Austal Limited
Annual Report
2
0
2
3
1
Austal Limited | Annual Report 2023 Contents
Contents .................................................................................................................................................................................................................. i
Index to the notes to the financial statements .......................................................................................................................................... ii
Chairman’s report ............................................................................................................................................................................................... 1
Chief Executive Officer’s report ..................................................................................................................................................................... 4
Review of operations ........................................................................................................................................................................................ 11
Directors’ report ............................................................................................................................................................................................... 15
Nomination & Remuneration Committee Chair’s message ..................................................................................................................21
Remuneration report ....................................................................................................................................................................................... 23
Auditor independence ..................................................................................................................................................................................... 47
Consolidated statement of profit and loss and other comprehensive income for the year ended 30 June 2023 ........... 48
Consolidated statement of financial position as at 30 June 2023 .................................................................................................. 49
Consolidated statement of changes in equity for the year ended 30 June 2023 ....................................................................... 50
Consolidated statement of cash flows for the year ended 30 June 2023 ..................................................................................... 51
Notes to the consolidated financial statements ..................................................................................................................................... 52
Directors’ declaration .................................................................................................................................................................................... 119
Independent audit report to the members of Austal Limited ........................................................................................................... 120
Shareholder information .............................................................................................................................................................................. 126
Corporate governance statement and ESG report ............................................................................................................................... 127
Corporate directory ....................................................................................................................................................................................... 127
Austal Limited | Contents i
Index to the notes to the financial statements
Basis of preparation ........................................................................................................................................................................................ 52
Current year performance .............................................................................................................................................................................56
Capital structure ............................................................................................................................................................................................... 78
Working capital ................................................................................................................................................................................................ 84
Infrastructure & other assets ....................................................................................................................................................................... 91
Financial risk management ......................................................................................................................................................................... 104
Unrecognised items ........................................................................................................................................................................................ 112
The Group, management and related parties ......................................................................................................................................... 115
ii Austal Limited | Index to the notes to the financial statements
Company Overview
FY2023 has been a year of significant achievement and
progress for Austal, while meeting the challenges of
new product lines, new manufacturing and sustainment
facilities and a competitive global marketplace for both
defence and commercial shipbuilding.
Continuing a clear pathway of expansion, with the aim of
becoming the Indo Pacific’s leading naval defence prime
contractor, Austal grew industrial and sovereign capability
in Australia and the United States, with several new
projects won and existing contracts further developed.
Worldwide, the company was awarded contracts for 11
new ships, while a total of 9 ships were delivered by
Austal’s shipyards in Australia, the US, Philippines and
Vietnam.
In the United States, the Austal team delivered two
Independence-variant Littoral Combat Ships; LCS-32
and LCS-34, and one Spearhead-class Expeditionary
Fast Transport, EPF-13; the US Navy’s largest semi-
autonomous ship. Reflecting the great confidence the
US Government has in Austal USA’s steel manufacturing
capabilities, the Mobile, Alabama shipyard was awarded
new contracts for three more T-ATS (Towing, Salvage
and Rescue) ships and up to seven T-AGOS (Ocean
Surveillance) ships for the US Navy.
An historic moment was celebrated by Austal teams
around the world when the USS Canberra (LCS 30)
was commissioned in Sydney, Australia in July 2023.
Originally designed by Austal Australia and constructed
by Austal USA, the USS Canberra is the first US Navy
ship to be commissioned outside of the United States
and is named after Australia’s capital and in honour of
the original HMAS Canberra that was sunk during World
War II.
In Western Australia, Austal continued to exceed
expectations in terms of quality, productivity and
efficiency, delivering 4 Evolved Cape-class Patrol Boats
for the Royal Australian Navy in FY2023. Over the past 5
years, Austal Australia has delivered 24 ships, including
Evolved Cape-class and Guardian-class Patrol Boats and
multiple commercial vessels, for operators around the
world.
In the Philippines, Austal completed the largest (by
volume) commercial ferry ever constructed by an Austal
shipyard – the 115 metre ‘Express 5’ for Molslinjen
of Denmark. The Balamban, Cebu shipyard has now
delivered more than 20 ships to 12 operators in 11
countries in 10 years.
Austal Vietnam completed the construction of a 66-metre
high-speed ferry, ‘Apetahi Express’ for repeat customer
The Degage Group of French Polynesia during the
financial year; the third vessel constructed at the Vung
Tau shipyard since opening in 2018.
Another innovation introduced by Austal in FY2023
was the DeepMorpher™ artificial intelligence tool that
is helping to optimise hull forms, quickly and efficiently.
The technology is assisting and enhancing the expertise
developed by the design and engineering team over 35
years, to deliver the best possible solutions for defence
and commercial customers around the world.
iii
Austal Limited | Annual Report 2023 3
2
0
2
s
t
h
g
i
l
h
g
H
i
$1.59B
Revenue
$2.32B
Order Book
40
Ships scheduled or
under construction
9
Ships
delivered
60
Vessels under
sustainment
4,300
Employees
SHIPYARDS
SERVICE CENTRES AND OFFICES
San Diego
USA
Mobile
Washington
UK
London
Port of Spain
Trinidad and Tobago
Muscat
Oman
Vung Tau
Vietnam
Singapore
Balamban
Philippines
Darwin
Australia
Cairns
Brisbane
Canberra
Henderson (Perth)
iv
Austal Limited | Annual Report 2023
Heading
USS Canberra
Commissioned in Sydney
a
i
l
a
r
t
s
u
A
v
It was a very proud moment for the Austal team,
watching the Independence-variant Littoral Combat
Ship, LCS-30 arrive at Sydney Harbour, led by her
namesake, HMAS Canberra (L02) on the 18th July
2023.
The USS Canberra, named for Australia’s capital city
and in honour of the original HMAS Canberra, a Kent-
class Cruiser sunk at the Battle of Savo Island in the
Solomon Islands in August 1942, is the first US Navy
ship to be commissioned outside of the United States
of America.
The Austal Australia designed and Austal USA
built ship is the second USS Canberra to be so
named, following President Roosevelt’s direction to
commission a Baltimore-class Heavy Cruiser the USS
Canberra in 1943, in honour of the Royal Australian
Navy ship.
Today’s USS Canberra is the 15th of 19
Independence-variant LCS being delivered by Austal
USA to the US Navy.
The ship was officially commissioned on 22nd July
2023 at the Royal Australian Navy’s Fleet Base East
in Sydney, with many Australian and US dignitaries
in attendance including Australia’s Governor General,
Deputy Prime Minister and Minister for Defence,
Australia’s Ambassador to the US, the Chief Of the
Royal Australian Navy, US Ambassador to Australia,
the US Secretary of Defence and US Chief of Naval
Operations.
The USS Canberra is a great representation of not
only the shipbuilding capabilities of Austal, but of
the strong alliance, and enduring friendship between
Australia and the United States.
Austal Limited | Annual Report 2023 USS Canberra (LCS-30) arriving in Sydney Harbour
vi
Austal Limited | Annual Report 2023 Heading
LCS Program
Austal USA continued to deliver the 19 vessel, Independence-
variant Littoral Combat Ship (LCS) program in Mobile, Alabama
over FY2023, handing over LCS-32 (USS Santa Barbara) and
LCS-34 (USS Augusta) to the US Navy in July 2022 and May
2023 respectively.
A
S
U
l
a
t
s
u
A
EPF Program
EPF-13, USNS Apalachicola, was delivered in February 2023,
following successful trials of the autonomous technology that
enables the ship to operate remotely and uncrewed.
EPF-13 is the largest autonomous capable vessel operating in
the US Navy.
vii
Austal Limited | Annual Report 2023
USS Santa Barbara (LCS-32)
USNS Apalachicola (EPF-13)
viii
Austal Limited | Annual Report 2023 Heading
Medium Landing Ship
A
S
U
l
a
t
s
u
A
The US Navy’s Medium Landing Ship (LSM)
program, previously called the Light Amphibious
Warship (LAW) program, envisions procuring a class
of 18 to 35 new amphibious ships to support the US
Marine Corps in theatre; moving from island to island,
to fire anti-ship cruise missiles (ASCMs) and perform
other missions alongside the US Navy and other
military forces.
The LSMs would embark, transport, land, and
subsequently re-embark Marine Corps units.
Austal USA is one of five US shipbuilders awarded a
concept design study contract to develop a solution
that is under consideration by the US Navy.
Medium Landing Ship (LSM)
ix
Austal Limited | Annual Report 2023
Expeditionary Medical Ship
The Expeditionary Medical Ship (EMS) is a cost-
effective design for a dedicated high-speed medical
ship, optimised to provide hospital-level medical
care in support of the US Navy’s Distributed
Maritime Operations (DMO).
The EMS will feature a full range of medical
capabilities needed to support operating forces
including triage/critical care, operating rooms,
medical laboratory, radiology capability, blood bank,
dental, mental health, OB-GYN and primary care,
rapid stabilization and follow-on evacuation of
multiple casualties, and combat search and rescue
including recovery at sea.
Austal USA was awarded an ‘undefinitised contract
action’ (UCA) with the US Navy to resolve the detail
design for three fully-funded EMS, valued at over
US$900m.
x
Austal Limited | Annual Report 2023 Towing, Salvage and Rescue (T-ATS)
In July 2022, Austal USA commenced
construction of the first of five Towing, Salvage
and Rescue (T-ATS) ships for the US Navy,
from the steel manufacturing facilities opened
earlier in the year. The Navajo-class T-ATS
ships provide ocean-going tug, salvage,
and rescue capabilities to support US fleet
operations and missions including oil spill
response, humanitarian assistance, and wide
area search and surveillance.
Ocean Surveillance (T-AGOS)
Austal USA was awarded a contract for the
design and construction of up to seven steel-
hulled Ocean Surveillance T-AGOS ships, worth
US$3.19B, in May 2023.
warfare (ASW) mission of the commanders of
the Atlantic and Pacific Fleets by providing a
platform capable of passive and active anti-
submarine acoustic surveillance.
T-AGOS ships, operated by US Military Sealift
Command (MSC), support the anti-submarine
A
S
U
l
a
t
s
u
A
xi
Austal Limited | Annual Report 2023
Auxiliary Floating Dock Medium (AFD-M)
In June 2023 Austal USA began construction on
the US Navy’s Auxiliary Floating Dock Medium
(AFD-M). The AFD-M is a “Rennie”-type floating
dry dock that has continuous wing walls and
several sectional pontoons to provide the stability
and displacement required to lift and submerge
vessels from the water, using buoyancy.
The vessel design incorporates several features
to improve operability and maintainability,
based on Austal USA’s experience from owning,
operating and maintaining a similar dry dock at the
company’s Mobile, Alabama ship repair facility.
Saildrone Surveyor
Austal USA and Saildrone Inc announced a
strategic partnership in August 2022, to build
a fleet of cutting-edge, autonomous uncrewed
surface vehicles. The new partnership combines
Saildrone’ s uncrewed surface vehicle technology
with Austal USA’s advanced manufacturing
capabilities and provides the US Navy and other
government customers with a cutting-edge solution
for maritime domain awareness, hydrographic
survey, and other missions requiring persistent wide
area coverage. Austal USA will construct the 20
metre Saildrone Surveyor, designed specifically for
deep ocean mapping and Intelligence, Surveillance
and Reconnaissance (ISR) applications, both above
and below the surface.
xii
Austal Limited | Annual Report 2023 Submarine Command Modules
and Aircraft Carrier Elevators
Gerald R. Ford-class aircraft carrier
Also in FY2023, Austal USA commenced
construction on the aluminum aircraft elevators
for two U.S. Navy Gerald R. Ford-class aircraft
carriers, Enterprise (CVN 80) and Doris Miller
(CVN 81), currently under construction at
Huntington Ingalls Industries’ Newport News
Shipbuilding division.
Austal USA will fabricate two shipsets of
aluminium elevators; three elevators per ship
at the state-of-the-art module manufacturing
facility (MMF) in Mobile, Alabama. The aircraft
elevators are scheduled to be completed in
October 2024 and October 2025, respectively.
In a strategic partnership with General
Dynamics Electric Boat (GDEB), and following
training that commenced in April 2022, Austal
USA has commenced the construction and
outfitting of Command and Control Systems
Modules (CCSM) and Electronic Deck
Modules (EDM) for the US Navy’s Virginia and
Columbia-class nuclear powered submarine
programs.
Utilising Austal USA’s lean manufacturing
techniques and modern steel production line
facilities, initial outfitting work commenced in
January 2023 and will support a gradual ramp
up to full fabrication and outfitting of CCSMs
and EDMs across both submarine classes from
2026.
A
S
U
l
a
t
s
u
A
xiii
Austal Limited | Annual Report 2023
Virginia-class nuclear-powered fast attack submarine
xiv
Austal Limited | Annual Report 2023 Heading
Evolved Cape and
Guardian Class Programs
a
i
l
a
r
t
s
u
A
l
a
t
s
u
A
xv
Austal Australia maintained industry-leading productivity, efficiency
and quality on both the Evolved Cape-class and Guardian-class
Patrol Boat Projects in FY2023, with 4 x 58 metre Evolved Cape-
class Patrol Boats delivered to the Royal Australian Navy in 12
months and system optimisation engineering packages developed
and applied to Guardian-class Patrol Boats for the Commonwealth
of Australia.
At 30 June 2023, Austal Australia has delivered 5 of the 8 Evolved
Cape-class Patrol Boats that were initially ordered in May 2020;
the project is on track for completion in CY2024. Meanwhile, 16 of
the 22 Guardian-class Patrol Boats ordered since May 2016 have
been delivered to the Commonwealth of Australia, under the Pacific
Patrol Boat Replacement Project (SEA3036-1). All the vessels will
be gifted by the Australian Government to 12 Pacific Island nations
and Timor-Leste, as part of the Pacific Maritime Security Program.
In CY2023, Austal Australia is celebrating 25 years of supplying
patrol boats to the Commonwealth of Australia, through the delivery
of 52 vessels to date; comprising Bay-class, Armidale-class, Cape-
class, Guardian-class and Evolved Cape-class Patrol Boats to the
Australian Border Force (previously Australian Customs Service),
the Royal Australian Navy and our Pacific Island neighbours.
Austal Limited | Annual Report 2023
Guardian-class Patrol Boat ‘VOEA Ngahau Siliva’
xvi
Austal Limited | Annual Report 2023 Heading
San Diego Service and Support
In February 2023, Austal USA celebrated the opening of the company’s new
San Diego waterfront ship repair facility, located adjacent to US Naval Base
San Diego. The facility can provide full-service repair, maintenance and
modernization services for small surface combatants (such as the Littoral
Combat Ship), unmanned and autonomous vessels, and auxiliary ships.
