AUSTAL LIMITED — Annual Report 2016

Aug 28, 2016

2016 full year results (concise)

David Singleton, Chief Executive Officer Greg Jason, Chief Financial Officer

29 August 2016

Earnings in line with guidance

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Income statement	FY2016 (A$m)*	FY2015 (A$m)^	Change
Revenue	1,339.9	1,414.9	(5)%
EBITDA	(91.0)	109.5	(183)%
- Underlying	65.0	97.9	(34)%
EBIT	(120.9)	85.2	(242)%
- Underlying	35.1	73.6	(52)%
NPAT	(84.2)	53.1	(258)%
- Underlying	25.0	45.0	(44)%
Reported EPS	(24.2)¢	15.5¢	(256)%

• Revenue decrease driven by write down of LCS work in progress (WIP) with FX offset

• Primary drivers of EBIT reduction:

• LCS WIP write down ($156 million in USA and $3 million in Australia)

• Lower activity in Australia following CCPB 1 – 8 and Oman HSSV

• CCPB 9 & 10 – no profit recognition in FY2016 under financing arrangement

• Warranty provision

• FY2016 underlying earnings removes the impact of a downward adjustment to revenue made to account for a change in the estimated cost to completion for the Littoral Combat Ship program

• ^ FY2015 underlying earnings removes the benefit from the foreign exchange mark-to-market revaluation of intercompany loans. Those loans were converted to equity in FY2015 H2 and have not impacted the FY2016 result.

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Segment breakdown

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($m) Ships Systems Support	Other1	Total
USA Revenue 821.4 213.9 97.8 EBIT (90.8) 2.2 6.0 EBIT Margin % (11.1) 1.0 6.2	-	1,133.0
	(8.0)	(90.5)
	-	(8.0)
Australia Revenue 139.0 - 48.0 EBIT 5.6 - 2.1 EBIT Margin % 4.0 - 4.4	-	187.1
	(1.0)	6.8
	-	3.6
Philippines Revenue 31.9 - 2.0 EBIT (4.4) - 0.7 EBIT Margin % (13.9) - 32.8	-	33.9
	-	(3.8)
	-	(11.1)

 USA: LCS work in progress write-down, support revenue grew over 100% year on year  Australia: Transition from CCPB 1-8 & RNO to new projects with zero or low profit take up  Philippines: Low throughput in FY2016

1 unallocated overhead targeting growth

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Discipline in long-term debt reduction

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120
114
112
Forecast
105 105
100 97
80
60
45
40
26
20
- - -
0
Dec 2014 June 2015 Dec 2015 June 2016 Dec 2016
USD US Infrastructure AUD CCPB 9 & 10
Gross debt ($millions)
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LCS test programs largely complete

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• Naval vessel rules modifications incorporated

• Physical shock trials complete. Analysis by US Navy will continue.

• Modification requirement has dropped dramatically

• Financial impacts understood

• Expect residual risks reducing

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Austal remains strongly positioned in US

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Austal-built vessels have
continued to be funded and
programs are maturing
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US Foreign Policy remains
focused on Asia-Pacific
defence strategy
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Winning service contracts on
LCS and investing in support
business to enhance
prospects for additional work
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US Navy and Congress
commitment appear to be
focused on ‘upgunning’ final
20 LCS as fast frigates and
meet 52 vessel target – rate of
acquisition to be decided by
Congress
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FY2017
Appropriation of 3 additional
LCS by Congress is likely
EPF 11 & 12 production
contract expected
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LCS variants attractive to
international market through
US Foreign Military Sales
(longer term)
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Transition period in Australia

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HSSV 1
HSSV 2
CCPB 9 & 10 Charter
CCPB 9
CCPB 10
Mols
PPB 1
PPB 2
PPB 3
PPB 4
OPV 1 Design
OPV 2
OPV 3
OPV 4
CCPB ISS
ACPB Rem
2016 2017 2018 2019 2020 2021
HSSV High speed support vessels for Oman Financial Year
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HSSV High speed support vessels for Oman CCPB Cape class patrol boats for Royal Australian Navy Mols 109m Passenger and Vehicle ferry for Mols Linen in Denmark PPB Pacific Patrol Boats for Commonwealth of Australia OPV Offshore Patrol Vessels for Royal Australian Navy (prospective) CCPB ISS. Support contract for Cape Class vessels for Australian Border Force ACPB Rem Armidale remediation. Support for Royal Australian Navy.

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Design work load Australia and Philippines

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Full Time Equivalent Design personnel
120
100
80
Potential Order Intake
60
Current Design Load
Current Manpower
40
20
0
Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17
SHIPS  SYSTEMS  SUPPORT
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Once in a generation opportunity for Austal“Continuous Shipbuilding” in Australia

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Designer Build location Adelaide Submarine Adelaide Future Frigate Adelaide initial 2 vessels Henderson next 10 vessels Offshore Patrol Vessel

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Austal today is by far Australia’s largest shipbuilder

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all vessels to
Austal vessels currently under construction in Alabama approximate scale
×7 ×3
127m LCS
102m EPF
Austal vessels currently under construction in Henderson
Upcoming Australian builds
×1
72m HSSV
×1
+ 1 more in
Philippines
×1
109m Mols
70m Oil & Gas
×
2 39m PPB-R ×19
58m Cape
ASC Air Warfare Destroyer. Size comparison
×3
147m AWD SHIPS  SYSTEMS  SUPPORT
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Pipeline has strengthened considerably

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United States 1 Defence

Middle East 2 Defence Australia 3 Defence Global 4 Commercial

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• •Strong potential to continue extending the LCS and EPF programs.

• •Exports from Austal’s portfolio of aluminium high performance naval vessels including HSSV and Cape Class variants.

• •Steel vessels for the Australian Navy’s fleet renewal programs. PPB awarded to Austal. OPV bid 2016/17. Frigate later.

• •5 ferry awarded already in CY2016. Pipeline continues.

• •Innovative new offering in the Oil & Gas crew transfer market. 2 vessels completing, market very strong.

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Disclaimer

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David Singleton, 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.

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