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RaytheonAUSTAL LIMITE D 20 10 Conci se Re po r t Front cover Austal’s 102 metre Next Generation Trimaran. Above 107 metre Vehicle-Passenger Catamaran, “Jean de la Valette” during sea trials with Austal’s Next Generation Trimaran. “Jean de la Valette” was handed over to Virtu Ferries in August 2010. 2010/2011 CALEnDAR of EvEnTS ConTEnTS Annual General Meeting The Annual General Meeting of shareholders will be held at 3.00pm on 22 October 2010 at the Fremantle Sailing Club, “Success Harbour”, Marine Terrace, Fremantle, Western Australia. Dividend Payment The final dividend will be paid to shareholders on 7 October 2010 to those registered at 5pm on 23 September 2010. 02 Chairman’s Report 04 Operating and Financial Overview 06 Profile of Directors 08 Directors’ Report 16 Income Statement 17 Statement of Comprehensive Income 18 Balance Sheet 19 Cash Flow Statement 20 Statement of Changes in Equity 21 Notes to Concise Financial Statements 24 Directors’ Declaration 25 Independent Audit Report 27 Shareholder Information 28 Corporate Directory The Directors’ Report, Concise Financial Report and The 2010 Concise Report has been derived from Austal A copy of Austal Limited’s 2010 Annual Report, together Independent Audit Report contained within this document Limited’s 2010 Annual Report. The financial statements with the Independent Audit Report and Corporate represent a Concise Report. included in the Concise Report cannot be expected to Governance Statement, is available to all shareholders and provide as full an understanding of Austal Limited’s financial will be sent to shareholders without charge upon request. performance, financial position and financing and investing The financial statements can be requested by telephone on activities as that provided by the 2010 Annual Report. +61 8 9410 1111. 2010 Annual Report CHA IRMAn’S RE PoRT Operators within Austal’s traditional high speed commercial ferry market were among those most affected by the global financial crisis, which resulted in the slowing of sales at our Australian operations. However, the strategic decision to diversify the company’s product offering and expand the company’s manufacturing presence into the US is now reaping rewards in the face of these challenges. Our involvement in two major US defence programmes, which have proven less susceptible to economic conditions, is the best example of the benefits of such a strategy. The company’s success in winning the US Department of Defense’s Joint High Speed Vessel (JHSV) 10 ship programme is a boost for our Alabama shipyard. All the current signs are that the programme will be extended to much larger numbers in the near future. The first Austal Littoral Combat Ship was delivered to the US Navy in the past year and is performing extremely well. A second ship is currently under construction and as the total programme is for more than 50 vessels, opportunities for winning multiple vessel orders for this ship are strong. The recent completion of a new 34,000m2 Modular Manufacturing Facility (MMF) at our US facility means Austal is well positioned to capitalise on these major military programmes through faster, more cost-effective construction of both JHSV and LCS components. The past year has also seen Austal maintain a deliberate, ongoing strategy to target the long-term, predictable income streams offered by multiple-vessel military constructions such as those previously mentioned and multi-year vessel maintenance contracts. This strategy attempts to counter the traditionally lumpy income streams associated with shipbuilding while delivering a level of visibility and predictability that is unparalleled in Austal’s history. The significant growth in Austal’s vessel maintenance and service business is further evidence of the strategy’s success as this unit is now a major business entity within the company. The establishment of strategically located service hubs in regions such as the Middle East, Asia, Europe and the Caribbean has increased market penetration. Importantly, vessel maintenance and service contracts typically span up to five years, delivering a long-term, predictable income stream independent of our shipbuilding order book. Although the commercial ferry market continues to feel the effects of the global financial crisis, Austal was successful in securing new orders for both passenger and vehicle passenger ferries during the year. These contracts underline the company’s ongoing commitment to the commercial market and also point to a recovery in the sector. The recent rationalisation of Austal’s Australian operations will deliver further efficiencies moving forward in line with market demand. Whilst the current economic conditions continue to present challenges across Austal’s markets, the company remains focussed on delivering growth opportunities through international expansion and product diversification. As we enter a new and exciting phase of consistent and predictable growth, I wish to thank our staff and shareholders for their ongoing support. JOHN ROTHWELL AO CHAIRMAN Three 30m Fast Patrol Craft delivered to the Government of the Republic of Right Trinidad & Tobago, are flanked by four 21m Inshore Patrol Craft delivered to to the Armed Forces of Malta. All seven vessels were delivered during 2010. This year’s earnings demonstrate that Austal’s underlying business strategy continues to perform well amidst the ongoing challenges presented by the aftermath of the global financial crisis. The high Australian dollar and international market conditions, particularly in the important European market, combined to greatly impede Austal’s ability to export its products during this period. 2 A USTAL LI M IT ED 201 0 C on ci s e Re po r t The past year has also seen Austal maintain a deliberate, ongoing strategy to target the long-term, predictable income streams offered by multiple-vessel military constructions... AUSTAL LIM ITED 2010 Con ci se Re por t 3 oPERATIng AnD fInAnCIAL ovERvIEw The Group operating profit after tax for the year was $37.132 million compared with the previous year of $9.166 million. Revenue has increased by $29.946 million over the previous year while operating profit before tax has increased by $41.380 million. Revenue from Austal’s US operations increased by 17.9% over 2009, to $267.3 million. The EBIT contribution from the US operations improved substantially, from an operating loss of $24.712 million in 2009, to a positive EBIT contribution of $23.722 million in 2010. This significant improvement in performance was achieved through the maturing of US manufacturing operations, with the Modular Manufacturing Facility beginning to reach design throughput levels. This level of contribution from Austal USA is expected to continue and indeed grow as further operational efficiencies are achieved. The revenue from Austal’s Australian operations decreased by $47.578 million compared to 2009 due to the continued impact of global economic conditions, resulting in less work volume awarded and completed in 2010. Further contributing to this result was that the stock vessels were not sold during the year as previously expected. The EBIT result for the Australian operations was $27.6 million which was a 14% improvement over the previous period. Importantly, Austal’s USA business is now providing the Group with a level of diversification in its earnings which is in part offsetting the impact of global economic conditions. fInAnCIAL SUMMARY Year ended 30 June Revenue* EBITDA Depreciation, Amortisation & Impairment EBIT Net Interest (Paid)/Received Operating Profit Before Tax Tax Expense Operating Profit After Tax % EBIT/Revenue Basic Earnings Per Share (cps) Net Assets Return on Equity (%) * Excludes interest and other income AUSTRALIAn oPERATIonS 2010 $’000 2009 $’000 520,150 490,204 67,159 (14,428) 52,731 (1,574) 51,157 (14,025) 37,132 10.1 20.3 9,593 (8,076) 1,517 8,260 9,777 (611) 0.3 5.0 269,365 235,735 13.8 3.9 This year the decision was made to rationalise our Australian operations. Although the rationalisation will unfortunately result in the closure of our Tasmanian operations in September, it is an important part of ongoing efforts to improve the efficiency and effectiveness of our Australian operations, within which our continued focus on improved productivity and cost management is resulting in greater throughput capability. 