Austal USA has invested over $100 million in upgrading the facility, including
a new floating dry dock that allows more extensive depot-level maintenance
on larger ships. The 15-acre site provides 210 metres of improved San Diego
Bay shoreline; approx 7,500 square metres of covered working space, and has
been equipped with new pier fenders and moorings, modernized shore power
conversions, and enhanced security.
A
S
U
l
a
t
s
u
A
xvii
Austal Limited | Annual Report 2023
Austal San Diego waterfront ship repair facility with
visualisation of dry dock and berthing capability
xviii
Austal Limited | Annual Report 2023 Heading
Largest ever high-speed
catamaran constructed by Austal
s
e
n
p
p
i
i
l
i
h
P
l
a
t
s
u
A
xix
Austal Philippines delivered the 115-metre,
high-speed vehicle-passenger ferry Express 5,
to repeat customer Molslinjen of Denmark, in
March 2023.
The high-speed catamaran is the largest ferry
(by volume) constructed by any Austal shipyard,
in the company’s 35-year history.
During sea trials, the vessel achieved a top
speed of 40 knots, and bettered Class quality
standards for noise and vibration in the
passenger decks, with a quiet and smooth ride.
Express 5, the 21st ship delivered to an
overseas operator by Austal Philippines since
2012, has the capacity for 1,610 passengers,
space for 450 cars over 2 vehicle decks and
an operating service speed of 37 knots. It
is powered by an LNG-capable power plant
that offers a powerful yet economic and
environmentally friendly solution.
Austal Limited | Annual Report 2023
xx
Austal Limited | Annual Report 2023 Heading
Austal Vietnam delivers third
ship since opening in 2018
m
a
n
t
e
V
i
l
a
t
s
u
A
xxi
Austal Vietnam delivered a new high-speed
catamaran to repeat customer The Degage
Group of French Polynesia in June 2023.
The 66 metre ‘Apetahi Express’ is the sixth
commercial ferry designed and constructed
for The Degage Group by Austal; and the
third ship delivered by Austal Vietnam since
opening in 2018.
‘Apetahi Express’ was customised by
Austal’s Australian and Vietnamese design
and engineering teams to meet the exacting
demands of inter-island transport, with an
emphasis on reducing CO2 emissions and
improving fuel efficiency.
By optimising the aluminium hull design,
Austal achieved a significant reduction
in resistance that not only lowers fuel
consumption for the operator but also
improves seakeeping and delivers a more
comfortable ride for passengers.
Austal Limited | Annual Report 2023
xxii
Austal Limited | Annual Report 2023 Heading
Using Artificial Intelligence
for Hull Optimisation
a
i
l
a
r
t
s
u
A
l
a
t
s
u
A
Austal’s new artificial intelligence (AI) toolset, DeepMorpher,
is helping the company to find world-leading solutions for
commercial and defence customers.
By enabling the efficient exploration of a broader design
space, DeepMorpher significantly reduces the resources
and time required to undertake complex hull optimisation
routines.
This provides Austal with the opportunity to work
collaboratively with customers to create valuable, low-risk
solutions that meet specific operational requirements.
xxiii
Austal Limited | Annual Report 2023
xxiv
Austal Limited | Annual Report 2023 Business Transformation -
Project Jupiter completion
Austal Australia substantially completed the business transforming
‘Project Jupiter’ in FY2023; comprising the rollout of new systems and
applications that have simplified the business process environment,
improved productivity, and enhanced data flow throughout the
enterprise – creating a culture of collaboration and care.
Going live in March 2023, the new IFS Enterprise Resource Planning
(ERP) system is streamlining a variety of financial, supply chain and
other business processes, while a new Product Lifecycle Management
System (PLM) is transforming the way we manage a vessel – from
concept into production and maintenance – and ultimately allowing
a “digital twin” of any vessel we build to be developed. A new 3D
CAD system ShipConstructor was also introduced that enhances the
development and sharing of 3D vessel models for production.
a
i
l
a
r
t
s
u
A
l
a
t
s
u
A
xxv
Austal Limited | Annual Report 2023
Transforming the way we work
xxvi
Austal Limited | Annual Report 2023 a
i
l
a
r
t
s
u
A
l
a
t
s
u
A
We’re Listening
Austal Australia has introduced a distinctive way of
identifying managers, supervisors and team members
who have completed mental health support training and
are available for conversations on personal health and
well-being.
Sporting brightly coloured high-vis shirts, and helmet
stickers saying “I am listening”, just under 100 team
members, across all Australian locations have now
completed mental health awareness training that is
enabling valuable conversations in the workplace.
The well-received initiative is helping to foster a culture
of support, by raising awareness of the importance
of mental health in the workplace, highlighting the
professional support available through the Employee
Assistance Program (EAP) and enabling a greater
number of effective conversations at the team level,
reducing the reliance on traditional people and culture
processes.
xxvii
Austal Limited | Annual Report 2023
xxviii
Austal Limited | Annual Report 2023 Chairman’s report
Financial Year Highlights
The Group’s order book has grown to
$11.6 billion, on the basis all contract option
agreements are exercised.
The commissioning of the new steel facilities in
the USA, with 2 major programs secured - OPC
and T-AGOS.
The diversification we added to the US portfolio
produced orders in autonomy, submarine
modules and additive manufacturing.
Started the transition from the LCS program
and secured a very significant future order book
to deliver long-term value to investors.
The arrival of our floating dock “Independence”
in San Diego to further enhance growth of the
USA Support business.
A challenging year for EBIT because of the loss
provision on T-ATS. All T-ATS options have now
been exercised.
I am pleased to present the FY2023 Annual Report
to shareholders on behalf of the Board of
Austal Limited.
Austal had an excellent year in terms of growing its
order book in the US through contract wins and
growing our Support business. This was
unfortunately overshadowed by the provision taken
on the Towing, Salvage, and Rescue ships (T-ATS)
program, but I firmly believe that the unique
circumstances of this program will be ringfenced
and the business has a tremendous opportunity
ahead. The contract wins are a testament to Austal’s
ability to adapt and expand its operations in an
increasingly volatile global environment, whilst
delivering on our commitments across our
shipbuilding programs and support services.
Again, all our shipyards - USA, Australia,
Philippines, and Vietnam produced great results
with their deliveries this year. Austal has always
maintained a strong customer relationship focus,
and our customers have worked constructively with
us to progress construction programs and the
delivery of vessels. The global transition towards zero
emissions continues to impact the current volume of
ferry orders, albeit with some signs of the market
improving.
The pinnacle of the year, perhaps my career, was
attending the commissioning of the USS Canberra in
Sydney. This was the first time the US Navy has ever
commissioned a warship outside of the United
States and is a testament to the enduring
relationship between the US and Australia, and
indeed the part that Austal plays in it.
Strategic initiatives
Austal continues to progress its strategy towards our
2050 vision. Our focus remains on long-term,
sustainable, and profitable growth. This will be
across shipbuilding, support, and systems, with a
strong aspiration to become the Sovereign Defence
Prime in Australia through organic and inorganic
growth. We also aim to grow our position in US
shipbuilding, as we efficiently deliver the programs
we have won in tandem with continuing to invest in,
and expand, our shipyard as we win more work.
The pivot to steel is already yielding significant
future opportunities through program wins in the
USA beyond the initial T-ATS contract. These major
steel wins include the floating dry dock (AFDM),
Offshore Patrol Cutters (OPC), and most recently
T-AGOS. Steel capability positions the business to
bid for a greater proportion of available ship
construction work than an aluminium-only yard can
tender for, and that is becoming clear with the
current awards. The future opportunity with
submarine modules is also substantial. We have
commenced with our first on the Virginia-class and
expect a Colombia-class opportunity to follow
shortly.
Our robust balance sheet underpins our continued
investment in the Company and its facilities. To this
end, it was exciting to see the recent arrival of the
new floating dock “Independence” in San Diego.
Our investment in systems is yielding some small,
but strategically important, wins, with our Lifecycle
Upkeep Sustainment Intelligence (LUSI) software on
trial on the Cape-class vessels with the Royal
Australian Navy. The capability the upgraded
MarineLink software provides in terms of efficient
operation of vessels will contribute to lower
emissions and increased efficiencies in the
commercial sector.
Risks & opportunities
The T-AGOS win was undoubtedly the biggest
achievement of the year as it stabilises Austal’s
long-term future in the USA and validates the
decision to invest in steel. A legal challenge remains
on OPC but we have been given the green-light to
commence design and procurement of long lead
time materials and the relationship with the US
Coast Guard has kicked off to a great start.
Austal Limited | Chairman’s report 1
We continue to support US Coast Guard as they go
through the legal challenge.
Austal is confident that both the integrity of the
solicitation process and the selection of Austal USA
as the Stage II OPC shipbuilder will again be
upheld.
The first steel ships on the new panel line are the
T-ATS vessels. The strategic importance of this was
to prove the steel production line and fine tune our
processes in preparation for OPC and future large
steel vessels. The other steel shipbuilding programs
in the portfolio included substantial cost-escalation
protections, giving us confidence that the T-ATS
issues are isolated and the learnings from T-ATS will
benefit the future programs.
The AFDM has just commenced and adds to the
throughput on our new steel panel line.
The Evolved Cape-class Program and Guardian-class
Patrol Boat Program continue to progress well with
multiple deliveries in the year. Our focus is firmly on
what next, with encouragement from what we saw in
the Defence Strategic Review output published in
FY2023.
Finally, the fast ferry fleet continues to age and will
need replacement. More stringent emissions
regulations may drive some of this replacement and
we are well placed with new product concepts, such
as the Volta electric ferry. Confidence is growing in
the resurgence of the commercial market as global
COVID-19 restrictions lift and travel rebounds.
The pivot to steel in tandem with the expansion of
our support business and increasingly diversified
order book has put us in a great place in the US,
with Australasia poised to follow suit.
Board update
I was pleased to announce the appointment of Lee
Goddard as a Non-Executive Director of the
Company on 1 January this year. Mr Goddard is
currently the Chief Executive Officer of the
Australian Missile Corporation and a Non-Executive
Director of the Commonwealth Superannuation
Corporation. Mr Goddard continues to serve as a
Royal Australian Navy active reserve officer (rank
Rear Admiral) following 34 years full time service up
until January 2021.
Lee’s breadth and depth of naval defence industry
expertise, in addition to his extensive international
defence industry networks, aligns perfectly with
Austal’s strategic direction.
His appointment follows the resignation of Giles
Everist as Non-Executive Director on 9 December
2022, and I would like to thank Giles for all that he
has done during his time with us.
It has been a challenging time for the Board and
Senior leaders, facing challenges such as legacy
2 Austal Limited |
regulatory investigations, and management changes.
The T-AGOS win in the USA provides even more
certainty to the Company, and coupled with the
other competitively won steel programs,
demonstrates we have invested wisely in the latest
technology for steel ship construction and should be
very competitive going forward. The transition from
aluminium to steel and the growth in the number of
programs will require focus from the teams as they
grow.
CEO Paddy Gregg continues to lead the revitalisation
of our corporate strategy, while closely managing the
Company’s operations. The implementation of that
strategy and an improved focus on customer
relationships means that we have clear objectives. I
remain optimistic about the future, driven by a
record pipeline of work for the US operation, albeit
we will have to navigate some challenges in the
years coming as we begin the steel programs, which
is part and parcel of commencing major new
programs.
The Board is improving internal compliance and
reporting practices between the USA operations and
Austal’s corporate headquarters; we will continue to
work hard to implement these improvements.
HSEQ
As always, our prime focus is ensuring that our
employees go home safely every day. We continue to
demonstrate excellent safety performance and
pursue more stringent targets each year. It was
especially pleasing to see our largest site, our Mobile
facility, again achieve awards for safety
performance.
ESG
Austal continues to ensure that its operations grow
and evolve in a sustainable manner.
You will have seen our Environmental, Social and
Governance (ESG) report last year. Our focus is to
build on these initiatives with a particular focus on
environmental and social risks and opportunities in
the year ahead. This year, we have placed even more
focus on this, and our enhanced ESG report has
adopted the Global Reporting Initiative. We have
now published our targets: By 2030, a 50%
reduction of embodied emissions (Scope 1, 2 and 3-
upstream) and by 2050 a Net Zero commitment
consistent with Science-Based Targets.
Austal continues to advance research and
development projects targeting improved methods to
design and construct vessels with increased fuel
efficiency and reduced emissions, such as battery-
powered smaller ferries (Volta) and larger vessels
that could be converted from diesel to greener fuels,
such as LNG or ammonia. Most of the commercial
opportunities we are quoting focus on reduced
emissions.
Corporate investigations
Thank-you
As we have previously announced to the ASX, we
resolved the civil proceedings with ASIC in
October 2022 and continue to work with the US
Department of Justice and US Securities and
Exchange Commission regarding the allegations of
fraud by three ex-employees of Austal USA and
whether that may in turn impact the Company. The
activities in question took place during the years
leading up to and including FY2016. I look forward
to its conclusion and being able to devote our entire
focus on delivering our operational and growth
strategy for the benefit of our customers, employees,
and shareholders.
On behalf of the Board, I would like to thank each
and every one of our people for their adaptability
and resilience during a period of unprecedented
global uncertainty. The recent contract wins in the
USA underpin the business for many years and
provides certainty for shareholders and employees.
These wins are testament to the commitment of our
people during the year, and I’m confident the
Australasia business is poised to follow suit. I would
like to acknowledge the Austal executive team and
support managers for their leadership in guiding the
Company through a volatile macroeconomic period. I
also want to express my appreciation to Austal’s
loyal shareholders.
John Rothwell AO
Chairman
Austal Limited | Chairman’s report 3
Chief Executive Officer’s report
Group financial results
Revenue
EBITDA 1
EBIT 2
NPAT 3
EBITDA margin
EBIT margin
2023
$’000
2022
$’000
1,585,034
1,429,044
54,973
165,350
(4,842)
120,662
(13,774)
79,565
3.5%
(0.3%)
11.6%
8.4%
Net assets
948,818
924,285
Net cash position
49,702
115,598
Net cash flow
(60,912)
(106,786)
(Loss) / earnings per share ($ per share)
(0.038)
Dividends per share ($ per share)
0.070
Payout ratio
(184.2%)
0.220
0.080
36.3%
1. Earnings before interest, tax, depreciation and amortisation (EBITDA).
1. EBITDA is comprised of EBIT with depreciation and amortisation ($59.815 million)
2. Earnings before interest and tax (EBIT).
2. EBIT is comprised of NPAT with finance income ($1.784 million) and
2. finance costs ($12.456 million) added back.
