AUSTAL LIMITED — Capital/Financing Update 2010

Nov 3, 2010

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COMPANY ANNOUNCEMENT 4 NOVEMBER 2010

UPDATE – U.S. NAVY LCS CONTRACT

The USA division of Australian‐headquartered Austal Limited (ASX: ASB) has been advised by the U.S. Navy of a potential change to the procurement strategy of the Littoral Combat Ship (LCS).

The potential change, which was communicated to both Austal and our competitor Lockheed Martin, is that Navy is giving consideration to awarding a contract for 10 vessels each to both Austal and Lockheed. Navy has confirmed that the existing process to down select to a single bidder and award a 10 vessel contract to a single bidder is continuing in the background whilst the viability of the potential change is determined.

The potential change to the procurement approach requires the support of both Austal and Lockheed and will ultimately require sanction by Congress.

Navy is presently preparing a modification to the form of contract to cater for the proposed change and will be releasing this to Austal and Lockheed for review within the next 24 hours and requiring confirmation of acceptance or rejection by the close of business in the U.S. on Friday 5 November.

If the contract modification is accepted by both contractors, Navy will then seek formal authorisation from Congress to amend the procurement approach. Navy expects that Congress would make a decision on the matter by approximately the end of November.

In the event that Congress does not approve the amendment, Navy will proceed with the existing selection process to down select to a single contractor by the end of this calendar year.

Austal expects to release a further statement to the ASX after completing its review of the proposed contract modification and responding to Navy.

This announcement is not intended to lift the current trading halt in Austal’s securities.

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About Austal

Austal is the world leader in the design and construction of customised, high performance aluminium vessels for both commercial and defence applications. With shipyards in Western Australia and the USA (Mobile, Alabama), Austal has delivered more than 220 vessels for customers around the world.

Established in Western Australia in 1988, Austal’s product range includes passenger and vehicle‐passenger ferries, patrol boats, theatre support vessels, combat ships, multi‐role vessels and luxury private live‐aboards. Austal is also an established provider of worldwide vessel maintenance and management services.

For further information contact:

Richard Simons Chief Financial Officer Austal Limited Tel: +61 8 9410 1111 Fax: +61 8 9410 2564 Website: www.austal.com

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