4 A USTAL LI M IT ED 201 0 C on ci s e Re po r t Although challenging economic conditions slowed sales at our Australian facilities, we were pleased to secure two new commercial contracts during the year. These consisted of four, 41 metre high speed passenger ferries for the Republic of Trinidad and Tobago and two, 47 metre ferries for repeat Austal customer L’Express des Iles in Guadeloupe. Considering the current global economic climate, this achievement was a tremendous endorsement of Austal’s ability to fulfil its customers’ commercial needs with affordable, quality products. Reflecting the company’s strategy of building longer term, more predictable income streams has been the growth of Austal’s vessel maintenance and support offering. The past year has seen Austal establish dedicated international service hubs in Egypt, Trinidad and Tobago, Oman, Hong Kong, Saudi Arabia and Spain. Multi-year service contracts announced this year include a five year package with the Trinidad and Tobago Government, as well as similar contracts with the Egyptian Government and Oman’s National Ferries Company. The result has been a $30.783 million increase in service related revenue compared to last year. In the defence sector, Austal’s Australian operations successfully completed the company’s first European military contract with the delivery of four, 21.2 metre inshore patrol craft for the Armed Forces of Malta. This was closely preceded by the delivery of six, 30 metre fast patrol craft for the Trinidad and Tobago Coast Guard. There continues to be strong interest in Austal’s brand of lightweight, high speed aluminium vessel technology within the patrol boat market. Recently completed at our Western Australian facility during the year has been the next generation 102 metre trimaran vehicle ferry which, as previously reported, the company has built on speculation. This state-of-the-art vessel exceeded performance expectations during sea trials, reinforcing the ability of Austal’s R&D team to deliver vessels that set new standards in the industry. We continue to field strong interest in the vessel, particularly from Europe and Asia, and remain confident that the vessel will sell in coming months. Meanwhile, construction continues on a 107 metre vehicle ferry for Virtu Ferries and a 113 metre vehicle ferry for Nordic Ferry Services, where increased automation within the manufacturing process is delivering improved efficiencies at our Western Australian facility. Austal’s US facility in Mobile, Alabama celebrated a number of major milestones during the year. Among these were the delivery of the company’s first US Navy Littoral Combat Ship (LCS), the opening of its state-of-the-art Modular Manufacturing Facility and the start of construction on the first Joint High Speed Vessel. An historic commissioning ceremony for the US Navy’s 127 metre Austal- designed and built LCS, “USS Independence” was held near Austal’s US facility in January and was attended by thousands of delegates and spectators. By utilising Austal’s advanced trimaran hull form, this new generation combat ship represents a technological leap in naval warfare. Construction of a second LCS “USS Coronado” is now underway and labour costs are already running at 30 per cent less than the first vessel as a result of having a mature design in place. The vessel remains on track for delivery in 2012. Austal is currently one of two competitors in contention for the award of a contract to build the next 10 LCSs, with the US Navy expected to announce the winner by September 2010. Our US facility also recently commenced construction on the first of the US Department of Defense’s high speed support vessels – the Joint High Speed Vessel (JHSV). As the sole supplier of a vessel that may expand into a 40-ship class, Austal currently has contracts in hand to build the first three of these 9,166 USA oPERATIonS Above Austal’s f acili ties i n Henderson, West er n Aus t ralia . 103 metre JHSVs. Together with receiving orders for JHSV 2 and 3 during 2010, the US Navy has also funded the acquisition of long lead-time materials for JHSV 4 and 5, in a strong indication that the options will be exercised in the coming year. 3 . 3 1 In order to best position ourselves to capitalise on these US military programmes, Austal USA recently upgraded its production capacity with the opening of a new 34,000m2 Modular Manufacturing Facility (MMF). The new facility allows faster, more cost effective vessel construction, and gives Austal USA the capability for multiple and concurrent LCS and JHSV vessel programmes. Once operating at maximum efficiency, the facility will allow Austal to deliver two, 103 metre JHSVs and two, 127 metre LCSs per year. 3 . 1 8 2 2 8 1 3 5 9 1 . 0 6 6 0 9 1 5 5 3 . 6 5 0 . 6 8 9 . 5 8 3 . 5 8 9 . 1 1 8 6 . 5 5 8 6 1 9 0 6 . 0 0 0 6 9 7 8 3 . 8 8 8 3 7 6 0 1 8 . 8 0 1 6 EnvIRonMEnTAL PERfoRMAnCE In response to the international focus on climate change and the need to reduce carbon and other greenhouse gas emissions we have continued to devote significant resources to the development of more efficient vessels with a smaller environmental footprint. Initiatives that are currently being pursued include medium speed ferries that combine Austal’s light weight aluminium technology with highly fuel efficient engines, the use of LNG and CNG fuels, reduction in on board electrical load through power saving and power substituting technologies, and the use of more hydro-dynamically efficient hull forms. In the US, Navy fuel utilisation profile comparison of the competing LCS designs indicates that at speeds above 16 knots, the Austal vessel consumes up to 64% less fuel than the Lockheed Martin-built vessel, representing dramatic proof of the company’s leadership in carbon reduction efforts. SAfETY PERfoRMAnCE This year saw Austal achieve both Lost Time Injury Frequency Rates (LTIFR) and Medical Treatment Injury Frequency Rates (MTIFR) at record low levels in contrast to the frequency rates in the previous year. LTIFR for Austal over the last 5 years has typically been at levels between 5 and 6.5. Our refocus on safety has seen new initiatives for Austal introduced and while maintaining a focus on the workplace culture and ramping up behavioural programmes, we have embarked on a more systematic approach. The results are very encouraging, especially given the rapidly expanding workforce in the US Operations which brings with it the challenges of new people, inexperienced in Austal’s systems and processes, to our industry and to the hazards in the marine manufacturing environment. oCCUPATIonAL SAfETY AnD HEALTH PoLICY Austal’s Occupational Safety and Health (OSH) Policy focuses on safe people, safe practices and safe work environments and promotes a workplace culture that raises awareness of individual responsibility for safety and health. Austal’s