3. Net Profit / (loss) after tax (NPAT).
EBIT and EBITDA are non-IFRS measures.
EBIT is used to understand segment performance.
EBITDA is used by management to understand cash flows within the Group.
The information is unaudited but is extracted from the audited accounts.
Total revenue for the year increased by
10.9% to $1,585 million in FY2023.
FY2023 EBIT decreased by 104.0% to an
EBIT loss of $(4.8) million compared to
EBIT of $120.7 million in FY2022, driven
by the T-ATS loss of $171.2 million in
FY2023.
Austal reported a NPAT loss of
$(13.8) million in FY2023 compared to
NPAT of $79.6 million in FY2022.
Austal delivered operating cash flow of
$86.7 million (FY2022: $37.5 million) and
4 Austal Limited | Chief Executive Officer’s report
FY2023 net cash flow of $(60.9) million
(FY2022: ($106.8) million).
Austal has maintained a strong cash balance
of $179.2 million at 30 June 2023, despite
a significant capital investment program in
Mobile and San Diego, and some
prepayments to suppliers to secure
discounts. This demonstrates the ongoing
cash generating strength of the business
(30 June 2022: $240.1 million).
Net cash was $49.7 million at 30
June 2023 (30 June 2022: $115.6 million).
A final FY2023 unfranked dividend of
3.0 cents per share was declared, adding to
the 4.0 cents a share paid in April 2023
(FY2022: 8.0 cents per share, unfranked).
Austal received $0.5 billion of new contract
awards during FY2023 to bring the order
book to $2.3 billion at 30 June 2023. If all
options on these programs are exercised the
order book equates to $11.6 billion.
Austal’s NPAT loss was $(13.8) million in
FY2023, a disappointing drop from the
$79.6 million recorded in the prior corresponding
period (pcp), and EBITDA of $55.0 million, down
66.8% on the pcp.
As detailed in our revised earnings guidance on
25 July 2023, Austal’s earnings were negatively
impacted with a further writedown on the recently
commenced T-ATS program.
The cause of the writedown is multi-factoral,
including changes in specification, cost inflation
pressures as well as incorrect efficiency
assumptions on the commissioning of our new
steel production line and in constructing the first
vessel.
During H2 FY2023, as originally planned in
FY2021, the Company reviewed the appropriate
level of contingency required for the mature LCS
and EPF programs due to a number of the
significant milestones reached in this period
including the delivery of LCS 32 and 34 and
EPF 13. As a result of this review, the remaining
contingencies associated with these programs
were released in H2 FY2023. Refer note 4(V)(2)
in the financial statements for further
information.
More detail is provided below in the Shipbuilding
section of this report, however it is the most
significant impact on our P&L so warrants
mention from the outset.
The impact is unfortunate on numerous levels,
but particularly because it has overshadowed the
contract wins Austal secured in FY2023, which
have set Austal’s USA operations up for success
for the next 10 years, as well as our support
business realising its potential with a substantial
uplift in revenue and profitability.
Our focus now has to be, and is, on delivering
those construction programs safely and
efficiently.
Despite the profit result, Austal’s strong cash
position and forward outlook has enabled the
Board to declare a final dividend of 3.0 cents per
share, taking total dividends to 7.0 cents per
share (unfranked) for FY2023.
Austal delivered 9 ships in FY2023 and
maintained a strong balance sheet, while
allocating considerable enhancing capital as we
strengthened our strategic position in the US
defence shipbuilding sector. This year has been
exceptional in terms of contract wins in the US
business and puts significant future stability back
into the business. Clearly the investment, in
partnership with our major customer, in adding a
steel production line to our aluminium capability
has been money well spent. We will continue to
invest in the business as we drive long term
profitable growth.
Pleasingly, improved efficiencies and risk
mitigation in the USA on the mature LCS and
EPF programs were reflected in an accelerated
release of contingency reserves during the year.
Importantly, we continue to translate the
Company’s earnings into strong operating cash
flow, though total cash flow was impacted by
significant enhancing expenditure and cash
outlays for materials on new programs.
We made significant investments in the USA with
both completion of the San Diego service centre
investment and the arrival of the floating dock,
enabling future revenue growth in line with our
business case.
In Australia, we delivered 4 defence vessels, of
the Evolved Cape-class Patrol Boats (ECCPB) to
the Royal Australian Navy. If we look back over
the last 5 years we have delivered 25 ships from
the Australian business which is very impressive
considering the challenges of COVID-19. This
demonstrates the capability we have in the
workforce and stands us in good stead for future
programs as we await the outcomes of the
Independent Analysis into the Navy’s Surface
Combatant Fleet review due in October 2023.
The Defence Strategic Review was well received
and encouraging on several items, including
clarity around the build of Tier 2 ships in Western
Australia, an immediate need for medium and
heavy landing craft, and a recognition of the
importance of continuous naval shipbuilding.
These are all indicators of a positive outlook for
shipbuilding opportunities in Henderson.
Austal USA continued its success in delivering
the US Navy’s LCS program, with the
commissioning of LCS 30, the USS Canberra.
This was a very special event that saw the
US Navy commission a warship outside of the
United States for the first time in its history.
It was a truly amazing experience to be part of the
ceremony and witness history being made, a
history that Austal’s ship designers and builders
made possible. It also reinforced the great bond
between Australia and the United States and
signifies exciting opportunities through AUKUS.
Autonomy is a pillar of AUKUS and with the
progress we have achieved on EPF 13, Overload
Unmanned Service Vessel (OUSV) 3 and
Saildrone, we are well placed for this to became
another future revenue stream both in the US and
Australia.
Another exciting development this year was the
award of submarine module build work in
Alabama. This commenced on Virginia-class
modules, the same submarine class that Australia
will be buying from the US and will progress to
the larger Colombia-class. This will likely be a
very important long term revenue stream for the
US shipbuilding business.
Austal Philippines delivered the Express 5 to
Molslinjen, the largest vessel, by volume, we have
ever built. Also in the Philippines, the repair
business generated revenue through use of our
floating dock, the Lewek Hercules, which is
another potential future revenue stream for that
business. More recently, it was a wonderful
opportunity to meet Philippines President Marcos
and talk him through our capabilities in
Balamban and how we could support their needs
for Coast Guard ships.
People & Safety
Ensuring our people go home safely at the end of
each day is our number one focus.
Austal continues to demonstrate effective and
robust health and safety management throughout
our global shipyard and service centres and
continues to be recognised in meeting industry
incidence benchmarks.
Austal Limited | Chief Executive Officer’s report 5
The following tables illustrate Health and Safety
incidence performance against the pcp.
14.1
14.2
10.7
10.4
10.1
6.8
7.1
7.5
7.0
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY23
Medical Treatment Injury Frequency Rate
(Injuries per million hours worked)
3.62
3.11
2.10
1.75
2.07
1.68
1.70
1.78
2.12
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY23
Lost Time Injury Frequency Rate
(Injuries per million hours worked)
Austal recorded a reduction in Medical Treatment
Injury Frequency Rate this reporting period, whilst
Lost Time Injury Frequency Rate unfortunately
increased.
We are reviewing the contributing factors to the
LTIFR and will respond accordingly.
Combined, Lost Time and Medical Treatments
incidences make a total recordable Injury
Frequency Rate of 9.12.
Austal continues to achieve accolades throughout
its operations and acknowledges and celebrates
its successes, such as receiving 2 national safety
awards from the Shipbuilder’s Council in America
(Excellence in Safety and Improvement in Safety)
this reporting period.
Further details on Health, Safety and
Environmental initiatives at Austal can be found
in Austal’s Environmental, Social and Governance
(ESG) Report FY2023.
USA
Strategy
Austal USA remains the core driver of Austal’s
financial performance, constituting more than
three-quarters of the Company’s revenue in
FY2023. This year was dominated by the
April 2023 T-AGOS contract win which including
construction options is valued at around
$3.2 billion. The addition of the T-AGOS program
takes Austal’s order book to $11.6 billion if all
options on the current contracts are exercised - a
record for the Company.
There has been considerable focus and success
on future growth opportunities including in the
6 Austal Limited | Chief Executive Officer’s report
emerging autonomous vessel market and non-
prime module projects, which leverage Austal’s
core shipbuilding, support, and advanced
technologies expertise. Austal has entered into
agreements for a number of strategic programs,
with a potential combined value of approximately
US$75 million (approximately A$108 million),
where some early stage contracts provide a
pathway for potential, future awards. These
agreements include:
An ‘undefinitised contract action’ (UCA) with
the US Navy to resolve the detail design for
three fully funded Emergency Medical Ships
(EMS) – with these ships to be valued at
more than US$900m
Partnership with L3Harris Technologies to
construct and modify autonomous
capabilities in support of the US Navy’s
Overlord Unmanned Surface Vessel (USV)
Program
Concept design for the US Navy’s Large
Unmanned Surface Vessels (LUSV),
involving a prototype of an unmanned ship
that is capable of autonomous operation
Appointment as the exclusive manufacturer
of Saildrone Inc.’s wind and solar-powered
Surveyor USV, with discussions continuing
as to the number of vehicles to be produced
Partnership with General Dynamics Electric
Boat to train Austal personnel in the
manufacture of Command and Control
Systems Modules and Electronic Deck
Modules for US Navy nuclear submarines
A contract with Newport News Shipbuilding
in the USA to fabricate aluminium aircraft
elevators for two US Navy Ford-class aircraft
carriers being constructed by Newport News
Shipbuilding
The steel facility is in full production and the
significant contract awards to utilise that facility
are:
The Towing, Salvage and Rescue Ships
(T-ATS) program with all 5 vessel options
exercised.
The Auxiliary Floating Dock Medium (AFDM)
for the US Navy is just commencing
production.
Undoubtedly the highlight for last year, the
Offshore Patrol Cutter (OPC) program for the
US Coastguard. This program is for up to 11
ships at a potential value of US$3.3 billion,
and is still in the design finalisation phase
with cut metal expected before the end of
the next financial year.
Award of Auxiliary General Ocean
Surveillance Ship (T-AGOS) 25-class for the
US Navy awarded. The contract includes
options for the detail design and
construction of up to seven T-AGOS 25-class
ships which, if exercised, would bring the
cumulative value of the contract to
US$3.2 billion.
The new floating dock “Independence” has
arrived in San Diego and as previously discussed
forms a key part of our Support growth model.
Shipbuilding
Austal had a solid year of deliveries - in February
we delivered Expeditionary Fast Transport USNS
Apalachicola (EPF 13) to the US Navy; the largest
surface ship in the fleet with autonomous
capability. LCS 32 and 34 were also delivered
with substantial progress on LCS 36 and 38. LCS
38 will mark the end of what has been a very
successful program.
Early stage production of the T-ATS construction
program has been disappointing. In our FY2022
Annual Report, an ASX announcement on
17 January 2023, and our earnings guidance on
25 July 2023, Austal stated that the program was
encountering changes in specification and general
cost inflation pressures. In addition, the
efficiency assumptions for the newly
commissioned steel manufacturing line, such as
labour hours and consequentially, recovery of
overheads, did not meet forecasts and have been
subsequently revised.
So, although these efficiency issues are expected
to increasingly improve as Austal progresses
construction of the T-ATS vessels, which is Austal
USA’s first steel shipbuilding project, they are
slowing progress on the first vessels in
production. The exercise of the option to
construct the fifth and final vessel in the contract
has also added in the associated cost issues to
the onerous contract provision. As noted
previously, Austal USA has submitted Requests
for Equitable Adjustment (REAs) to seek
recoveries for some of the additional costs
incurred in the T-ATS project, but the precise
timing and success of those claims is uncertain.
Austal is submitting further REAs, for some, but
not all, of the additional costs, and the outcome
of those REAs is similarly uncertain.
Support
FY2023 set Austal’s support business up for
future success.
In February 2023 Austal hosted a grand opening
ceremony at its San Diego facility after the facility
was successfully certified to execute US Navy
repair and maintenance enabling execution of the
USS Canberra (LCS 30) post shakedown
availability. In June we completed work on our
floating dry dock, further expanding our capability
on the San Diego waterfront which will be
NAVSEA certified in January 2024, following
completion of our waterfront improvements.
In Singapore Austal continues to provide reliable
Outside of the Continental United States
(OCONUS) support for forward deployed Littoral
Combat Ships. We execute continuous, emergent
and planned maintenance throughout seventh
fleet, ensuring USN readiness is delivered.
In Mobile on Austal West Campus, we continue to
provide an important role in our Services and
Support business with consistent utilisation and
contribution to profit through commercial work
won. We grew our work in the mid-Atlantic region
by working on carrier elevators. We are working to
leverage this new work as a growth opportunity in
FY2024.
Overall the US service business delivered, with
growth in revenue and EBIT. It recorded
$227.0 million in revenue (FY2022:
$175.8 million) and $14.7 million in EBIT this
financial year (FY2022: $11.6 million),
demonstrating progress on our route to $500
million annual revenue in this segment.
When combined, these strategic investments are
starting to deliver a long term, stable income
stream that will underpin sustained shareholder
returns.
We also continue to look for acquisition and
organic growth opportunities to support our
customers in the regions in which they choose to
operate.
Outlook
Austal has had some challenges on its first steel
program that was bid in a non-standard process,
but none-the-less the steel panel line is up and
running and ready for the significant volume of
work that has been won in the past two years.
Looking ahead, Austal entered FY2024 with a
$11.6 billion order book, with unexercised
options for the US Navy and US Coast Guard
extending through to the early 2030’s.
Austal USA’s focus has been on broadening the
potential order book with investment in facilities
and capability, while delivering existing contracts,
winning future build programs and ensuring we
are part of the design process for longer term
programs and developing a true long-term
pipeline of work. The record order book clearly
demonstrates this strategy is paying off.
Austal Limited | Chief Executive Officer’s report 7
Enterprise Resource Planning (ERP) solution,
with more to come. We maintained our
ISO 27001 and Defence Industry Certification
Program (DISP) cyber security accreditations for
Austal IT systems.
Both Austal USA and Australasia have clear
direction and an agreed set of objectives to build
customer relationships and target addressable
markets using technologically advanced products.
We now have the ability to deliver shipbuilding,
support and systems, for commercial and defence
customers in both steel and aluminium.
Support
The support yards in Cairns and Brisbane are
back to full operating capacity following upgrades
and modernisation improvements in FY2023.
This impacted our FY2023 revenue but has set us
up to maximise future commercial revenue, while
our Cairns facility focuses on Border Force and
Navy vessels. Many of the newly built ECCPB will
be home ported in Cairns, and as the fleet grows,
we anticipate our revenue will grow too.
