus x2 from General Dynamics

o Cape Class Patrol Boats x8 contracted plus through life support

• Commercial vessels

x3 27 metre wind farm support catamarans x1 80 metre vehicle-passenger catamaran

==> picture [92 x 44] intentionally omitted <==

==> picture [313 x 407] intentionally omitted <==

SHIPS  SYSTEMS  SUPPORT

12

Littoral Combat Ship

==> picture [92 x 44] intentionally omitted <==

• 10 ship award to Austal (plus 2 from General Dynamics) worth US$5.0 billion

• Total of 4 ships contracted, plus 2 from General Dynamics

• Two of those vessels, LCS 10 and LCS 12, contracted to Austal in March 2012 – two further vessels expected in 1Q2013

• LCS 2 complete, LCS 4 launched

• Keel laying on LCS 6 in October

“At the geo-strategic level, it’s all about the littorals.”

==> picture [409 x 244] intentionally omitted <==

General James F. Amos Commandant of the Marine Corps April 2012

SHIPS  SYSTEMS  SUPPORT

13

Joint High Speed Vessel

==> picture [92 x 44] intentionally omitted <==

• 10 ship award to Austal valued at $1.6 billion

• Total of 9 vessels contracted

• Two of those vessels, JHSV 8

• and 9, were contracted in February 2012

• JHSV 10 expected to be awarded in first quarter CY2013

• Issues with first-in-class JHSV 1, but now completed acceptance trials

• Christening and launch of JHSV

• 2, USNS Choctow County

• JHSV 3 keel laying ceremony in April 2012

==> picture [409 x 244] intentionally omitted <==

SHIPS  SYSTEMS  SUPPORT

14

Cape Class Patrol Boat

==> picture [92 x 44] intentionally omitted <==

• $330 million contract to design, manufacture and support 8 new CCPBs

• Underwrite activity at Henderson shipyard until 2015

• CCPB 1 keel laying in June 2012

• Naming ceremony in March

• 2013

“During the year Austal developed a very professional and productive relationship with Customs that has led to significant design and engineering improvements on the Cape Class Patrol Boats.”

==> picture [409 x 244] intentionally omitted <==

Nigel Perry National Director of Maritime Operations, Customs and Border Protection Service

SHIPS  SYSTEMS  SUPPORT

15

Philippines

• Allows Austal to compete competitively in the global commercial market (e.g. ferries, wind farm support vessels)

• Started operations in February 2012

• Full order book through to Q3 CY2013

• x3 27 metre wind farm vessels

• x1 27 metre TRI SWATH trimaran wind farm vessel

• x1 79 metre vehiclepassenger catamaran

==> picture [92 x 44] intentionally omitted <==

==> picture [409 x 244] intentionally omitted <==

• Ramp up to 225 employees achieved as planned – further hires to increase capacity

SHIPS  SYSTEMS  SUPPORT

16

Service and systems

==> picture [92 x 44] intentionally omitted <==

• Represents significant long-term opportunity for Austal

• Significant recurring revenue postdelivery

==> picture [397 x 250] intentionally omitted <==

• Austal’s IP and global footprint provides significant opportunity to provide through life support for JHSV and LCS

• Ships designed for 20 to 30 year life

• These contracts will begin to be awarded in FY2013 – Austal actively pursuing

• Forward deployment model of LCS to drive size of through life support opportunity for Austal

• No significant capex investment needed to execute our strategy

SHIPS  SYSTEMS  SUPPORT

17

Strate and Outlook gy

==> picture [109 x 54] intentionally omitted <==

SHIPS  SYSTEMS  SUPPORT

18

US defence outlook

==> picture [92 x 44] intentionally omitted <==

==> picture [168 x 100] intentionally omitted <==

----- Start of picture text -----

US “fiscal cliff”
----- End of picture text -----

==> picture [168 x 101] intentionally omitted <==

----- Start of picture text -----

Election of Barack
Obama
----- End of picture text -----

==> picture [168 x 100] intentionally omitted <==

----- Start of picture text -----

Ships
----- End of picture text -----

==> picture [168 x 100] intentionally omitted <==

----- Start of picture text -----

Support work
----- End of picture text -----

• Bi-partisan views that mandated cuts to US Defense budget are a blunt instrument – will harm recovery

• Austal’s US backlog of $2.27 billion unaffected (is from previous budgets)