safety culture is achieved when these components are recognised and budgeted in conjunction with strong leadership. SAfE PEoPLE This year has seen the nomination of employees in various Safe Work Awards for their safety innovations and the implementation of monthly recognition awards for safety. Austal Ships, the Australian manufacturing facility has been recommended to WorkSafe Western Australia for a Silver Certificate of Achievement under the WorkSafe Plan Assessment, a 3rd party assessment process. The US Operations received two awards from the Ship Builders Council of America for Excellence and its Improvement in Safety Performance. FY05 FY06 FY07 FY08 FY09 FY10 FY05 FY06 FY07 FY08 FY09 FY10 Lost Time Injury frequency Rate Per million hours worked Medical Treatment Injury frequency Rate Per million hours worked At Austal the safety of our people is at the forefront of everything we do. Our goal is Zero Harm and we work hard in an effort to achieve this every day. oUTLook Austal can look ahead to future earnings with a level of visibility and predictability that is unparalleled in the company’s history, underpinned by an ongoing strategy to target long term, predictable revenue streams offered by multiple-vessel military construction and multi-year vessel maintenance contracts. Success in both the US Navy’s LCS programme and the potential expansion of the US Department of Defense’s JHSV programme would see Austal charged with building one third of the US Navy’s future fleet. This would result in an order book in excess of $2 billion by the end of 2012. Austal has already been selected as sole supplier of the JHSV and is expected to be awarded contracts for an additional two vessels during 2011. Options currently remain for an additional seven JHSVs to be exercised between FY2011 and FY2013. The total value of the 10-vessel contract is approximately US$1.6 billion. Importantly, the programme is expected to deliver a predictable revenue stream of US$320 million per annum from 2012 to 2015, which equates to approximately 60 percent of Austal’s historical revenue. With dedicated service hubs now established worldwide we can also expect continued growth in the vessel maintenance and support markets which further complement the company’s predictable, multi-year income stream strategy. As of 30 June 2010, contracts on hand to be completed across the 2011 to 2012 financial years amounted to $923 million. Although challenges remain in many of Austal’s traditional export markets as a result of current economic conditions, the successful execution of a strategy embarked upon several years ago has successfully positioned Austal to deliver consistent shareholder value. ROBERT BROWNING MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER AUSTAL LIM ITED 2010 Con ci se Re por t 5 PRofILE of DIRECToRS JoHn RoTHwELL MICHAEL ATkInSon CHRISToPHER noRMAn AO – Non Executive Chairman CA (ZIM), CA (SA) - Executive B.Eng (Hons) - Non Executive Director, Finance & Company Director Secretary Director since 9 October 1987 Director since 14 September 1994 Director since 9 October 1987 Last elected: 22 October 2007 Last elected: 21 October 2008 Last elected: 23 October 2009 Michael joined Austal in 1990 as Financial Controller and was appointed to the Board in 1994. He is a qualified Chartered Accountant with 10 years experience in the accounting profession. On leaving the profession, he entered the railway and construction industry where he served in a senior financial capacity and as a Board member. With in excess of 30 years experience in boat and shipbuilding, John has played a major role in the development of the Australian aluminium shipbuilding industry and is a Founding Director of Austal. of Committee In June 2004, John was appointed a Council member of the Australian National Maritime Museum and became Chairman of the Capital Works that organisation in November 2005. In January 2004, John was appointed an Officer of the Order of Australia the Australian to for shipbuilding the through industry development of trade links and for significant contributions to vocational education and training. In October 2002, John was named the Ernst & Young “Australian Entrepreneur of the Year”. services and Architecture Chris is one of the Founding Directors of Austal. He graduated from the University of New South Wales in 1986 with first class honours in has Naval previously been Austal’s Technical Director. He has been a driving force in technical and marketing success of the company and, with extensive experience in international marketing and the position of Sales Director between 1993 and 2002. sales, held the In May 2000, Christopher was awarded the prestigious A.G.M. Michell Award in recognition of outstanding service in the profession of Mechanical Engineering. John stepped down as Executive Chairman and Chief Executive Officer on 22 August 2008 to continue as Non Executive Chairman. InTERESTS In THE SHARES AnD oPTIonS of THE CoMPAnY AnD RELATED boDIES CoRPoRATE As at the date of this report, the interests of the directors in the shares of Austal Limited were: number of ordinary Shares number of Shares held in AgMSP* John Rothwell Michael Atkinson Direct Indirect 33,974,685 1,415,737 - - Christopher Norman 26,595,621 6,600 John Poynton Robert Browning Dario Amara 10,000 20,000 50,000 - - - - 285,062 - - 3,000,000 - * This represents the number of shares (in substance options) held in the Austal Group Management Share Plan (AGMSP).There were no additional ordinary shares issued or options granted and exercised between the balance sheet date and the date of this report. 6 A USTAL LI M IT ED 201 0 C on ci s e Re po r t JoHn PoYnTon RobERT bRownIng DARIo AMARA IAn CAMPbELL B.Com, SF Fin, FAIM, FAICD - MSc, MBA, FAIM – Managing B.Eng (Distn), FIEAust, CPEng - Independent Director Independent Director Director & Chief Executive Officer Independent Director Director since 24 August 1998 Director since 2 September 2003 Director since 16 August 2005 Appointed 1 August 2007 Last elected: 23 October 2009 Last elected: 22 August 2008 Last elected: 21 October 2008 Last elected: 22 October 2007 John is a Co-Founder and Executive Chairman of Azure Capital. He is the Deputy Chairman of Austal Limited and is a Non-Executive Director of Burswood Ltd. He is a Member of the Council of Celebrate WA and of Social Ventures Australia. John is also a Member of the Board of the the Business School at University of Western Australia, where he also serves as Adjunct Professor of Financial Services. Previously, John was a Chairman of ASX Perth, Fleetwood, Alinta and West Australian Museum Foundation; Director of Multiplex; Member of the Higher Education Endowment Fund Advisory Board and Payments System Board of the Reserve Bank of Australia. Robert was Chief Executive Officer of Alinta Limited from March 2001 to 8 April 2007. He holds a Bachelor of Science from San Diego State degree University, an MBA the University of Phoenix and a Master of Science from Massachusetts Institute of Technology, Sloan School of Management. from held the position Director of Robert from Independent 2 September 2003 until his resignation on 31 July 2007 to take up the position of Chief Executive Officer with Austal USA LLC. On 22 August 2008, Mr Browning rejoined the Board and was appointed to the position of Managing Director & Chief Executive Officer. Institute Services John is a Senior Fellow of the Financial of Australasia (FINSIA), and a Fellow of the Australian Institute of Company (AICD) and Australian Directors Institute of Management (AIM). John is a Member in the General Division of the