As the Defence Strategic Review increases the
size of the Navy fleet over coming years, there will
be more vessel sustainment activities being
undertaken in Perth, Darwin and Cairns, where we
are already established.
Outlook
The Defence Strategic Review indicated a
commitment to Western Australia and
consolidation to create a defence precinct, with a
desire for continuous naval shipbuilding. Austal
will work with Defence to achieve its desired
outcomes and this should provide Austal the
ability to focus on a visible pipeline of tenders
that match our capabilities in Australian
shipbuilding.
Of course, new ships also bring opportunities on
new sustainment contracts.
Austal anticipates that the commercial ferry
market will remain tough for the next few years,
but there are signs of increasing opportunities,
driven by three main factors: the reduction in
COVID-19 travel restrictions, the ageing of the
global commercial ferry fleet, and the desire of
operators to reduce emissions. This will be vitally
important for our yards in the Philippines and
Vietnam.
Australasia
Strategy
Our core focus remains on long term sustainable,
profitable growth. We have maintained our focus
on sovereign capability and continue rebuilding
positive stakeholder relationships across Navy,
Defence, Australian Border Force, other
Departments and Government R&D and Digital
Technology teams. Austal’s strategy of
establishing operational capability in-country on
commercial vessels and then subsequently
moving into defence and support has worked well,
and the recent meeting with the President of the
Philippines allowed us to showcase the patrol
boat and shipbuilding capability we have in that
country.
Shipbuilding
Both the Philippines and Vietnam operations
delivered high quality vessels this year, but those
deliveries marked the end of the current order
book of vessels. Both yards have significantly
scaled down and are performing infill work to
maintain capability while we work to finalise new
contracts. If these contracts do not materialise,
we will have to review the ongoing operations at
those sites. We have made a strategic decision to
maintain this capability because we see a bright
future as technology develops and delivers a
significant resurgence in the market.
Our Australian operations continue to support
Australian Navy and Border Force on the new
build and sustainment of vessels. We had a
successful year as we continue to deliver Evolved
Cape-class and Guardian-class vessels. The
Defence Strategic Review was well received, and
we await the outcome of the Independent
Analysis into the Navy’s Surface Combatant Fleet
review due in October 2023. Based on the
opportunities outlined so far and the
demonstration of our capability, I am confident
the future will be bright as we continue to partner
with Navy to deliver outcomes. The next
opportunity is the Army’s Independent Littoral
Manoeuvre Vessel (Army Landing Craft). Austal is
seeking to establish its position as the ultimate
Sovereign Defence Prime Contractor in Australia,
and we continue to assess inorganic and
acquisition opportunities in the sector and what
the defence precinct post the review’s outcomes
will yield.
The significant growth in the size of the
Australasia business over the last 5 years has
prompted investment in the appropriate
Information Technology systems to monitor and
control our operations in multiple countries. This
year we went live with a transformation project,
which includes implementation of a new
8 Austal Limited | Chief Executive Officer’s report
Research & Development (R&D)
Austal continues to invest in new technologies to
support future growth and Austal’s digital
products have seen significant deployments this
year.
Austal’s trusted Control & Monitoring solution,
MARINELINK, has been developed and deployed
for over 20 years on Austal vessels. The next
generation version of this software, MARINELINK
PRIME, updates the system to utilise a modern
architecture and underlying technologies, and has
been designed to support the next generation of
ships. MARINELINK PRIME has been
successfully deployed on all ECCPBs delivered to
the Royal Australian Navy and Express 5 in the
commercial sector.
Austal’s Asset Management solution LUSI
(Lifecycle Upkeep Sustainment Intelligence) has
moved to operational use on all ECCPBs delivered
to the Royal Australian Navy. Opportunities to
exploit this technology in other maritime areas, as
well as in adjacent sectors such as aerospace, are
under consideration.
Austal R&D is focusing on technologies for
emissions reduction, autonomous operations and
reduced crewing. On the back of delivering
EPF 13 and its autonomous capability to the US
Navy, in Australia Austal began a Patrol Boat
Autonomy Trial, sponsored by the
Commonwealth’s Warfare Innovation Navy (WIN)
Branch. This program is converting a
decommissioned Armidale Patrol Boat
(the PBAT Sentinel) to autonomous operations in
order to better understand the use and
capabilities of future autonomous platforms. The
autonomous functionality is being delivered
through the integration of the proven L3Harris
autonomous navigation capability and extensions
to the Austal MARINELINK Control and
Monitoring solution. This program is progressing
well, with sea trials anticipated in the second half
of 2023 calendar year.
Austal is also working closely with a number of
parties on emissions reduction. In April 2023,
Austal signed a Memorandum of Understanding
with the Gotland Company of Sweden for the
design of an upcoming catamaran that can
operate on hydrogen as well as other fuels.
In the US, Austal Technology is investing in
additive manufacture capability and working
closely with Navy to produce complex parts in a
variety of materials.
A final area of focus is the modernisation of
Austal’s business systems. The first stage of this
project, the deployment of a new Enterprise
Resource Planning (ERP) solution, successfully
went live in 2023. This aligns the ERP systems
across the US and Australasia businesses.
Management
In April I was pleased to announce the
appointment of a new Austal Chief Financial
Officer, Christian Johnstone. Christian was
previously CFO for AusGroup Limited and has also
held Chief Financial Officer, Company Secretary
and Executive M&A roles with Iron Ore Holdings
and Wesfarmers.
I’d like to thank interim CFO Geoff Buchanan for
his extended interim service with us and his work
ensuring a smooth transition with Christian. I
wish Geoff luck in his future endeavours.
Conclusion
The highlight of this year has undoubtedly been
the contract awards in the US business. Clearly
the move to steel had been the right one and
created a record order book for Austal. T-ATS has
been a disappointment but is a program that was
bid in a completely different manner to all other
programs and despite the cost issues is
progressing well through the new steel facility and
producing very impressive quality that is being
recognised by the customer.
The addition of submarine module work is just as
satisfying as our shipbuilding wins. This has real
potential to be a significant revenue stream
alongside our work in autonomy. No doubt there
will be more to come on both of these topics over
the coming year.
Being part of the USS Canberra commissioning
was a truly historic moment in our history and
demonstrated our position in the market and our
commitment to defence in both Australia and the
USA. We have clearly stated our long term
commitment to defence.
Part of that commitment is in support as well as
shipbuilding and it’s exciting to see the arrival of
the floating dock in San Diego and watch the
team commission that as we strive to hit our
growth targets.
In Australia the DSR was encouraging, and we
look forward to the output of the IAT. This should
yield opportunities to match our US achievements
- security and longevity of our future order book.
In summary, our two year investment in steel and
support is now paying off in the form of orders. A
turning point in the commercial market which,
whilst small, is on the horizon and should provide
a good revenue stream alongside defence in our
dedicated facilities in the Philippines and
Austal Limited | Chief Executive Officer’s report 9
Vietnam. We will continue to pursue opportunities
with both Navy and Coast Guard and utilise our
proven patrol boat and commercial designs and
design capability.
Crucially, we continue to maintain a robust
balance sheet during this transition period.
Paddy Gregg
Managing Director and Chief Executive Officer
10 Austal Limited | Chief Executive Officer’s report
Review of operations
USA
Financial performance
Revenue
Shipbuilding
Support
Total
EBIT
Shipbuilding
Support
Total
EBIT Margin
Shipbuilding
Support
Total
2023
$’000
2022
$’000
$
998,116
226,920
$
880,101
175,821
$
1,225,036
$
1,055,922
$
(9,498)
14,677
$
122,105
11,636
$
5,179
$
133,741
N/A
6.5%
0.4%
13.9%
6.6%
12.7%
USA total segment revenue was $1,225.0 million in
FY2023 compared to $1,055.9 million in FY2022.
EBIT decreased by $128.6 million (96.1%) on
FY2022 to $5.2 million, primarily driven by the T-ATS
loss of $171.2 million in FY2023.
This was reflected in an EBIT margin of 0.4% in
FY2023, compared to 12.7% in FY2022.
Revenue increased principally due to the
diversification of new program revenue which more
than offset the decline in revenue from the maturing
LCS program.
Shipbuilding
Shipbuilding revenue increased by 13.4% from
FY2022 to FY2023.
Austal was awarded a US$395.5 million contract in
July 2022 to design and build a 110 metre Offshore
Patrol Cutter vessel (OPC) for the United States Coast
Guard (USCG), the first of up to 11 OPC vessels for
the USCG with a potential contract value of
$US3.3 billion (AUD $4.4 billion).
Austal delivered the 16th Independence-class Littoral
Combat Ship, USS Santa Barbara (LCS 32), to the
US Navy in July 2022, whilst LCS 34 was delivered in
May 2023. LCS 36, the future USS Kingsville and
LCS 38, the future USS Pierre remain under
construction.
In July 2022, Austal was awarded a further
US$156.2 million fixed price incentive contract
option for the construction of an additional two
Towing, Salvage, and Rescue Ships (T-ATS), whilst in
June 2023 the Company was awarded a fixed-price
contract option for the construction of a fifth and final
vessel (T-ATS 15) for US$79.2m.
As indicated in the Company’s FY2023 H1 Report, an
onerous contract provision of US$41.2 million was
recognised at the half year in relation to the T-ATS
program, in addition to the US$7 million onerous
contract provision recognised in FY2022.
More recently, the Company conducted a full review of
forecasts for all five vessels in the T-ATS program and
applied the same forecasting methodology to those
vessels. Using that methodology, the forecast loss
arising from this program was subsequently increased
to US$(122.6) million. It should also be noted that
Austal USA has submitted a Request for Equitable
Adjustment (REA) to recover some of the costs
relating to design and construction. The Company has
included an estimate in the onerous contract provision
of the expected recovery of a portion of the REA
remaining outstanding.
During H2 FY2023, as originally planned in FY2021,
the Company reviewed the appropriate level of
contingency required for the mature LCS and EPF
programs due to a number of the significant
milestones reached in this period including the
delivery of LCS 32 and 34 and EPF 13. As a result of
this review, the remaining contingencies associated
with these programs were released in H2 FY2023.
Refer note 4(V)(2) in the financial statements for
further information.
Austal provided revised earnings guidance to
shareholders in January 2023 and July 2023 as a
result of these adjustments to the T-ATS onerous
contract provision.
USNS Apalachicola (EPF 13) successfully completed
acceptance trials for the US Navy in September 2022.
EPF 13 is the US Navy’s largest ship with the
capability to operate as an unmanned surface vessel
(USV) and is a significant achievement for Austal
being the first surface vessel constructed by Austal
USA with autonomous capability. EPF 14, the future
USNS Cody and EPF 15, the future USNS Point Loma
remain under construction. EPF 16 is under contract.
Following the successful delivery of the future
USS Canberra (LCS 30) to the US Navy in December
2021, the vessel was commissioned in Sydney on
22nd July 2023, the first USN to be commissioned
outside the United States.
Austal was awarded a US$114.0 million fixed-price
incentive (firm target) and firm-fixed-price contract for
detail design of the Auxilliary General Ocean Ship
T-AGOS-class for the US Navy. The contract includes
options for detail design and construction of up to
seven T-AGOS 25-class ships which, if exercised,
would bring the cumulative value of the contract to
US$3.2 billion.
During the year the Company also acquired ~67 acres
of Mobile waterfront property for expansion.
Austal Limited | Review of operations 11
Support
Support revenue increased from $175.8 million in
FY2022 to $226.9 million in FY2023, whilst EBIT
generated by the USA Support segment increased
from $11.6 million in FY2022 to $14.7 million in
FY2023.
Austal’s USA support business grew its offshore
service centres and support revenue even though
support work was impacted by the reduced volume of
support work taking place due to the delayed
commissioning of the floating dry dock in San Diego.
Austal expects support revenue to continue to grow
over the long term, with a growing fleet of LCS and
EPF and the introduction of the floating dry dock to
augment the Company’s recent admission to the
Sustainment Execution Contract (SEC) West panel of
service providers in San Diego. This positions Austal
to win a larger share of the available support work.
The SEC West contract will also serve as an enabler to
the expansion of support activities to other vessel
types.
New contract awards
In addition to the firm-fixed-price contract for detail
design of the Auxilliary General Ocean Ship
T-AGOS-class for the USN, and the additional T-ATS
awards, Austal entered into agreements for a number
of strategic developments during the year, with a
potential combined value of approximately
US$75 million (approximately A$108 million), with
some early stage contracts providing a pathway for
potential, future awards. These agreements include:
An ‘undefinitised contract action’ (UCA) with the
US Navy to resolve the detail design for three
fully funded Emergency Medical Ships (EMS) –
with these ships to be valued at over US$900
million.
Partnership with L3Harris Technologies to
construct and modify autonomous capabilities in
support of the US Navy’s Overlord Unmanned
Surface Vessel (USV) Program.
Concept design for the US Navy’s Large
Unmanned Surface Vessels (LUSV), involving a
prototype of an unmanned ship that is capable of
autonomous operation.
Appointment as the exclusive manufacturer of
Saildrone, Inc.’s wind and solar-powered
Surveyor USV, with discussions continuing as to
the number of vehicles to be produced.
Awarded a time and material (T&M) contract by
General Dynamics Electric Boat (GDEB) for
structural assembly fabrication in support of the
US Navy Virginia-class submarine program,
expected to provide potentially up to US$25
million revenue for Austal USA.
12 Austal Limited | Review of operations
Partnership with General Dynamics Electric Boat
to train Austal personnel in the manufacture of
Command and Control Systems Modules and
Electronic Deck Modules for US Navy nuclear
submarines.
A contract with Newport News Shipbuilding in
the USA to fabricate aluminium aircraft elevators
for two US Navy Ford-class aircraft carriers being
constructed by Newport News Shipbuilding.
Safety
Austal USA continued to receive national safety
awards from the Shipbuilder’s Council in America
(Excellence in Safety and Improvement in Safety)
during the year, affirming that Austal USA remains
one of the safest shipyards in the USA maritime
industry.