• Uncertainty in medium-term as Congress works through this challenge

• Provides continuity in defence strategy focus on Asia-Pacific region (e.g. US Secretary of State Hillary Clinton’s visit in November)

• Opportunities for Darwin and Henderson facilities

• Vessels patrolling littorals important for protection of trade routes • LCS and JHSV vessels specifically designed for littorals

• US Navy continuing to develop Through Life Support strategy

• Austal’s existing global service footprint closely aligns with potential forward deployment locations

SHIPS  SYSTEMS  SUPPORT

19

Strategy

==> picture [92 x 44] intentionally omitted <==

==> picture [61 x 60] intentionally omitted <==

Increase our status as a prime defence contractor

==> picture [61 x 60] intentionally omitted <==

Use lessons learnt on first-in-class vessels to drive margin improvement in US

==> picture [604 x 56] intentionally omitted <==

----- Start of picture text -----

Continue to refocus Henderson operations on the manufacture and support of
defence vessels
----- End of picture text -----

==> picture [603 x 49] intentionally omitted <==

----- Start of picture text -----

Expand commercial construction at our Philippines shipyard
----- End of picture text -----

==> picture [61 x 60] intentionally omitted <==

Grow commercial and defence vessel service and maintenance business Leverage our existing defence systems integration capabilities to pursue new opportunities

SHIPS  SYSTEMS  SUPPORT

20

Outlook

==> picture [220 x 136] intentionally omitted <==

----- Start of picture text -----

Lessons learnt from a
challenging period to deliver
stronger earnings from US
operations
----- End of picture text -----

==> picture [222 x 135] intentionally omitted <==

----- Start of picture text -----

Long lead items in defence
contracts provide visibility of
income, operations ramping up
at Philippines
----- End of picture text -----

==> picture [220 x 136] intentionally omitted <==

----- Start of picture text -----

FY2013 guidance for
A$65-71 million EBITDA and
A$23-26 million NPAT
----- End of picture text -----

==> picture [220 x 135] intentionally omitted <==

----- Start of picture text -----

Further contracts expected
in 1Q CY2013
----- End of picture text -----

==> picture [92 x 44] intentionally omitted <==

==> picture [234 x 136] intentionally omitted <==

----- Start of picture text -----

Strengthened balance sheet to
deliver on $2.3 billion order book
----- End of picture text -----

==> picture [227 x 135] intentionally omitted <==

----- Start of picture text -----

Continuing growth in Systems
and Support, with increasing
opportunities for support work of
Austal-built products
----- End of picture text -----

SHIPS  SYSTEMS  SUPPORT

21

Disclaimer

==> picture [92 x 44] intentionally omitted <==

Andrew Bellamy, Chief Executive Officer

Telephone: +61 8 9410 1111

For further information visit www.austal.com

Disclaimer

This presentation and any oral presentation accompanying it has been prepared by Austal Limited (“Austal”). It should not be considered as an offer or invitation to subscribe for or purchase any securities in Austal or as an inducement to make an offer or invitation with respect to those securities. No agreement to subscribe for securities in Austal will be entered into on the basis of this presentation.

Our presentation contains “forward-looking” statements or projections based on current expectations. These statements are not guarantees of future performance and are subject to risks and uncertainties. Actual results may differ materially due to: the availability of US government funding due to budgetary or debt ceiling constraints; changes in customer priorities; additional costs or schedule revisions. Actual results may also effect the capitalization changes on earnings per share; the allowability of costs under government cost accounting divestitures or joint ventures; the timing and availability of future impact of acquisitions; the timing and availability of future government awards; economic, business and regulatory conditions and other factors. We disclaim any duty to update forward looking statements to reflect new developments.

Accordingly, to the maximum extent permitted by applicable laws, Austal makes no representation and can give no assurance, guarantee or warrant, express or implied, as to, and takes not responsibility and assumes no liability for, the authenticity, validity, accuracy, suitability or completeness of, or any errors in or omission, from any information, statement or opinion contained in this presentation.

You should not act or refrain from acting in reliance on this presentation material. This overview of Austal does not purport to be all inclusive or to contain all information which its recipients may require in order to make an informed assessment of Austal’s prospects. You should conduct your own investigation and perform your own analysis in order to satisfy yourself as to the accuracy and completeness of the information, statements and opinions contained in this presentation before making any investment decision.

SHIPS  SYSTEMS  SUPPORT

22