Order of Australia and is a past recipient of a WA Citizen of the Year award in the industry and commerce category. John holds a Bachelor of Commerce and an honorary Doctor of Commerce from the University of Western Australia. Dario is founder and Group Chief Executive Officer of Emerson Stewart Group Limited, an engineering, geospatial, project implementation and consultancy group based in Perth. the engineering He has 30 years of Australian and International experience covering both and construction sectors, and has been involved in a number of senior leadership roles. He has a record of achievement in establishing, growing and rejuvenating businesses and is a strategic graduate from the Curtin University of Technology. leadership. He He is currently Non Executive Chairman of Mission New Energy Limited and Chairman of Heritage Perth. He has also served as Chairman of the West Australian Opera Company, the Art Gallery of Western Australia and as a board member of the Perth International Arts Festival. Ian has had a distinguished 17 year career as a Senator for Western Australia in the Australian Federal Parliament. As Parliamentary Secretary to the Treasurer for 4 years, Ian initiated the Corporate Law Economic Reform Programme including legislating to International to move Australia Standards, Reporting Financial reform of Accounting and Audit oversight institutional arrangements, takeovers and fundraising provisions. He is a former Member of Federal Cabinet where he held the portfolios of Environment and Heritage and Human Services. He also served as Minister Local Government, Territories and Roads. for He is a Non Executive Chairman of Enerji Limited and a Director of Solco Ltd, ASG Group Ltd and Proto Resources and Investments Ltd. He is also Chairman of Princess Margaret Hospital Foundation and WA 2011 Pty Ltd, the organiser of the ISAF World Sailing Championships in Fremantle in 2011 Unless otherwise indicated all Directors held their position as a Director throughout the entire financial year and up to the date of this report. The maximum term of office for a Director on the Austal Board is three years, with the exception of the Managing Director who is exempted from retirement by rotation. Each year the longest serving one third of the Board must retire from office. A retiring Director is eligible for re-election. AUSTAL LIM ITED 2010 Con ci se Re por t 7 DIRECToRS’ REPoRT PRInCIPAL ACTIvITIES The principal activities during the year of entities within the consolidated entity were the design and manufacture of high performance vessels. These activities are unchanged from the previous year. During the financial year, the parent entity has paid premiums in respect of a contract insuring the directors and officers of the consolidated entity in respect of liability resulting from these indemnities. The terms of the insurance arrangements and premiums payable are subject to a confidentiality clause. RESULTS The profit of the consolidated entity for the financial year was $37.132 million after income tax (2009: 9.166 $million). oPERATIng AnD fInAnCIAL REvIEw A review of the operations and financial position of the consolidated entity is outlined in the Operating and Financial Overview on page 4. DIvIDEnDS A fully franked final dividend of $11.284 million (6 cents per share) (2009: $11.284 million being 6 cents per share) has been declared for the year ended 30 June 2010 to be paid on 7 October 2010. SIgnIfICAnT EvEnTS AfTER THE bALAnCE DATE There were no significant events occurring after year end requiring disclosure. LIkELY DEvELoPMEnTS AnD fUTURE RESULTS A general discussion of the group outlook is included in the Chairman’s Report on page 2 and the Operating and Financial Overview on page 4. SIgnIfICAnT CHAngES In THE STATE of THE AffAIRS A review of the significant changes in the state of affairs of the consolidated entity is outlined in the Operating and Financial Overview on page 4. EnvIRonMEnTAL REgULATIon AnD PERfoRMAnCE The consolidated entity has a policy of at least complying with, but in most cases exceeding, environmental performance requirements. No environmental breaches have been notified by any Government Agency during the year ended 30 June 2010. SHARE oPTIonS As at the date of this report, there were 3,874,402 un-issued ordinary shares under options. There were no options exercised during the year. ToTAL nUMbER of EMPLoYEES As at 30 June 2010, the consolidated entity employed a total of 2,452 full-time equivalents (2009: 2,065 full-time equivalents). InDEMnIfICATIon AnD InSURAnCE of DIRECToRS AnD offICERS An indemnity agreement has been entered into between the parent entity and each of the directors named in this report. Under the agreement, the company has agreed to indemnify those directors against any claim to the extent allowed by the law, for any expenses or costs which may arise as a result of work performed in their respective capacities. REMUnERATIon REPoRT (Audited) This Remuneration report outlines the remuneration arrangements in place for Directors and Executives of Austal Limited (the Company) and the Group in accordance with the requirements of the Corporations Act 2001 and its Regulations. For the purposes of this report, Key Management Personnel (KMP) of the Group are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company and the Group, directly or indirectly, including any director (whether executive or otherwise) of the parent company, and includes the five executives in the Parent and the Group receiving the highest remuneration. For the purposes of this report, the term ‘executive’ encompasses the Chief Executive, senior executives and general managers and secretaries of the Parent and the Group. noMInATIon AnD REMUnERATIon CoMMITTEE The Nomination and Remuneration Committee of the Board of Directors reviews the remuneration of all Directors and makes recommendations to the Board. REMUnERATIon PoLICY It is the Company’s objective to provide maximum stakeholder benefit from the retention of a high quality Board and executive team by remunerating Directors and Key Executives fairly and appropriately with reference to relevant employment market conditions. Other than the variable component and the share option plan, the remuneration policy is not linked to company performance. Objective The Company aims to reward executives and senior managers with a level and mix of remuneration commensurate with their position and responsibilities within the Company so as to: • attract and retain exceptional employees (‘key employees’) that have the capacity to significantly impact the growth and profitability of the Company; • align key employees’ behaviour towards the growth and profitability objectives of the Company; and reward key employees for sustained contributions to business success. Structure The non executive directors receive fixed remuneration, in the form of salary and fees. However, they do not receive retirement benefits, nor do they participate in any incentive programs. The remuneration for the executives consists of fixed remuneration, being base salary, superannuation and non-monetary benefits and variable remuneration as listed below. No element of fixed remuneration is linked to performance conditions. To encourage the retention of employees, KMP who are not directors of the Australian companies participate in an annual bonus which takes into account length of service and profits earned by the Australian enterprises. The bonus vests and is paid dependent on the employees being employed at the end of December of each year. The bonus is paid at the discretion of the Nomination and Remuneration Committee. 