Material business risks - USA
Steel shipbuilding in the USA
Austal USA completed construction of its new steel
shipbuilding facilities in April 2022. Since opening
the facility, Austal has commenced work on its initial
steel vessel program, the Navajo-class Towing,
Salvage and Rescue Ships (T-ATS). As advised
through the Company’s ASX announcements in July
2023, this program has experienced significant
performance hurdles which has resulted in forecasts
of earnings losses. The program has encountered
changes in specification and general cost inflation
pressures and the efficiency assumptions that the
Company made for the newly commissioned steel
manufacturing line, such as labour hours and
consequentially, recovery of overheads, did not meet
forecasts and have been subsequently revised. So,
although these efficiency issues are expected to
increasingly improve as Austal progresses construction
of the T-ATS vessels, which is Austal USA’s first steel
shipbuilding project, they are slowing progress on the
first vessels in production. (Austal had noted a risk
around this project being the first steel project in its
2022 Corporate Governance Statement).
US Coast Guard Offshore Patrol Cutter (OPC)
program
This contract award is a major boost for the Company
however it also comes with risks such as:
Successful protest – as at the date of this Annual
Report, the OPC award is subject to a protest
lodged by the incumbent builder, Eastern
Shipbuilding Group. While the Company has no
reason to believe the protest will succeed in
overturning the award, it is a risk and such action
would have a material impact on the pipeline of
work in the USA. The Company has been working
on these vessels for some time already, and will
retain any amounts paid or owing to it for such
work, even if the protest is successful;
New customer – the OPCs will be constructed for
the US Coast Guard. Austal has a longstanding
and constructive relationship with the US Navy
and the Company has every confidence that it
will continue to develop and deepen its
relationship with the Coast Guard to a similar
degree, however the slight differences in policy
and approach may introduce unexpected
considerations in the initial stages of this
relationship.
Australasia
Reporting of Austal’s Australia, Philippines, Vietnam
and Muscat operations are combined into the
Australasia Shipbuilding and Australasia Support
reporting segments for tendering, scheduling, resource
planning and management accountability.
Financial performance
Revenue
Shipbuilding
Support
Total
EBIT
Shipbuilding
Support
Total
EBIT Margin
Shipbuilding
Support
Total
2023
$’000
2022
$’000
$
222,319
144,094
$
285,705
98,261
$
366,413
$
383,966
$
6,720
9,057
$
11,863
2,755
$
15,777
$
14,618
3.0%
6.3%
4.3%
4.2%
2.8%
3.8%
The Australasia segment reported revenue of
$366.4 million in FY2023, compared to
$384.0 million for FY2022.
EBIT increased from $14.6 million in FY2022 to
$15.8 million in FY2023.
Revenue in FY2023 continued to be impacted by
reduced work in the commercial ferry sector due to
delayed orders as operators contemplate future vessel
design with alternative fuel propulsion sources in
mind. This was offset by the continued growth in the
Support business in FY2023.
Shipbuilding
Austal is currently examining investment options
developed to support the Commonwealth of Australia
Defence Strategic Review outcomes.
Austal delivered 4 of the contracted 8 Evolved
Cape-class Patrol Boats (ECCPB’s) defence vessels to
the Royal Australian Navy in FY2023.
Construction continues to progress well at Austal
Australia on the 3 remaining ECCPB vessels which are
under various stages of construction.
An additional Guardian-class Patrol Boat (GCPB) was
awarded by the Commonwealth of Australia
(Commonwealth) during the year. Fifteen GCPB’s have
now been delivered to the Commonwealth, with a
further three built and ready for acceptance.
Austal Philippines delivered the 115 metre, high-
speed vehicle-passenger catamaran for Danish ferry
operator Molslinjen. The new ‘Auto Express 115’ is
the largest ferry (by volume) ever built by Austal.
Austal Vietnam also delivered the 66-metre high
speed catamaran ferry, Apetahi Express, to the Degage
Group of French Polynesia, paving the way for future
opportunities.
Despite the challenges being experienced in the
commercial market, Austal is actively focused on
securing a number of potential contracts for the
Philippines and Vietnam yards, whilst working
collaboratively with a number of commercial operators
to identify future fuel technologies.
Support
Support activity in FY2023 included continuing
servicing and support for the fleet of 8 CCPBs
operated by the Australian Border Force throughout
Northern Australia, with the ABF Cape sustainment
contract extended through to August 2024.
The support contract over three years for CCPB 9 Cape
Fourcroy and CCPB 10 Cape Inscription, was
extended, with S&Q requested to provide support to
ECCPB for a further 12 months.
In Service Support continues to grow, with the
Queensland yards operating near capacity.
In June 2022, Austal announced a two year support
contract to sustain the 2 CCPBs the Company built for
the Government of the Republic of Trinidad and
Tobago. The Trinidad and Tobago Service center is
now fully operational.
The Autonomous Patrol Boat (PBAT) Systems
Definition Review was completed, with good progress
towards achieving an autonomous system ready for
platform demonstration.
Austal’s Asset Management capability and technology
has been extended into the Air Domain, with the
introduction of ALFI.
Material business risks - Australasia
Commercial Ferries
The commercial high speed aluminium ferry business
is a significant market for Austal and provides
significant workload to the Philippines and Vietnam
shipyards. The newbuild ferry industry can be
adversely affected by economic, political, social,
security and other factors which delay or eliminate
future orders for vessels or even cause cancellations of
Austal Limited | Review of operations 13
and Technology SP800-171 Standard
(NIST 800-171). However, third parties retain the
ability to access even the most well protected
systems. This may create levels of interference or
public disclosure, such as demands of large financial
payments or interruption of service.
Negative outcome of the regulatory investigation
As initially announced to the ASX in January 2019,
and in a number of updates since then, Austal
Limited, Austal USA and some of their officers have
been the subject of investigations by ASIC in
Australia, and the Department of Justice and the
Securities Exchange Commission in the USA.
Following resolution of the Australian regulatory
investigations with ASIC in October 2022, the Group
continues to engage with the US Department of
Justice (DOJ) and Securities and Exchange
Commission (SEC) regarding their respective
investigations into alleged fraudulent activities by
former Austal USA personnel during 2013 – 2016.
In March and April 2023 each of the DOJ and SEC
commenced formal proceedings alleging fraudulent
conduct by the 3 ex-employees of Austal USA.
According to the DOJ allegation, the 3 former
employees concealed the true extent of cost growth on
the LCS program from the Austal USA Board of
directors and from Austal Limited and its
shareholders, resulting in Austal Limited reporting
inaccurately overstated progress on the LCS contract.
While the SEC’s complaint and the DOJ’s indictment
pertain to the conduct of those individual employees,
the indictment documents also include reference to
Austal USA and Austal Limited – in particular it is
noted that the SEC complaint includes the above
claim that the 3 ex-employees aided and abetted
Austal’s breach of the Exchange Act. No indictments
or charges have been made against either Austal
Limited or Austal USA, however the group is engaging
with both the DOJ and the SEC to fully understand the
nature of any potential allegations or proceedings
against either company, and to work constructively
towards a negotiated outcome of same. More detail on
this matter is provided in the notes to the financial
statements.
contracted vessels. Closure or contraction of this
market, or substantial contraction of the order book
generally, could force a closure of shipyards or severe
curtailment of operations. Since delivering vessels in
March 2023 and May 2023 respectively, Austal
Philippines and Austal Vietnam have not added to
their pipelines of work, and resources in each location
have been significantly reduced as a result.
Alternative opportunities are being pursued by each of
those facilities at present, however without further
material shipbuilding commitments, the Company will
be forced to consider reduction or re-orientation of its
Asian shipyards in the next 12 months.
This market also retains a risk of potential customer
default based on insolvency or other commercial
considerations that are less likely in contracts with
government or state-owned entities. While Austal
seeks to mitigate this risk through a combination of
contractual and cashflow protection measures, an
unexpected repudiation or material breach by a
commercial customer could pose a risk to workforce
retention and operational planning, because the
nature of the business means that large projects are
not easily replaced or rescheduled entirely.
Other material business risks
Tax treatment in Australia, USA and other
jurisdictions
As with many global entities, Austal’s operations
include some cross-border tax arrangements currently
under scrutiny by authorities around the world,
including the ATO (Australia) and the IRS (US). Austal
addresses these matters through the engagement of
third party experts and considers itself compliant with
all relevant requirements, however in light of the
increased scrutiny and focus of national governments
on base erosion and profit shifting, there is always a
risk that tax authorities in the jurisdictions in which
Austal operates will take a different view to that of the
Company. This is demonstrated by the current
engagement with the ATO and IRS in relation to
intercompany intellectual property royalties, as
disclosed in the notes to the Company’s financial
accounts.
Cyber security
Austal’s production of vessels for the US, Australian
and other governments means that it handles sensitive
information regarding people and vessels. Austal has
established information handling policies and
standards and cyber security measures that seek to
prevent the disclosure and theft of such information
and in 2022 achieved ISO27001 accreditation, which
further enhances the Company’s cyber security
framework. As a defence provider to the
Commonwealth of Australia, Austal Australia is
certified under the Department of Defence’s Defence
Industry Security Program (DISP) and as a prime
contractor to the US Department of Defence, Austal
USA complies with the National Institute of Standards
14 Austal Limited | Review of operations
Directors’ report
The Board of Directors of Austal Limited submit their report for the year ended 30 June 2023.
Directors
The names and details of the Company’s Directors in office at the date of this report are detailed below:
John Rothwell AO – Non-Executive Chairman
John has played a major role in the development of the Australian aluminium
shipbuilding industry approaching 50 years of experience in boat and shipbuilding. He is
the architect responsible for the establishment of Austal and was the founding Managing
Director. John identified markets for high speed ferries throughout Asia which resulted in
Austal’s rapid growth. He saw the potential for US Defense contracts for high speed
aluminium naval ships and he led the formation of a new shipyard in Mobile, Alabama in
1999.
John was appointed as an Officer of the Order of Australia (AO) in January 2004 for
services to the Australian shipbuilding industry, and for significant contributions to
vocational education and training. He was named “Australian Entrepreneur of the Year”
by Ernst and Young in 2002 and he was awarded the Western Australia Citizen of the
Year in the category of Industry and Commerce in 1999.
John stepped down as Executive Chairman in 2008 to continue as Non Executive Chairman after managing the
Company for 20 years.
Paddy Gregg – Chief Executive Officer
Patrick (Paddy) Gregg was promoted to the position of Austal’s Chief Executive Officer
on 1 January 2021, following 4 years as Austal’s Chief Operating Officer.
Paddy is a highly regarded senior leader with significant project management,
manufacturing and business experience acquired within the high-technology nuclear
defence industry, Rail Industry and Naval Shipbuilding Industry.
Immediately prior to joining Austal, Paddy was working for Network Rail in the United
Kingdom. During his time there he was responsible for major infrastructure
enhancements and renewals on the Western and Wales Route.
Paddy has extensive experience in the naval sector having worked for BAE Systems
Submarines, based in Barrow-in-Furness, England. Paddy was the Head of Project for
the second Astute-class hunter killer nuclear submarine build. In this role he worked
closely with both the United Kingdom Ministry of Defence and Navy to ensure the
project was successfully delivered.
As Chief Operating Officer at Austal, Paddy had responsibility for the shipbuilding and sustainment operations in
Australia, Philippines and Vietnam. This responsibility covered both new build of commercial and naval vessels, and
the sustainment stream of the business focussed support for Australian Border Force and Royal Australian Navy.
As Chief Executive Officer, Paddy oversees a global company comprising 5 shipyards and 9 service centres in
4 countries, with more than 4,300 employees worldwide.
Paddy is a Chartered Engineer and fellow of the Institution of Mechanical Engineers, with a Masters Degree in
Mechanical Engineering from the University of Newcastle-upon-Tyne, and a Masters in Business Administration
from the Warwick Business School.
Austal Limited | Directors’ Report 15
Sarah Adam-Gedge – Independent Non-Executive Director
Sarah was appointed as a Non-Executive Director of the Company in August 2017, became
Chair of the Audit & Risk Committee in December 2022, Deputy Chair of the Austal Limited
Board in September 2019 and is a member of the Nomination & Remuneration Committee.
She brings strong consulting, customer experience, digital and technology expertise to Austal
through her experience in executive roles in the information technology and consulting
sectors.
Sarah is also a Non-Executive Director of Codan Ltd, Kinetic IT Pty Ltd and Cricket Australia,
as well as being an independent Audit Committee member for the Australian Sports
Foundation. In August 2023, Sarah was appointed as Non-Executive Director of Bravura
Solutions Ltd, as well as Chair of the Audit and Risk Committee and member of the Human
Resources Committee. Prior to her professional director career, Sarah was the CEO &
Managing Director of Wipro Australia & New Zealand, Publicis Sapient, the digital business
transformation hub of the Publicis Groupe, Avanade Australia, Managing Partner and Vice President at IBM,
Managing Partner at PwC and Partner at Arthur Andersen. Sarah's work experience is across many industries and
geographies.
Sarah is a Chartered Accountant, and member of the Chartered Accountants Australia/New Zealand. She holds a
Bachelor of Business (Accounting) from the Queensland University of Technology and is a Graduate of the
Australian Institute of Company Directors. Sarah has extensive Diversity and Inclusion experience, is a mentor for
the Minerva Council and for CAANZ, has sponsored the development of Reconciliation Action Plans, and is
committed to sustainability having completed the Sustainability and Social Impact Futures course at RMIT.
Chris Indermaur – Independent Non-Executive Director
Chris was appointed as a Non-Executive Director of the Company in October 2018, has been
a member of the Audit & Risk Committee and Nomination & Remuneration Committee since
October 2018 and August 2019 respectively, and became Chair of the Nomination &
Remuneration Committee in December 2022. Chris has over 40 years of experience in large
Australian companies in Engineering and Commercial roles. Amongst these roles he was the
Engineering and Contracts Manager for the QNI Nickel Refinery at Yabulu, Company
Secretary for QAL and General Manager for Strategy and Development at Alinta Limited.
Chris is also a Director of Austin Engineering Limited and Mayur Resources Limited.
Chris holds a Bachelor of Engineering (Mechanical) and a Graduate Diploma of Engineering
(Chemical) from the West Australian Institute of Technology (now Curtin University).
He also holds a Bachelor of Laws and a Master of Laws from the Queensland University of
Technology and a Graduate Diploma in Legal Practice from the Australian National
University.
Mick McCormack – Independent Non-Executive Director
Mick was appointed as a Non-Executive Director of the Company in September 2020 and to
the Nomination & Remuneration Committee and Audit & Risk Committee in April 2021.
Mick has over 35 years’ of experience in Australia’s energy infrastructure sector, is
acknowledged as a pioneer in the Australian energy industry and was instrumental in
transforming Australia’s gas delivery system with the development of a world-leading
pipeline grid system. He was formally Managing Director and CEO of ASX listed APA Group
between 2015-2019, growing the enterprise value of the business from $1 billion to $24
billion during that time. Mick is recognised for delivering operational efficiency, safety
performance excellence, value-adding mergers & acquisition strategies, effective capital
allocation, prudent capital management and strong corporate governance principles.