100% of the cash bonuses vested with the executives was paid during the financial year. 8 A USTAL LI M IT ED 201 0 C on ci s e Re po r t Structure The share options are granted to executives and senior managers based on the eligibility criteria set by the Remuneration Committee. Eligibility for the plan will be linked to employee performance. The exercise of the options will vest after 3 years subject to meeting the company performance criteria. Performance hurdle The Company uses a relative Total Shareholder Return (TSR) as the performance hurdle for the share option plan. Relative TSR was selected as the share option plan performance hurdle as it ensures an alignment between comparative shareholder return and reward for executives. The Company’s performance against the hurdle is determined by comparing the TSR against the return of the Small Industrials Accumulation Index (or another appropriate index) for the three year period commencing on 1 July prior to the grant date. If the TSR does not exceed the return of the Small Industrials Accumulation Index for a particular three year period, the series of options issued at that grant date would lapse. In relation to the options issued on the 3 November 2009, the options vest if the TSR of Austal Limited exceeds 25% for the period 1 September 2009 to 31 August 2012. The percentage vesting reduces on a sliding scale if the TSR is below 25%, until no options vest if the TSR is below 5%. Below Austal’s Next Generation Trimaran Similarly, KMP who are not directors of Austal USA participate in an annual bonus programme. Two forms of bonus opportunities exist: one form for the production workforce and one form for administration and management. Bonuses to the production workforce are tied to achievement of the performance objectives of Austal USA, reduction of waste, and safety and attendance measures. Bonuses to administration and management are tied to achievement of the financial objectives of Austal USA, specific growth initiatives, productivity improvement initiatives, customer satisfaction measures and employee satisfaction measures. These measures were chosen as they represent the key drivers for the short term success of the business and provide a framework for delivering long term value. Goals for each of the preceding categories are established at the beginning of each financial year for each participant and bonuses are paid at the conclusion of that year dependent upon the level of achievement of these goals. Such bonuses are reviewed and approved by the Nomination and Remuneration Committee. 100% of the cash bonuses vested with the executives and paid during the financial year. Ex gratia bonuses are paid to executives in certain circumstances for exceptional performance as determined by the CEO. These bonuses vest immediately. SHARE oPTIon PLAn Objective The Share Option Plan aims to reward executives and senior managers with the issue of share options commensurate with their position and responsibilities within the Company so as to: • attract and retain exceptional employees (‘key employees’) that have the capacity to significantly impact the growth and profitability of the Company; • align key employees’ behaviour towards the growth and profitability objectives of the Company; and reward key employees for sustained contributions to business success. Group performance The graph below shows the performance of the Company as compared to the movement in the Company’s earnings per share over time. 30 25 20 S P E 15 10 5 0 $4.00 $3.00 $2.00 $1.00 $0.00 -$1.00 -$2.00 e c i r P e r a h S y l r a e Y e g a r e v A 2005 2006 2007 2008 2009 2010 EPS Average Yearly Share Price AUSTAL LIM ITED 2010 Con ci se Re por t 9 DIRECToRS’ REPoRT Cont inued DETAILS of kEY MAnAgEMEnT PERSonnEL InCLUDIng gRoUP AnD CoMPAnY ExECUTIvES wHo RECEIvED THE HIgHEST REMUnERATIon foR THE YEAR EnDED 30 JUnE 2010 (i) DIRECToRS (ii) ExECUTIvES Mr John Rothwell Non Executive Chairman Mr Joseph Rella Chief Operating Officer Austal USA Mr Michael Atkinson Executive Director & Company Secretary Mr Greg Metcalf Chief Financial Officer – resigned 18 September 2009 Mr Christopher Norman Non Executive Director Mr Richard Simons Chief Financial Officer – appointed 1 February 2010 Mr John Poynton Independent Director Mr William Rotteveel General Manager Austal Image – resigned 6 July 2010 Mr Robert Browning Managing Director & Chief Executive Officer Mr Mark Dummett Executive Manager Australian Operations Mr Dario Amara Independent Director Mr Andrew Bellamy Chief Operating Officer Australia – appointed 1 June 2010 Mr Ian Campbell Independent Director Mr Peter Hogan Chief Operating Officer Australia – resigned 10 December 2009 REMUnERATIon of kEY MAnAgEMEnT PERSonnEL InCLUDIng gRoUP AnD CoMPAnY ExECUTIvES wHo RECEIvED THE HIgHEST REMUnERATIon foR THE YEAR EnDED 30 JUnE 2010 TAbLE 1: REMUnERATIon foR THE YEAR EnDED 30 JUnE 2010 Short-Term Salary & Fees Cash Bonus $ $ non executive directors John Rothwell Christopher Norman John Poynton Dario Amara Ian Campbell 416,666 85,000 90,000 93,000 90,000 Sub-total non executive directors 774,666 Executive directors Robert Browning Michael Atkinson other key management personnel 623,986 364,105 - - - - - - - - $ - - - - - - 28,008 - Non Monetary Benefits Post Employment Superannuation Sharebased Payment Options % Performance Related Contract Terms Note Total $ 416,666 85,000 90,000 93,000 90,000 774,666 $ - - - - - - 478,754 1,130,748 15,346 379,451 42.3 4.0 $ - - - - - - - - - - - - - - 4.1 3.1 5.7 7.0 3.2 3.7 6.4 2 1 1 1 1 5 2 5 3 3 3 4 4 4 Joseph Rella Greg Metcalf* # William Rotteveel Mark Dummett Andrew Bellamy Peter Hogan* ## Richard Simons* 374,065 84,527 35,646 21,330 515,568 344,347 231,682 254,285 - 9,050 9,760 324,507 32,110 239,269 22,242 125,960 - - - - - - - 5,812 11,290 361,449 18,847 15,615 275,194 23,377 21,648 309,070 28,321 12,537 397,475 21,946 10,896 294,353 11,274 9,397 146,631 Sub-total executive kMP 2,882,206 157,689 63,654 109,577 596,813 3,809,939 Total 3,656,872 157,689 63,654 109,577 596,813 4,584,605 Key management personnel for part of year of 2010. Salary and fees includes a cessation of employment payment of $212,994. * # ## Salary and fees includes a cessation of employment payment of $83,479. 10 AUSTAL LI M I TED 2010 Co nci s e R ep or t Above Virtu Ferries 107m vehicle-passenger catamaran “Jean de la Valette” Interior of “Jean de la Valette” TAbLE 2: REMUnERATIon foR THE YEAR EnDED 30 JUnE 2009 Short-Term Salary & Fees Cash Bonus Non Monetary Benefits Post Employment Superannuation Sharebased Payment Options % Performance Related Contract Terms Note non executive directors John Rothwell Christopher Norman John Poynton Dario Amara Ian Campbell $ 583,333 89,950** 90,000 93,000 90,000 Sub-total non executive directors 946,283 $ - - - - - - $ - - - - - - Total $ 583,333 89,950 90,000 93,000 90,000 946,283 $ - - - - - - $ - - - - - - - - - - - - - - 1.4 3.2 3.3 4.7 - - 2 1 1 1 1 5 2 5 3 3 3 4 4 Executive directors Robert Browning Michael Atkinson other key management personnel Joseph Rella Greg Metcalf William Rotteveel Mark Dummett Andrew Bellamy* Peter Hogan* 617,338 351,794 5,228 28,720 - - 410,494 19,508 68,510 785,640 1,436,926 14,959 366,753 54.7 4.1 6,904 505,416 264,750 17,674 - 25,117 10,128 317,669 204,555 14,294 6,712 18,659 8,234 252,454 242,017 16,054 209,159 122,786 - 1,698 9,821 - - 22,838 13,782 294,691 18,658 11,203 - - 227,817 145,508 Sub-total executive kMP 2,422,893 74,456 113,763 96,475 839,647 3,547,234 Total 3,369,176 74,456 113,763 96,475 839,647 4,493,517 Key management personnel for part of year of 2009. * ** Includes amounts paid for consultancy services during the year. ConTRACT TERMS noTES 1. Directors fees only. 2. Subcontract – no fixed notice period or duration. No termination entitlements. 3. Employment contract – one week notice period or duration. No non-statutory termination entitlements. 4. Employment contract – three months notice period. No non-statutory termination entitlements. 5. Employment contract – upon involuntary termination of employment without cause, a severance of six months salary will be paid. AUSTAL LIM ITED 2010 Con ci se Re por t 1 1 DIRECToRS’ REPoRT Cont inued TAbLE 3: CoMPEnSATIon oPTIonS: gRAnTED AnD vESTED DURIng THE YEAR (ConSoLIDATED) Granted Terms & Conditions for each Grant 30 June 2010 Executives Joseph Rella Andrew Bellamy Peter Hogan* William Rotteveel Mark Dummett Richard Simons* Total No. Grant Date 140,000 3 Nov 2009 140,000 3 Nov 2009 140,000 3 Nov 2009 100,000 16 Feb 2010 70,000 3 Nov 2009 70,000 3 Nov 2009 140,000 16 Feb 2010 800,000 Fair Value per option at grant date ($) Exercise price per option ($) Expiry Date First Excercise Date Last Exercise Date Vested No. 0.522 0.522 0.522 0.690 0.522 0.522 0.561 2.95 30 Oct 2016 30 Oct 2012 30 Oct 2016 2.95 30 Oct 2016 30 Oct 2012 30 Oct 2016 2.95 ** ** ** 1.81 27 Feb 2016 27 Feb 2012 27 Feb 2016 2.95 30 Oct 2016 30 Oct 2012 30 Oct 2016 2.95 30 Oct 2016 30 Oct 2012 30 Oct 2016 2.45 27 Feb 2017 27 Feb 2013 27 Feb 2017 - - - - - - - - * Key management personnel for part of year of 2010. ** 140,000 options were forfeited on cessation of employment. Granted Terms & Conditions for each Grant 30 June 2009 Executives Joseph Rella Greg Metcalf William Rotteveel Mark Dummett Total No. Grant Date 95,000 10 Sep 2008 50,000 10 Sep 2008 50,000 10 Sep 2008 69,000 10 Sep 2008 264,000 No options vested or were exercised during the year or prior year. TAbLE 4: oPTIonS gRAnTED AS PART of REMUnERATIon Fair Value per option at grant date ($) Exercise price per option ($) Expiry Date First Excercise Date Last Exercise Date Vested No. 0.36 0.36 0.36 0.36 2.40 10 Sep 2015 10 Sep 2011 10 Sep 2015 2.40 10 Sep 2015 10 Sep 2011 10 Sep 2015 2.40 10 Sep 2015 10 Sep 2011 10 Sep 2015 2.40 10 Sep 2015 10 Sep 2011 10 Sep 2015 - - - - - 30 June 2010 Joseph Rella Andrew Bellamy Peter Hogan* William Rotteveel Mark Dummett Richard Simons* Value of options granted during the year $ Value of options exercised during the year $ Value of options forfeited during the year $ Value of options lapsed during the year $ 73,080 73,080 73,080 69,000 36,540 36,540 78,540 - - - - - - - - - 73,080 - - - - - - - - - - - Remunerations consisting of options granted during the year % 4.1 3.2 - 3.7 5.7 7.0 6.4 * Key management personnel for part of year of 2010. 12 AUSTAL LI M I TED 2010 Co nci s e R ep or t TAbLE 4: oPTIonS gRAnTED AS PART of REMUnERATIon (ConTInUED) 30 June 2009 Michael Atkinson Joseph Rella Greg Metcalf William Rotteveel Mark Dummett Value of options granted during the year $ Value of options exercised during the year $ Value of options forfeited during the year $ Value of options lapsed during the year $ - 34,295 18,050 18,050 24,909 - - - - - - - - - - - - - - - Remunerations consisting of options granted during the year % 4.1 1.4 1.2 3.4 4.7 TAbLE 5: SHARES HELD In AgMSP (In SUbSTAnCE oPTIonS) gRAnTED AS PART of REMUnERATIon Value of shares held in AGMSP (in substance options) granted during the year Value of shares held in AGMSP (in substance options) exercised during the year Total value of options granted, and exercised during the year Remunerations consisting of in substance options during the year $ - - $ - - $ - - % 42.3 54.7 30 June 2010 Robert Browning* 30 June 2009 Robert Browning* * Robert Browning was granted 3,000,000 in substance options on 22 October 2007 at a fair value and exercise price of $0.96 and $3.51 respectively. The first exercise date for these in substance options was 22 October 2008. There were no alterations to the terms and conditions of options granted as remuneration since their grant date. The maximum cost assuming that all service and performance conditions are met, is equal to the number of options or rights granted multiplied by the fair value at the grant date. The minimum cost assuming that service and performance criteria are not met is zero. During the year a further 600,000 (2009: 600,000) in substance options vested and 285,000 (2009:24,894) were exercised by KMP. AUSTAL LIM ITED 2010 Con ci se Re por t 1 3 DIRECToRS’ REPoRT Cont inued DIRECToRS’ MEETIngS The number of meetings of directors (including meetings of committees of Directors) held during the year and the number of meetings attended by each Director was as follows: Directors’ Meetings Meetings of Audit Committee Meetings of Nomination and Remuneration Committee number of meetings held number of meetings attended: John Rothwell Michael Atkinson Christopher Norman John Poynton Robert Browning Dario Amara Ian Campbell CoMMITTEE MEMbERSHIP 6 6 5 6 5 6 6 6 4 - - 3 - - 4 4 2 2 - - 2 - - 2 As at the date of this report, the Company had an Audit Committee and a Nomination and Remuneration Committee of the Board of Directors. Members acting on the committees of the Board during the year were: AUDIT D Amara* C Norman I Campbell noMInATIon AnD REMUnERATIon I Campbell* J Rothwell J Poynton *Designates the Chairman of the committee RoUnDIng The amounts contained in this report and in the financial report have been rounded to the nearest $1,000 (where rounding is applicable) under the option available to the Company under ASIC Class Order 98/0100. The Company is an entity to which the Class Order applies. 14 A USTAL LI MI TE D 201 0 Co nci s e R ep or t Above 21m high speed passenger catamarans. The vessels were delivered to Trinidad and Tobago in 2010. AUDIToR InDEPEnDEnCE AnD non-AUDIT SERvICES The directors received the following declaration from the auditor of Austal Limited. Auditor’s Independence Declaration to the Directors of Austal Limited In relation to our audit of the financial report of Austal Limited for the financial year ended 30 June 2010, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct. Ernst & Young Gavin A. Buckingham Partner 19 August 2010 Liability limited by the Accountants Scheme, approved under the Professional Standards Act 1994 (NSW). non-AUDIT SERvICES There were no non-audit services provided by the entity’s auditor, Ernst & Young, during the year. Signed in accordance with a resolution of directors. J ROTHWELL AO Chairman R BROWNING Managing Director and Chief Executive Officer Dated at Henderson this 19th day of August 2010 AUSTAL LIM ITED 2010 Con ci se Re por t 1 5 In CoME STATEME nT FOR THE YE AR E N DED 30 JU NE 2 0 1 0 Continuing operations Revenue Other income Expenses (excluding finance costs) Impairment of receivable Impairment of land and buildings Unrealised gain/(loss) on deferred premium options Finance costs Profit before income tax Income tax expense Profit after tax from continuing operations Attributable to Members of the Parent Earnings per share (cents per share) Note 2(a) 2(b) Consolidated 2010 $000 2009 $000 521,414 9,242 (474,817) - (2,462) 618 (2,838) 51,157 (14,025) 37,132 500,448 11,366 (455,350) (29,890) - (14,813) (1,984) 9,777 (611) 9,166 37,132 9,166 - basic for profit for the year attributable to ordinary equity holders of the parent - diluted for profit for the year attributable to ordinary equity holders of the parent Dividends per share (cents per share) 3 3 5 20.3 20.2 6.0 5.0 5.0 6.0 16 A USTAL LI MI TE D 201 0 Co nci s e R ep or t STATEMEnT of CoMPRE HEnSIvE InCoME FOR THE YE AR E N DED 30 JU NE 2 0 1 0 Profit after income tax from