Mick holds a Bachelor of Applied Science (Surveying) and a Master of Business
Administration from the University of Queensland, and a Graduate Diploma of Engineering
from Monash University. Mick is Chairman of Central Petroleum Limited and a Director of Origin Energy. He is also
a director of the Clontarf Foundation and is Chairman of the Australian Brandenburg Orchestra Foundation.
16 Austal Limited | Directors’ Report
Lee Goddard – Independent Non-Executive Director
Lee was appointed as a Non-Executive Director of the Company in January 2023, and has
been a member of the Audit & Risk Committee and Nomination & Remuneration Committee
since January 2023. He is an Executive Leader who continues to serve as a Royal
Australian Navy active reserve officer (rank Rear Admiral) following 34 years full time
service up until January 2021.
In April 2022 he was appointed as the inaugural CEO and Executive Director of the
Australian Missile Corporation. He is also a Non-Executive Director of the Commonwealth
Superannuation Corporation, an Advisor to the Minderoo Foundation and OCIUS
Technologies, and the Chairman (Race Director) of the Sydney to Hobart Yacht Race.
Prior to assuming his current industry roles, he was dual appointed as Commander,
Maritime Border Command and Operation Sovereign Border, responsible for the law
enforcement and operational oversight of Australia’s maritime economic and security zones; covering more than 10
per cent of the earths’ surface across the Indian, Pacific and Southern Oceans, Antarctic Territory and Australia’s
northern maritime approaches. This was preceded by a two-year secondment into the Department of the Prime
Minister & Cabinet.
On promotion to Commodore in late 2014 he assumed the role of Commander Surface Fleet, commanding 18 major
warships and over 3,500 personnel. He has Commanded warships and joint-agency Taskforce's at every senior Navy
rank from Commander to Rear Admiral.
He has contributed to a range of professional and academic journals focused on national security, maritime issues
and international affairs.
Austal Limited | Directors’ Report 17
Interests in the shares and options of the company and related corporate bodies
The interests of the Directors in the shares of Austal Limited at the date of this report were as follows:
Director
Ordinary Shares
Share Rights
Indeterminate Rights
Mr John Rothwell
Mr Paddy Gregg
Mrs Sarah Adam-Gedge
Mr Chris Indermaur
Mr Mick McCormack
Mr Lee Goddard
32,761,692
242,399
20,000
-
106,920
-
-
-
66,327
49,066
-
-
-
441,683
-
-
-
-
Principal activities
The principal activities of the companies within the consolidated entity during the year were the design,
manufacture and support of high performance vessels for commercial and defence customers worldwide.
These activities are unchanged from the previous year.
Results
The net (loss) after tax of the consolidated entity for the financial year was $(13.8) million (FY2022: net profit after
tax $79.6 million).
Review of operations
A review of the operations and financial position of the consolidated entity is outlined in the Review of Operations
on page 11.
Share price
The closing share price of Austal at 30 June 2023 was $2.37 (30 June 2022: $1.80).
Dividends
An unfranked dividend of 4.0 cents per share was paid after the FY2023 H1 results (FY2022: H1 4.0 cents
per share) and a further dividend of 3.0 cents per share has been declared post 30 June 2023 for FY2023
(FY2022 final 4.0 cents per share).
Significant events after the balance date
The Directors have declared an unfranked dividend of 3.0 cents per share in respect of the year ended
30 June 2023 as described above.
The directors are not aware of any other significant events since the reporting date.
18 Austal Limited | Directors’ Report
Likely developments and future results
A general discussion of the Group’s outlook is included in the Chairman’s report on page 1, the CEO’s report on
page 4 and the Review of Operations on page 11.
Significant changes in the state of the affairs
Mr Giles Everist resigned as Non-Executive Director, effective 9 December 2022. Please refer to the ASX
announcement titled “Resignation of Giles Everist as Non-executive Director” on 9 December 2022 for further
information.
Mr Lee Goddard was appointed as Non-Executive Director, effective 1 January 2023. Please refer to the ASX
announcement titled “New Non-executive Director Appointment” on 29 December 2022 for further information.
Mr Christian Johnstone was appointed as CFO, effective 3 April 2023. Please refer to the ASX announcement titled
“Austal Limited appoints new Chief Financial Officer” on 3 April 2023 for further information.
There were no other significant changes to the structure or operations of the Group during the financial year.
Environmental regulation and performance
The Group 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 2023.
Share rights, performance rights, indeterminate rights and service rights
There were 3,468,114 un-vested performance rights and 1,622,793 service rights at 30 June 2023.
1,870,548 performance rights, 345,839 indeterminate rights and 584,520 service rights were granted during
FY2023.
Indemnification and insurance of Directors and Officers
An indemnification agreement has been entered into between the parent entity and each of the Directors and
Officers named in this report. The Company has agreed to indemnify those Directors and Officers against any claim
for any expenses or costs which may arise as a result of work performed in their respective capacities to the extent
allowed by the law.
The parent entity paid premiums during the financial year in respect of a contract insuring the Directors and
Officers of the Group in respect of liability resulting from these indemnities. The terms of the insurance
arrangements and premiums payable are subject to a confidentiality clause.
Indemnification of auditors
The parent entity has agreed to indemnify its auditors, Deloitte Touche Tohmatsu, against claims by third parties
arising from the audit (for an unspecified amount) to the extent permitted by law, as part of the terms of its audit
engagement agreement. No payment has been made to indemnify Deloitte Touche Tohmatsu during or since the
financial year.
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 Corporations (Rounding in
Financial / Directors’ Reports) Instrument 2016 / 191. The Company is an entity to which the instrument applies.
Austal Limited | Directors’ Report 19
Committee membership
The Company has an Audit & Risk Committee and a Nomination & Remuneration Committee of the Board of
Directors. Members acting on the committees of the Board during the year were:
Audit & Risk
Nomination & Remuneration
Mrs Sarah Adam-Gedge 1
Mr Chris Indermaur
Mr Mick McCormack
Mr Lee Goddard 2
Mr Giles Everist 3
Mr Chris Indermaur 4
Mr John Rothwell
Mrs Sarah Adam-Gedge 5
Mr Mick McCormack
Mr Lee Goddard 6
Mr Giles Everist 7
1. Chair of the Audit & Risk Committee since December 2022
2. Member of the Audit & Risk Committee since January 2023
3. Chair of the Audit & Risk Committee to December 2022
4. Chair of the Nomination & Remuneration Committee since December 2022
5. Chair of the Nomination & Remuneration Committee to December 2022
6. Member of the Nomination & Remuneration Committee since January 2023
7. Member of the Nomination & Remuneration Committee to December 2022
Directors’ meetings
The number of Board and committee meetings of Directors and the attendance by each Director during the year was
as follows:
Number of meetings held
Number of meetings attended:
Mr John Rothwell 2
Mr Paddy Gregg 1
Mrs Sarah Adam-Gedge
Mr Chris Indermaur
Mr Mick McCormack
Mr Lee Goddard 3
Mr Giles Everist 4
Board
7
7
7
7
7
7
3
4
Meeting
Audit & Risk
Committee
Nomination &
Remuneration
Committee
4
n/a
4
4
4
3
2
2
5
5
5
5
5
4
2
1
1. Paddy Gregg is not formally a member of the Audit and Risk Committee or Nomination
& Remuneration Committee but attended as a guest.
2. John Rothwell is not a member of the Audit & Risk Committee.
3. Lee Goddard joined the Board and the Audit & Risk Committee and Nomination & Remuneration
Committee on 1 January 2023.
4. Giles Everist resigned as a director and member of all subcommittees in December 2022.
20 Austal Limited | Directors’ Report
Nomination & Remuneration Committee Chair’s message
Dear Shareholder,
The Board of Directors is pleased to present the Remuneration Report for the year ended 30 June 2023, outlining
the nature and amount of remuneration for Austal’s Non-Executive Directors and other Key Management Personnel
(KMP), and changes in KMP in the financial year.
2022 remuneration resolutions
I would like to thank shareholders for the positive support provided in favour of remuneration related resolutions at
the 2022 AGM.
KMP remuneration
Remuneration for KMP continues to be a focus for the organisation and our remuneration framework is designed to
be competitive to attract and retain talent and reward for achieving business outcomes. The Executive remuneration
framework is monitored annually for relevance and competitiveness and recent reviews of the framework by the
Nomination and Remuneration Committee (NRC) has determined that salary mix and structure remain competitive
against market and identified competitors.
Benchmarking of KMP remuneration in FY2023 resulted in a fixed remuneration adjustment for the CEO to ensure
alignment to P50 was maintained. Other KMP fixed remuneration was adjusted in line with aged market data and
legislated superannuation changes.
In accordance with the Executive Remuneration policy, external remuneration consultants have recently been
engaged to benchmark Executive Remuneration. Results from this exercise will be considered as part of FY2024
annual remuneration review.
FY2023 proved to be a successful year for contract awards including a major contract award in USA however
challenges experienced on the pivot to steel programs has impacted the results and in turn incentives. As the group
has not achieved the 85% profit gate threshold there are no Short-Term Incentives for FY2023 across the group. In
addition, the recent profit downgrade results in zero vesting of the FY2021 Long Term Incentive awards.
KMP update
We have seen a number of changes to KMP in FY2023:
Mr Giles Everist resigned from the Board on 9 December 2022.
Mr Lee Goddard was appointed to the Board on 1 January 2023.
After an extensive search Mr Christian Johnstone was appointed as Chief Financial Officer and is performing
a handover with the Interim Chief Financial Officer, Mr Geoff Buchanan through to 30 August 2023.
Board remuneration
In line with Executive Remuneration policy the company sourced annual market movements from external
remuneration sources to gauge the market median increases for NEDs in the year. Results of this review will be
considered as part of the FY2024 annual remuneration review.
Board Diversity
The Board recognises the need for diversity as part of its overall composition. The Board continues to keep diversity
at the forefront of its selection criteria when recruiting for vacant positions. The Board views diversity as skills,
knowledge, industry experience, background, race, gender and other qualities of the individual members as a whole.
Austal Limited | Nomination & Remuneration Committee Chair’s message 21
Commitment to ongoing feedback, and shareholder support
The Board looks forward to the continued support of shareholders for remuneration related resolutions at the
upcoming AGM. The Board will continue to consider further improvements to remuneration governance, policies and
practices, and commits to engaging with shareholders and their representatives on these matters.
The Board will be pleased to receive feedback in relation to this report.
Yours sincerely,
Chris Indermaur
Chair, Nomination & Remuneration Committee
22 Austal Limited | Nomination & Remuneration Committee Chair’s Message
Remuneration report
This Remuneration Report for the year ended 30 June 2023 outlines the remuneration arrangements of the
Company in accordance with the requirements of the Corporations Act 2001 (the Act) and its regulations.
This information has been audited as required by section 308(3C) of the Act.
1.
2.
Key management personnel ............................................................................................................................................................24
Remuneration governance framework ........................................................................................................................................ 25
3.
Executive KMP remuneration policy ............................................................................................................................................. 27
4.
Executive KMP remuneration .......................................................................................................................................................... 33
5.
Non-Executive Director remuneration .........................................................................................................................................39
6.
Equity instruments held by KMP ....................................................................................................................................................42
7.
Other related matters ....................................................................................................................................................................... 45
Austal Limited | Remuneration report 23
1.
Key management personnel
This report covers all Key Management Personnel (KMP) as defined in the Accounting Standards, including
all Directors, as well as those Senior Executives who have specific responsibility for planning, directing, and
controlling material activities of the Group.
The KMP for the year ended 30 June 2023 were:
Senior Executives
Mr Paddy Gregg
Chief Executive Officer and Managing Director since January 2021
Mr Ian McMillan
Chief Operating Officer Australasia since January 2021
Mr Rusty Murdaugh
President USA since September 2021
Interim President USA from February 2021 until appointed permanently
Mr Geoff Buchanan
Interim Chief Financial Officer since November 2021
Mr Christian Johnstone
Chief Financial Officer since April 2023
Mrs Christy Taylor
Chief Operating Officer USA - Transformation since promoted in May 2023
Non-Executive Directors
Mr John Rothwell
Chairman since 1998
Member of the Nomination & Remuneration Committee since December 1998
Mrs Sarah Adam-Gedge
Independent Non-Executive Director since August 2017
Member of the Audit & Risk Committee from August 2017 to December 2022
Chair of the Audit & Risk Committee since December 2022
Chair of the Nomination & Remuneration Committee from September 2018 to December 2022
Member of the Nomination & Remuneration Committee since December 2022
Deputy Chair of the Board since September 2019
Mr Chris Indermaur
Independent Non-Executive Director since October 2018
Member of the Audit & Risk Committee since October 2018
Member of the Nomination & Remuneration Committee since August 2019
Chair of the Nomination & Remuneration Committee since December 2022
Mr Mick McCormack
Independent Non-Executive Director since September 2020
Member of the Audit & Risk Committee since April 2021
Member of the Nomination & Remuneration Committee since April 2021
Mr Lee Goddard
Independent Non-Executive Director since January 2023
Member of the Audit & Risk Committee since January 2023
Member of the Nomination & Remuneration Committee since January 2023
The following person resigned and ceased to be a Non-Executive Director during FY2023:
Mr Giles Everist
Independent Non-Executive Director from November 2013 to December 2022
Chair of the Audit & Risk Committee from October 2014 to December 2022
Member of the Nomination & Remuneration Committee from February 2014 to December 2022
24 Austal Limited | Remuneration report
2.
Remuneration governance framework
The following framework and strategy broadly outlines the principles and policies that the Board applies in
overseeing KMP remuneration:
I.
Nomination & Remuneration Committee Charter
The role and responsibilities of the committee are outlined in the Nomination & Remuneration
Committee Charter (the Charter), which is available on the Austal website.
The role of the Nomination & Remuneration Committee (NRC) is to ensure that appropriate
remuneration policies are in place which are designed to meet the needs of the Company and to
enhance corporate and individual performance.
The Committee also oversees the implementation of the policies in setting remuneration and
performance objectives related to the Short Term Incentive (STI) and Long Term Incentive (LTI) plans.
The remit of the NRC also includes succession planning which was undertaken for the Directors of
the Board and Executives during FY2023.
The Charter specifies that the NRC is to be composed of at least three members with the majority
being independent directors.
II.
Share trading policy
The Share Trading Policy of Austal is available on the Austal website. The Policy contains the
standard references to insider trading restrictions that are a legal requirement under the
Corporations Act, as well as conditions associated with good corporate governance. The Policy
specifies ‘Closed Periods’ during which Directors and related parties, KMP, Senior Executives, and
any employee in possession of inside information must not trade in the securities of the Company,
unless written permission is provided by the Board following an assessment of the circumstances.
All equity based remuneration awards which have vested are subject to the Group’s Share Trading
Policy.
III.
Executive remuneration consultant engagement policy
Austal has an Executive Remuneration Consultant (ERC) engagement policy which is intended to
manage the interactions between the Company and the ERC. The policy is intended to ensure
independence of advice and to provide clarity to the NRC regarding the extent of any interactions
between management and the ERC. This policy enables the Board to state with confidence that advice
received has been independent. The policy states that ERCs
the Board before any advice is received and that such advice may only be provided to a NED.
Any interactions between management and the ERC must be approved and overseen by the NRC, this
includes the collection of factual internal records (e.g. superannuation paid or allowances and
benefits).
are to be approved and engaged by
IV.
Stakeholder engagement
The Company seeks input regarding the governance of KMP remuneration from a wide range of
sources, including:
Shareholders
NRC Members
Stakeholder groups including proxy advisors
External remuneration consultants
Other experts and professionals such as tax advisors and lawyers
Company management to understand roles and issues facing the Company
Austal Limited | Remuneration report 25
V.
Remuneration framework
Austal is committed to responsible remuneration practices. The need to reward the Group’s employees
fairly and competitively based on performance needs to be balanced with the requirement to do so
within the context of principled behaviour and action, particularly in the area of safety, risk,
compliance and control.
Remuneration should contribute to the Group’s achievements in a way that supports the Group’s
culture and goals. The Remuneration Policy Framework set out below summarises the key features of
the Group’s remuneration approach.
Our Vision
Maintain a responsible, performance-based Remuneration Policy aligned with the long-term interests of shareholders.
Certain incentive metrics are utilised on the Remuneration framework to capture the impact of the Group’s strategy.
Our Goal
Strike the right balance between meeting shareholders' expectations, paying our employees competitively, and
responding appropriately to the regulatory environment.
Our Approach
Governance
Clearly defined and documented governance procedure.
Independent Nomination & Remuneration Committee.
Independent External Remuneration Consultants.
Annual assessment of Remuneration Policy.
Individual Remuneration
Reward annual performance of Group relative to planned key performance indicators.
Aligned with business performance.
Recognise and reward teamwork and development of the culture of the organisation.
Award and differentiate based on individual performance and contributions.
Individual Remuneration Determination
Total remuneration based approach.
Facilitate competitiveness by paying remuneration for comparable roles and experience, subject to performance.
Promote meritocracy by recognising individual performance, with an emphasis on contribution, ethics and safety.
Equal remuneration opportunity.
Remuneration Structure
Provide the appropriate balance of fixed and variable remuneration consistent with the position and role.
Significant portion of variable remuneration deferred and aligned with the long-term performance of the Group.
Promote ethical behaviour and do not create incentives to expose the Group to inappropriate risk.
26 Austal Limited | Remuneration report
3.
Executive KMP remuneration policy
I.
Structure
The following policy applies to executive KMP:
Total Remuneration Packages (TRP) should be composed of:
Total Fixed Remuneration (TFR) which is inclusive of superannuation, allowances, social
security, benefits and any applicable fringe benefits tax (FBT) as well as any salary
sacrifice arrangements.
Short Term Incentives (STI) which provides a reward for performance against annual
objectives.
Long Term Incentives (LTI) which provides an equity-based reward for performance
against indicators of shareholder benefit or value creation, over a three year period.
Internal TRP relativities and external market factors should be considered.
TRP should be structured with reference to market practices and the particular circumstances
of the Group where appropriate.
II.
Total fixed remuneration
i.
Framework
Base Packages should be set with reference to the market practice of ASX listed
companies at the 50th percentile, where 50% of the comparator group are above
the median level and 50% are below the median level.
TRP at Target bonus levels (being the Base Package plus incentive awards intended to
be paid for targeted levels of performance) should be between the 50th and 75th
percentile range of the relevant market practice to create a strong incentive to achieve
targeted objectives in both the short and long term.
Remuneration will be managed within a range to allow for the recognition of individual
differences such as individual experience, knowledge or competency with which they
fulfil a role (a range of + / - 20% is generally targeted in line with common market
practices).
ii.
CEO minimum equity holding
The CEO must accumulate and hold a minimum equity holding that is equal to or greater in
value than 1 year of TFR. The minimum equity holding will be computed in July of each year
based upon the volume weighted average price of Austal shares in the month of June. The
minimum equity holding includes shares, share rights and vested indeterminate rights, but
does not include unvested Performance Rights.
The minimum equity holding may be achieved by the vesting of LTI grants, personal purchase
of shares on market by the CEO, or the CEO and the Board may agree at the commencement of
each year for a portion of TFR to be unconditionally (not subject to performance conditions
since it is part of TFR) payable in share rights.
III.
Short term incentive (STI) policy
The short term incentive policy provides for a component of annual remuneration of executives to be
at-risk, payable in a mix of cash and equity and based upon an assessment of performance measured
using Key Performance Indicators (KPI) that are aligned to the relevant business unit of each
individual and the Company performance.
i.
Purpose
The purpose of the STI Plan is to incentivise KMP to deliver and outperform KPI and annual
business plans that are challenging but achievable. This is intended to lead to sustainable
superior returns for shareholders and to modulate the cost of employing KMP such that the
cost of employment reflects the performance of the Company.
Austal Limited | Remuneration report 27
ii.
Principles
The principles of the plan are that:
STI should be aligned with clear and measurable targets which are set at the start of the
financial year, and the targets will be aligned with the achievement of the Company’s
business plan.
STI payments will be determined after the end of the financial year and the full year
accounts have been approved by the Board.
STI payments are at the full discretion of the Board even if hurdles are met in order to
avoid inappropriate outcomes.
iii.
Form of remuneration - cash and equity
STI awarded to all non-USA Executive KMP will be paid as follows:
50% in cash.
50% in Indeterminate Rights (refer to the definition below) with a minimum holding
period of 1 year irrespective of continued employment.
Both the Austal USA President and Austal USA Chief Operating Officer - Transformation
receive 100% of STI in cash.
iv.
Indeterminate Rights
Indeterminate Rights are contractual rights to the value of a share in the Company which are
typically settled in the form of shares but which may, at the Board’s discretion, be settled in
cash.
v.
Minimum holding period
The minimum holding period for indeterminate rights that have vested is 1 year and applies
irrespective of continued employment with Austal.
vi. Measurement period
The Measurement period for STI awards is the financial year of the Group.
vii.
Determination of STI award
The Board reviews and approves performance targets and objectives annually for the CEO;
other executive KMP targets and objectives are also reviewed annually. At the discretion of the
Board the final STI award is determined subsequent to financial year end taking into
consideration the expectations and outcomes of shareholders. Where an STI is awarded, the
payment is made in September of the following financial year.
viii. Key performance indicators (KPI)
KPI are customised for each KMP, Senior Executive and Manager and reflect the nature of their
role, whilst creating shared objectives where appropriate.
Weightings are applied to the KPI selected for each participant to reflect the relative
importance of each KPI whilst ensuring that financial metrics always constitute at least 50% of
the total.
Satisfaction of KPI performance conditions are assessed qualitatively and quantitatively against
the targets defined at the start of the financial year.
The FY2023 KPI are contained in the STI KPI target and outcomes section commencing on
page 33.
28 Austal Limited | Remuneration report
ix.
Cessation of employment
STI awards will only be made to those participants that are still employed at the end of the
Measurement Period (30 June each year).
Resignation after the completion of the measurement period will not impact the 50% of STI
that is paid in cash.
STI recipients who resign after the completion of the measurement period will be subject to
good leaver / bad leaver provisions. An employee may forfeit their Indeterminate Rights if they
are a ‘bad leaver’. A bad leaver is defined as an employee whose employment is terminated for
cause, resigns upon being asked to do so or an ex-employee who acts against the interests
of the company.
STI awards may be determined at the discretion of the Board in the case of either resignation
or termination due to serious illness or disability.
x.
Change of control
The Board has determined that in the event of a Change of Control (including a takeover),
Indeterminate Rights will vest on a pro-rata basis at the ‘Target’ level for the portion of the
Performance Period that has elapsed at the date of the change of control. The Board retains
discretion to vary this approach if it considers that it would generate an inappropriate outcome.
xi.
Profit gate
The Company’s EBIT (Earnings Before Interest and Tax) result must be at least 85% of budget
in order for STI to be awarded.
xii.
Individual performance gate
Individual performance ratings for the year must be at least ‘Meets Expectations’ on the
following scale:
Does not meet expectations
Meets expectations
Exceeds expectations
The Board will have discretion to vary award outcomes in the circumstances that the outcomes
would otherwise be inappropriate.
xiii. Fraud or gross misconduct
All entitlements in relation to the Measurement Period will be forfeited by a participant if the
Board forms the view that a participant has committed fraud, defalcation or gross misconduct
in relation to the Company.
xiv. Clawback policy
The Board has implemented a Clawback policy which provides for the potential forfeiture of the
unvested equity based STI entitlements in the event of a material misstatement in the
Company’s financial statements of a relevant STI year being identified during the subsequent
holding lock period.
The Clawback policy only applies to the Indeterminate Rights awarded from STI and does not
apply to the cash portion of STI that has already been paid to participants.
xv.
STI award opportunities
The FY2023 STI award opportunities are contained in the STI KPI target and outcomes section
on page 35.
Austal Limited | Remuneration report 29
IV.
Long term incentive (LTI) policy
The LTI policy of the Company is to set a component of annual remuneration of executives to be at
risk, payable in equity in the Company and based on an assessment of long term performance over a
period of no less than three years in duration. A share disposal restriction applies for one year from
the expiry of the performance measurement period which extends the effective remuneration deferral
to a total of four years.
i.
Purpose
The purpose of the LTI Plan is to incentivise Senior Executives to deliver long term Group
performance that will lead to sustainable superior returns for shareholders and to modulate the
remuneration of Senior Executives relative to this performance.
ii.
Form of incentive
Non US participants in the LTI plan receive a grant of Indeterminate Performance Rights that
vest based on an assessment of performance against objectives over a defined Measurement
Period.
US participants in the LTI plan receive a grant of Performance Rights that vest based on an
assessment of performance against the same objectives over a defined Measurement Period.
US participants receive shares for vested Performance Rights.
iii. Measurement period
The Measurement period is three financial years.
iv.
LTI grant
The number of LTI Rights granted are calculated with reference to the stretch (maximum) LTI
value divided by the volume weighted average closing share price in the first month of the
measurement period (i.e. July each year).
Details of the FY2023 LTI grant are contained on page 43.
v.
Measures of long term performance
Long term performance is measured in reference to three equally weighted metrics
(i.e. 1/3 each):
Indexed Total Shareholder Return (iTSR)
Earnings per Share Growth (EPSG)
Return on Equity (ROE)
Metrics are set so that Target performance is expected to be achieved 50 – 60% of the time
and Stretch (Maximum) performance is expected to be achieved 10 – 20% of the time.
The metrics are disclosed below.
vi.
Total shareholder return (TSR) measure
The Board believes that TSR is the measure that has the strongest alignment with
shareholders.
The Board utilises an absolute TSR premium to indexed TSR (iTSR) outcomes and avoids
windfall gains / (losses) from changes in broad market movements in share prices.
Austal’s iTSR is computed by comparing Austal’s TSR against Standard and Poor’s ASX 300
Industrials Total Return Index.
Austal’s TSR is the sum of share price appreciation and dividends (assumed to be reinvested in
shares) during the Measurement period. Share price appreciation is measured utilising a
30 Austal Limited | Remuneration report
1 month Volume Weighted Average Price (VWAP) at the beginning and the end of the
measurement period (i.e. July in year 1 and June in year 3).
The Company TSR metric for the measurement period must be positive to ensure that the LTI
will not reward executives when shareholders have lost value. None of the iTSR tranche will
vest if the Company TSR is negative.
vii.
Earnings per share growth (EPSG) measure
EPSG is an internal measure of performance which the Board encourages management to
focus on.
EPSG is determined by calculating the compound annual growth rate (CAGR) from EPS in the
last financial year prior to the 3 year measurement period, to the EPS in the final year of the
3 year measurement period.
EPS equals Basic EPS as reported in the financial accounts of the relevant year.
Actual EPSG results are compared against internal targets set by the Board.
viii. Return on equity (ROE) measure
Sustainability of ROE is a key element of creating sustainable shareholder wealth and hence
ROE was adopted to help ensure that this is taken into account by management.
ROE is calculated by dividing:
The average NPAT over the 3 year measurement period by;
The day weighted average Contributed Equity + Retained Profits - Reserved Shares
balance over the 3 year measurement period.
Actual ROE results are compared against internal targets set by the Board.
ix.
Board discretion
The Board retains discretion to adjust vesting outcomes in the circumstances that the
outcomes from applying the vesting scales alone would be deemed to be inappropriate.
In exercising this discretion, the Board is required to take into account the Company
performance from the perspective of shareholders over the relevant Measurement Period and
consider whether specific participants:
Engaged in any activities or communications that may cause harm to the operations or
reputation of the Company or the Board;
Took actions that caused harm or will cause harm to the Company’s stakeholders;
Took excessive risks or contributed to or may otherwise benefit from unacceptable
cultures within the Company; or
Exposed employees, the broader community or environment to excessive risks, including
risks to health and safety.
The Board will also consider whether there has been a material misstatement in the Company’s
financial reports, which would unduly increase any award under the scheme.
x.
Vesting of performance rights
Performance rights meeting the performance hurdles will vest at the end of the measurement
period.
Participants are not required to make any payments at grant or at vesting.
Austal Limited | Remuneration report 31
xi.
Holding period
Non US recipients of vested performance rights are subject to a one year holding period:
Recipients are permitted to exercise their rights in order to receive shares, however;
Recipients are prevented from selling their shares during the holding period.
This effectively extends the incentive period to four years and increases the accumulation of
equity by executives to strengthen their alignment with shareholders.
xii.
Taxing point for US recipients
The taxing point for US recipients of vested performance rights is at the time of vesting
because there is no further risk of forfeiture. Consequently, Austal sell 50% of shares arising
from vested performance rights immediately after vesting has occurred so that recipients can
fund their tax liability and the remaining 50% of shares are subject to a one year holding
period.
The difference between the realised proceeds from the sale of the first 50% of shares and the
actual tax liability for each participant is paid to participants in cash.
xiii. Specified disposal restrictions
Performance Rights may not be disposed of or otherwise dealt with prior to exercise.
All shares acquired by participants as a consequence of exercising vested Performance Rights,
shall be subject to a dealing restriction detailed in Austal’s Share Trading Policy and insider
trading restrictions.
xiv. Cessation of employment during a measurement period
A participant who resigns prior to the elapsing of the Measurement period in respect of which
the grant is made will forfeit their entire unvested Performance Rights grant.