continuing operations Other comprehensive income Cash flow hedges: Gain taken to equity Transferred to the income statement Foreign currency translations Income tax expense on items of other comprehensive income other comprehensive income for the period, net of tax Total comprehensive income for the year Attributable to members of the parent Consolidated 2010 $000 37,132 12,554 (1,684) (1,416) (3,268) 6,186 43,318 43,318 2009 $000 9,166 49,392 (13,179) 5,668 (10,944) 30,937 40,103 40,103 Below The last of fourteen 47.5m passenger catamaran ferries for Venetian Marketing Services Ltd is unloaded in Hong Kong. AUSTAL LIM ITED 2010 Con ci se Re por t 1 7 bALA nCE SHE ET FOR THE YE AR E N DED 30 JU NE 2 0 1 0 ASSETS Current Assets Cash and cash equivalents Trade and other receivables Inventories Prepayments Derivatives Total Current Assets non Current Assets Cash and cash equivalents Prepayments Derivatives Property, plant and equipment Intangible assets Deferred tax assets Total non-current Assets ToTAL ASSETS LIAbILITIES Current Liabilities Trade and other payables Derivatives Interest-bearing loans and borrowings Provisions Government grants Income tax payable Other Total Current Liabilities non-current Liabilities Derivatives Interest-bearing loans and borrowings Provisions Government grants Deferred tax liabilities Total non-current Liabilities ToTAL LIAbILITIES nET ASSETS EQUITY Contributed equity Reserves Retained earnings ToTAL EQUITY 18 A USTAL LI MI TE D 201 0 Co nci s e R ep or t Consolidated 2010 $000 2009 $000 29,030 31,060 275,288 2,206 60,273 397,857 1,138 309 16,394 217,734 3,786 10,900 250,261 648,118 87,488 2,690 46,567 27,108 4,840 19,755 11,816 93,028 36,242 104,799 1,522 16,165 251,756 995 582 48,820 187,164 3,452 10,969 251,982 503,738 68,206 1,189 8,657 25,187 461 19,994 39,098 198,343 164,713 6,320 79,335 2,829 55,045 36,881 180,410 378,753 269,365 30,870 26,173 212,322 269,365 2 29,330 2,356 53,974 17,628 103,290 268,003 235,735 30,096 19,165 186,474 235,735 CASH fLow STATEM EnT FOR THE YE AR E N DED 30 JU NE 2 0 1 0 Cash flows from operating activities Receipts from customers Payments (to)/from suppliers and employees Interest received Borrowing costs paid Income tax received/(paid) GST refunded Receipts of government grants Net cash from operating activities Cash flows from investing activities Proceeds from sale of property, plant and equipment Purchase of property, plant and equipment Purchase of intangible assets Net cash used in investing activities Cash flows from financing activities Repayment of loan – in substance options Loan advanced – others Repayment of borrowings Loans received Option incentive plan fee received Equity dividends paid Net cash from/(used) in financing activities Net decrease in cash and cash equivalents Net foreign exchange differences Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period Consolidated 2010 $000 549,683 (664,945) 1,264 (2,838) 798 9,024 11,725 (95,289) 10 (46,503) (1,922) (48,415) 774 - (16,887) 107,566 - (11,284) 80,169 (63,535) (463) 93,028 29,030 2009 $000 437,987 (544,552) 10,269 (1,394) (10,002) 16,374 44,724 (46,594 217 (83,168) (2,609) (85,560) 406 (5,581) (6,051) - 8 (24,449) (35,667) (167,821) 1,971 258,878 93,028 AUSTAL LIM ITED 2010 Con ci se Re por t 1 9 STATEM EnT of CHAngES In E QUITY FOR THE YE AR E N DED 30 JU NE 2 0 1 0 ConSoLIDATED As at 1 July 2008 Currency translation differences Net gain on cash flow hedges Transfer from cash flow hedge reserve Total income and expense for the year recognised directly in equity Profit for the period Total comprehensive income for the period Equity Transactions: Options exercised Cost of share-based payments Equity dividends As at 30 June 2009 As at 1 July 2009 Currency translation differences Net gains on cash flow hedges Transfer from cash flow hedge reserve Total income and expense for the year recognised directly in equity Profit for the year Total comprehensive income for the year Equity Transactions: Options exercised Cost of share-based payments Equity dividends As at 30 June 2010 * Reserved shares are in relation to the Austal Group Management Share Plan Attributable to equity holders of the parent Issued capital Reserved shares* $000 $000 Retained earnings $000 Other Reserves $000 Total Equity $000 41,075 (11,385) 201,757 (12,713) 218,734 - - - - - - - - - - - - - - - - - 406 - - - - - - 9,166 9,166 - - - (24,449) 5,668 34,575 (9,306) 30,937 - 5,668 34,575 (9,306) 30,937 9,166 30,937 40,103 - - 941 - - 406 941 (24,449) 41,075 (10,979) 186,474 19,165 235,735 41,075 (10,979) 186,474 - - - - - - - - - - - - - - - 774 - - - - - - 37,132 37,132 - - (11,284) 19,165 (1,416) 8,791 (1,189) 6,186 - 6,186 - 822 - 235,735 (1,416) 8,791 (1,189) 6,186 37,132 43,318 774 822 (11,284) 41,075 (10,205) 212,322 26,173 269,365 Above “Spearhead” (JHSV 1) under construction at Austal’s Mobile, Alabama, USA Facilities. 20 A USTAL LI MI TE D 201 0 Co nci s e R ep or t noTES To TH E ConCISE fInAnCIAL STATEME nTS FOR THE YE AR E N DED 30 JU NE 2 0 1 0 noTE 1. bASIS of PREPARATIon of THE ConCISE fInAnCIAL REPoRT This concise financial report has been derived from the full 2010 Financial Report as presented in the Austal Limited Annual Report, which complies with the Corporations Act 2001 and Australian Accounting Standards. This concise financial report has been prepared in accordance with Accounting Standard AASB 1039 – “Concise Financial Reports”, and the relevant provisions of the Corporations Act 2001. A full description of the accounting policies adopted by Austal Limited is provided in the full 2010 Financial Report. The presentation currency used in this concise financial report is Australian Dollar. noTE 2. REvEnUE AnD ExPEnSES Revenue from Continuing operations (a) Revenue Construction contract revenue Charter revenue Service revenue Rental revenue Sale of scrap Finance revenue - Interest from other unrelated parties (b) other income Government grants Other income Consolidated 2010 $000 2009 $000 476,611 474,304 12,300 29,279 28 1,932 1,264 14,121 - 19 1,760 10,244 521,414 500,448 8,934 308 9,242 5,827 5,539 11,366 Consolidated Consolidated 2010 $000 2009 $000 2010 Number 2009 Number noTE 3. EARnIngS PER SHARE Net profit attributable to ordinary equity holders of the parent from continuing operations 37,132 9,166 - - Weighted average number of ordinary shares (excluding reserved shares) for basic earnings per share Effect of dilution – share options Weighted average number of ordinary shares (excluding reserved shares) adjusted for the effect of dilution 183,311,350 182,834,859 782,824 731,208 184,094,174 183,566,067 Earnings per share (cents per share) Diluted earnings per share (cents per share) 20.3 20.2 5.0 5.0 There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the date of completion of these financial statements. 6,874,402 (2009: 4,495,741) potential ordinary shares have been excluded from the earnings per share calculation as they were not considered dilutive. AUSTAL LIM ITED 2010 Con ci se Re por t 2 1 noTES To TH E ConCISE fInAnCIAL STATEME nTS ConTInUED FOR THE YE AR E N DED 30 JU NE 2 0 1 0 noTE 4. SEgMEnT InfoRMATIon IDEnTIfICATIon of REPoRTAbLE SEgMEnTS For management purposes the Group is organised into three business segments based on the location of the production facilities, related sales regions and types of activity. The Board monitors the performance of the business segments separately for the purpose of making decisions about resources to be allocated and of assessing performance. Segment performance is evaluated based on operating profit or loss. Finance costs, finance income and income tax are managed on a group basis. The Group’s reportable segments are as follows: USA The USA manufactures high performance vessels for markets within the USA. Australia The Australian business manufactures high performance vessels for markets worldwide, excluding the USA. Service The Service business provides training and on-going support and maintenance for high performance vessels and includes the chartering of vessels. Other/Unallocated The following items and associated assets and liabilities are not allocated to operating segments as they are not considered part of the core operations of any segment: • Cost of Group services • Corporate overheads • Revenue from property leased to other Group segments • Finance revenue and costs • Taxation Inter-entity sales are recognised based on an arm’s length pricing structure. Year Ended 30 June 2010 Revenues External customers Inter-segment Total revenues Australia $'000 USA $'000 219,697 267,016 14,799 279 234,496 267,295 Service $'000 41,595 3,316 44,911 Other/ Unallocated Elminations and Adjustments $'000 $'000 Total $'000 1,702 22,188 23,890 - 530,010 (40,582) - (40,582) 530,010 Segment earnings before interest and tax (EbIT) 27,601 23,722 2,757 (1,562) 213 52,731 Segment assets 352,676 300,077 18,102 89,290 (112,027) 648,118 22 A USTAL LI MI TE D 201 0 Co nci s e R ep or t noTES To TH E ConCISE fInAnCIAL STATEME nTS ConTInUED FOR THE YE AR E N DED 30 JU NE 2 0 1 0 Year Ended 30 June 2009 Revenues External customers Inter-segment Total revenues Australia $'000 USA $'000 Service $'000 Other/ Unallocated Elminations and Adjustments $'000 $'000 Total $'000 260,288 226,690 14,128 21,786 - - 282,074 226,690 14,128 464 23,349 23,813 - 501,570 (45,135) -- (45,135) 501,570 Segment earnings before interest and tax (EbIT) 24,303 23,722 2,757 (1,562) 1,089 1,517 Segment assets 260,982 300,077 18,102 89,290 (102,662) 503,738 i) Segment revenue does not include finance revenue of $1.264 million (30 June 2009: $10.244 million). ii) Segment profit before tax does not include finance revenue of $1.264 million (30 June 2009: $10.244 million) and finance costs of $2.838 million (30 June 2009: $1.984 million). noTE 5. DIvIDEnDS A fully franked dividend of $11.284 million of 6 cents per share has been declared for the year ended 30 June 2010 to be paid on 7 October 2010. A dividend of $11.284m of 6 cents per share was paid on 8 October 2009. noTE 6. SUbSEQUEnT EvEnTS There were no material subsequent events occurring after year end. Above 47.5m high-speed passenger catamaran ferries, four of which were delivered to Trinidad & Tobago’s NIDCO. AUSTAL LIM ITED 2010 Con ci se Re por t 2 3 DIRECToRS’ DE CLARATIon The directors of Austal Limited declare that the accompanying Concise Financial Report is presented fairly in accordance with Accounting Standard AASB 1039 Concise Financial Report and is consistent with the consolidated entity’s 30 June 2010 financial report. With regard to the 30 June 2010 financial report of Austal Limited, the directors declared that: 1. In the opinion of the directors: (a) The financial statements and notes of the consolidated entity are in accordance with the Corporations Act 2001, including: (i) Giving a true and fair view of the consolidated entity’s financial position as at 30 June 2010 and of its performance for the year ended on that date; and (ii) Complying with Accounting Standards (including the Australian Accounting Interpretations) and Corporations Regulations 2001. 2. The financial statements and notes also comply with International Financial Reporting Standards. 3. In the opinion of the directors, as at the date of this declaration, there are reasonable grounds to believe that the parent entity will be able to pay its debts as and when they become due and payable. 4. This declaration has been made after receiving the declarations required to be made to the directors in accordance with sections 295A of the Corporations Act 2001 for the financial period ending 30 June 2010. This statement has been made in accordance with a resolution of directors. On behalf of the Board JOHN ROTHWELL AO CHAIRMAN Dated at Henderson this 19th day of August 2010. Above Trinidad & Tobago Coast Guard (TTCG) complete their training at Austal’s Henderson facilities. 24 A USTAL LI MI TE D 201 0 Co nci s e R ep or t AUSTAL LIM ITED 2010 Con ci se Re por t 2 5 Keel Laying Ceremony for US Army’s “Spearhead” (JHSV 1). Left to right: Chaplain (Major) Michael L. White, Below Mr. Kelvin Watkins, Mr. Dave Growden, Mr. Kevin M. Fahey, Mr. Arthur W. Divens, Jr., RADM Mark H. Buzby, Brigadier General Brian R. Layer, Mr. Joseph J. Rella, The Honorable Jim Folsom, Jr., Chief Warrant Officer 4 Kenneth M. Wahlman, Mrs. Linda Wahlman, Mr. Lou Von Thaer, Captain George M. and Sutton Captain Dean M. Krestos. Above his initials into the hull section with the assistance of Austal fabricator, Kelvin Watkins. Photo Credit: Mobile Press-Register; G.M. Andrews Staff Photographer. “Spearhead” (JHSV 1) Keel Laying. The ship’s sponsor, Chief Warrant Officer Four Kenneth M. Wahlman, US Army, Retired, authenticated the keel-laying event by welding 26 A USTAL LI MI TE D 201 0 Co nci s e R ep or t SHAREHoLDER Info RMATIon The following information was extracted from the Company’s register as at 17 August 2010 DISTRIbUTIon of SHARES 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over TOTAL TwEnTY LARgEST SHAREHoLDERS Rank Shareholder 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Austro Pty Ltd HSBC Custody Nominees Longreach (WA) Pty Ltd J P Morgan Nominees Australia Limited Onyx (WA) Pty Ltd National Nominees Limited Mr Vincent Michael O’Sullivan Citicorp Nominees Pty Ltd Austal Group Management Share Plan Pty Ltd Garry Heys & Dorothy Heys Lavinia Shipping Ltd Zilon Pty Ltd Mossisberg Pty Ltd Pepperwood Holdings Pty Ltd Cogent Nominees Pty Limited Bond Street Custodians Limited ANZ Nominees RBC Dexia Investor Services UBS Nominees Pty Ltd Mr James Nicholas Bennett SUbSTAnTIAL SHAREHoLDERS 1 2 3 4 5 Austro Pty Ltd (J Rothwell) Longreach (WA) Pty Ltd (C Norman) HSBC Custody Nominees J P Morgan Nominees Australia Limited Onyx (WA) Pty Ltd (G Heys) voting Rights All ordinary shares issued by Austal Limited carry one vote per share without restriction. Number of Holders Number of Units % of Total Issued Capital 1,758 2,738 867 588 36 5,987 1,002,890 7,722,608 6,769,431 13,566,821 159,007,888 188,069,638 0.53 4.11 3.60 7.21 84.55 100 Total Units % Issued Capital 32,200,745 30,799,071 26,595,621 18,902,159 10,108,212 7,388,866 7,320,000 5,326,137 4,611,400 2,844,670 2,342,625 1,773,940 1,556,945 1,415,737 1,190,254 1,130,816 787,094 661,628 438,890 417,569 17.12 16.38 14.14 10.05 5.38 3.93 3.89 2.83 2.45 1.51 1.25 0.94 0.83 0.75 0.63 0.60 0.42 0.35 0.23 0.22 157,812,379 83.91 No. of Ordinary Shares 32,200,745 30,799,071 26,595,621 18,902,159 10,108,212 AUSTAL LIM ITED 2010 Con ci se Re por t 2 7 CoRPoRATE DIRE CToRY DIRECToRS ExECUTIvE DIRECToRS Robert Browning Michael Atkinson non ExECUTIvE DIRECToRS John Rothwell John Poynton Christopher Norman Dario Amara Ian Campbell AUDIToRS ERnST & YoUng The Ernst & Young Building 11 Mounts Bay Road Perth 6000 Western Australia CoMPAnY SECRETARY Michael Atkinson REgISTERED offICE 100 Clarence Beach Rd Henderson 6166 Western Australia Telephone: +61 8 9410 1111 Facsimile: +61 8 9410 2564 SHARE REgISTRY ADvAnCED SHARE REgISTRY SERvICES 110 Stirling Highway Nedlands 6009 Western Australia Telephone: +61 8 9389 8033 Facsimile: +61 8 9389 7871 28 A USTAL L IMITE D 201 0 Co nci s e R ep or t Above Armed Forces of Malta 21m Inshore Patrol Craft. 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