The Board may exercise its discretion to award some proportion of LTI under certain
circumstances including consideration of whether the KMP was a good leaver up to the point of
vesting.
Vested rights already held by a participant are not forfeited.
xv.
Clawback policy
The Board may determine that a participant found to have harmed the interests of the
Company or its Shareholders, will forfeit some or all of their unvested entitlements at any time.
This includes fraud, defalcation, joining a competitor etc.
Unvested Performance Rights held that are not forfeited, will be retained for testing against the
vesting conditions at the normal time.
xvi. Change of control of the company
The Board has determined that in the event of a Change of Control (including a takeover), LTI
will vest on a pro-rata basis at the ‘Target’ level for the portion of the Performance Period that
has elapsed at the date of the change of control. The Board retains discretion to vary this
approach if it considers that it would generate an inappropriate outcome.
32 Austal Limited | Remuneration report
4.
Executive KMP remuneration
I.
5 year performance
The table below outlines Austal’s performance over the last five years.
2019
2020
2021
2022
2023
Financial Year
Earnings measures
EBIT (Earnings before interest & tax)
EBITDA (Earnings before interest, tax, depreciation & amortisation)
NPAT (Net profit after tax)
$'000
$'000
$'000
92,795
130,396
114,619
120,662
(4,842)
135,001
176,139
160,326
165,350
54,973
61,384
88,978
81,057
79,565
(13,774)
EPS (Earnings per share)
$ / share
0.18
0.25
0.23
0.22
(0.04)
Dividends paid
Share price
Closing
$ / share
0.06
0.06
0.09
0.08
0.07
$ / share
3.41
3.23
2.05
1.80
2.37
II.
FY2023 award opportunities
The tables below depict the Target and Stretch (Maximum) remuneration for KMP in FY2023
including:
The Total Fixed Remuneration
STI award opportunity if Target or Stretch STI KPI results are achieved
LTI award opportunity if Target or Stretch LTI results are achieved
Awards are applied to Total Fixed Remuneration.
i.
Target remuneration
KMP
TFR
$
STI Opportunity
LTI Opportunity
% of TFR
$
% of TFR
$
Total
$
Mr Paddy Gregg
Mr Ian McMillan
Mr Rusty Murdaugh
1,008,781
533,000
796,005
45%
40%
65%
453,951
213,200
517,403
50%
35%
50%
504,391
186,550
398,003
1,967,123
932,750
1,711,411
ii.
Stretch (Maximum) remuneration
KMP
TFR
$
STI Opportunity
LTI Opportunity
% of TFR
$
% of TFR
$
Total
$
Mr Paddy Gregg
Mr Ian McMillan
Mr Rusty Murdaugh
1,008,781
533,000
796,005
68%
60%
98%
680,927
319,800
776,105
100%
70%
100%
1,008,781
373,100
796,005
2,698,489
1,225,900
2,368,115
Austal Limited | Remuneration report 33
III.
CEO remuneration
These charts depict the Minimum, Target and Stretch (Maximum) remuneration opportunities that
were available to the CEO and the breakdown between fixed remuneration (TFR) and variable
remuneration (STI and LTI).
FY2023 CEO Remuneration - Mr Paddy Gregg
Legend
Fixed
STI
LTI
Minimum
100%
$1,008,781
Target
51%
23%
26%
$1,967,123
Stretch (Maximum)
37%
26%
37%
$2,698,489
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
FY2022 CEO Remuneration - Mr Paddy Gregg
Legend
Fixed
STI
LTI
Minimum
100%
$970,000
Target
51%
23%
26%
$1,891,500
Stretch (Maximum)
37%
26%
37%
$2,594,750
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
34 Austal Limited | Remuneration report
IV.
STI targets and outcomes
The following KPI were selected because they were the most significant matters for each of the KMP
that were expected to contribute to the success of the Company during FY2023, given the business
plans approved by the Board at the commencement of the financial year.
The Company’s EBIT (Earnings Before Interest and Tax) result did not exceed the required threshold
of at least 85% of Budget therefore no STI was awarded for FY2023. The tables below show the
outcomes of each performance measure during FY2023 but note the overall nil award.
Chief Executive Officer - Mr Paddy Gregg
Measures
Group EBIT
Group Free Cash flow
New Vessel Orders - USA
New Vessel Orders - Australasia
Long term Sustainment Orders - Australasia
Strategic Growth - USA
Strategic Growth - Australasia
Total
Actual Performance
Targets
Weight
Below Stretch
Award
Threshold
Target
Stretch
Actual
30.00%
10.00%
5.00%
20.00%
5.00%
10.00%
20.00%
100.00%
$ 81 m
$ 89 m $ 108 m
$
(4.8)
$ 139 m $ 147 m $ 162 m
$ 53 m
Commercial in Confidence
Commercial in Confidence
Commercial in Confidence
Commercial in Confidence
Commercial in Confidence
-
-
78%
-
66%
67%
5%
-
Chief Operating Officer Australasia - Mr Ian McMillan
Measures
Weight
Below Stretch
Award
Threshold
Target
Stretch
Actual
Actual Performance
Targets
Australasia EBIT 1
Australasia Free Cash flow
New Vessel Orders - Australasia
Strategic Growth - Australasia
Safety (Total Recordable Incident Rate)
Total
30.00%
10.00%
30.00%
25.00%
5.00%
100.00%
$ 11.8 m $ 16.1 m $ 24.6 m $ 9.6 m
$ 6.7 m
$ 7.8 m $ 10.1 m $ (1.4) m
Commercial in Confidence
Commercial in Confidence
-
1.9
1.7
2.1
-
-
-
17%
-
-
1. Note that Australasia EBIT includes an allocation of Corporate Overhead for STI metric purposes and hence it doesn't match the segment note.
President USA - Mr Rusty Murdaugh
Measures
Weight
Below Stretch
Award
Threshold
Target
Stretch
Actual
Actual Performance
Targets
USA Revenue (USD)
USA EBIT (USD)
USA Free Cash flow (USD)
New Vessel Orders - USA
Strategic Growth - USA
Safety (Total Recordable Incident Rate)
Total
10.00%
20.00%
20.00%
25.00%
15.00%
10.00%
100.00%
37%
-
66%
100%
50%
33%
-
$821
$ 864 m $ 950 m $ 825 m
$ 73 m
$ 77 m
$ 84 m
$ 5 m
$ 59 m
$ 62 m
$ 68 m
$ 62 m
Commercial in Confidence
Commercial in Confidence
2.4
2.3
2.0
2.4
2. The FY2023 STI opportunity for Mrs Christy Taylor was set before she was promoted to KMP, and therefore no further information has been provided.
It is noted that the EBIT profit gate did apply to all STI in the group.
Austal Limited | Remuneration report 35
V.
LTI vesting
i.
FY2021 Performance rights grant
250,562 Performance Rights were granted to KMP in FY2021, who were still employed by
Austal at 30 June 2023.
ii.
Measurement period
100% of the Performance Rights granted in FY2021 had a 3 year Measurement period from
1 July 2021 – 30 June 2023.
iii.
FY2021 LTI vesting performance
The performance criteria relating to the FY2021 grant of Performance Rights to KMP are
detailed below resulting in a 0% vesting:
Indexed TSR
Award
Stretch
Award
100%
75%
50%
Target
25%
-
0%
ROE
Award
Stretch
Target
Threshold
-
Award
100%
75%
50%
25%
0%
0%
2%
4%
6%
8%
10%
0% 2% 4% 6% 8% 10% 12% 14% 16%
TSR Premium to market
ROE
Award
100%
75%
50%
25%
0%
-
0%
EPSG
Award
Stretch
Target
Threshold
10%
20%
30%
EPSG
Indexed TSR = Austal TSR Premium to Market
ROE = NPAT / Equity (Excluding Reserves)
EPSG = CAGR EPS1 (Base Year) to EPS (Final Year)
1. CAGR = Compound Annual Growth Rate.
iv.
FY2021 LTI vesting awards
KMP
Tranche
Weight
Granted
%
Number
Grant Date ($)
Vesting
Value @
VWAP @ Grant Date
Mr Paddy Gregg
Mr Rusty Murdaugh
iTSR
ROE
EPSG
Total
iTSR
ROE
EPSG
Total
33%
33%
33%
62,806
62,806
62,806
100%
188,418
33%
33%
33%
20,715
20,715
20,715
100%
62,144
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3.09
-
-
-
-
-
-
-
-
VI.
Realised Executive remuneration (non-statutory disclosure)
The Realised Remuneration tables below are provided to convey the actual remuneration awarded to
KMP during FY2023 and FY2022 rather than the statutory disclosure required under the accounting
standards and includes:
The portion of TFR paid in cash.
36 Austal Limited | Remuneration report
The portion of TFR contributed to superannuation plans or pension schemes.
STI awarded but not yet paid.
The value of LTI rights vesting following the conclusion of the relevant measurement period
using the VWAP at the grant date.
FY2023
KMP
Value @ Grant VWAP
Mr Paddy Gregg
Mr Ian McMillan
Mr Rusty Murdaugh
Mr Geoff Buchanan
Mr Christian Johnstone
Mrs Christy Taylor
Total
FY2022
KMP
Value @ Grant VWAP
Mr Paddy Gregg
Mr Greg Jason
Mr Ian McMillan
Mr Rusty Murdaugh
Mr Geoff Buchanan
Total
2
4
5
6
7
2
3
4
5
Total Fixed Remuneration
Payout 1
FY2023 STI Awarded / Bonus
LTI
Total
Super-
annuation /
Pension
$
Cash
$
Other8
$
Total
$
Leave
$
Cash
$
Indeterminate
Rights
$
Total
$
981,281
507,708
27,500
25,292
796,005
109,774
511,641
53,722
142,427
82,405
6,323
8,240
-
-
34,545
83,595
-
2,459
1,008,781
533,000
940,324
648,958
148,750
93,104
-
-
45,923
-
-
10,301
-
-
-
75,000
-
-
3,021,467
230,851
120,599
3,372,917
56,224
75,000
-
-
-
-
-
-
-
-
-
-
75,000
-
-
75,000
FY2021
Vesting
$
3.09
-
-
-
-
-
-
-
Total
$
1,008,781
533,000
986,247
723,958
148,750
103,405
3,504,141
Total Fixed Remuneration
Payout 1
FY2022 STI Awarded / Bonus
LTI
Total
Super-
annuation /
Pension
$
Cash
$
Other8
$
Total
$
Leave
$
Cash
$
Rights
$
Total
$
Indeterminate
FY2020
Vesting
$
3.82
Total
$
946,432
351,726
485,050
23,568
14,029
27,500
-
-
-
703,564
75,977
123,400
314,971
31,497
51,101
970,000
365,755
512,550
902,941
397,569
-
271,722
271,721
543,443
159,682
1,673,125
249,073
-
-
-
123,320
123,319
38,224
-
579,539
122,607
-
-
-
246,639
579,539
122,607
-
-
614,828
759,189
84,931
1,605,635
-
520,176
2,801,743
172,571
174,501
3,148,815
287,297
1,097,188
395,040
1,492,228
244,613
5,172,953
1. This balance represents the KMPs annual leave and/or long service leave entitlements either cashed out or paid out on termination.
2. Value @ Grant VWAP is the Volume Weighted Average Share Price utilised for the respective LTI grant.
3. Mr Greg Jason resigned effective 10 December 2021. Included in his cash TFR is an Eligible Termination Payment of $100,000.
4. Mr Rusty Murdaugh was appointed as Interim President USA from February 2021 to September 2021 when appointed permanently.
The STI Awarded in both years represents the full year award.
5. Mr Geoff Buchanan was appointed as Interim CFO on 22 November 2021. Mr Geoff Buchanan was not a part of the STI award opportunity. The FY2022 and FY2023 award
represents a service bonus (FY2022) and retention bonus (FY2023: $75,000 out of a total of $150,000 payable at end of contract - 30 September 2023) respectively.
6. Mr Christian Johnstone was appointed as CFO on 3 April 2023. Mr Christian Johnstone was not a part of the STI award opportunity for FY2023.
7. Mrs Christy Taylor was promoted to Chief Operating Officer - Transformation USA on 8 May 2023.
8. This category is comprised of other monetary benefits such as car, housing and medical benefits.
Austal Limited | Remuneration report 37
VII. Statutory remuneration disclosure
The following table outlines the remuneration received by Executive KMP during FY2023 and
FY2022, prepared according to statutory disclosure requirements and accounting standards:
FY2023
KMP
Mr Paddy Gregg
Mr Ian McMillan
Mr Rusty Murdaugh
Mr Geoff Buchanan
Mr Christian Johnstone
Mrs Christy Taylor
Total
FY2022
KMP
Mr Paddy Gregg
Mr Greg Jason
Mr Ian McMillan
Mr Rusty Murdaugh
Mr Geoff Buchanan
5
6
7
8
4
5
6
Fixed Remuneration
Super-
annuation /
Pension
$
Long Service
Leave
Accrued
$
Other9
$
Salary2
$
1,031,598
503,408
27,500
25,292
834,018
109,774
513,506
153,587
87,389
53,722
6,323
8,240
-
-
34,545
83,595
-
2,459
61,469
2,663
-
1,645
301
-
Total
$
1,120,567
531,363
978,337
652,468
160,211
98,088
Variable Remuneration
Payout 1
STI / Bonus
Accrued
$
LTI
Accounting
Expense3
$
Leave
$
-
-
45,923
-
-
-
-
-
75,000
-
-
213,321
189,161
287,578
-
-
4,027
10,301
Total
Total
$
1,333,888
720,524
1,311,838
727,468
160,211
112,416
3,123,506
230,851
120,599
66,078
3,541,034
75,000
694,087
56,224
4,366,345
Fixed Remuneration
Variable Remuneration
Payout 1
Super-
annuation /
Pension
$
Salary2
$
987,165
371,600
496,627
739,171
325,936
23,568
14,029
27,500
75,977
31,497
Other9
$
-
-
-
123,400
51,101
Long
Service Leave
Accrued
$
Total
$
STI / Bonus
Accrued
$
LTI
Accounting
Expense3
$
Leave
$
20,558
1,031,291
543,443
492,417
-
4,623
1,474
-
702
390,252
525,601
938,548
409,236
-
(378,023)
249,073
246,639
579,539
122,607
81,930
266,974
-
-
38,224
-
Total
Total
$
2,067,151
261,302
854,170
1,823,285
531,843
Total
2,920,499
172,571
174,501
27,357
3,294,928
1,492,228
463,298
287,297
5,537,751
1. This balance represents the KMPs annual leave and/or long service leave entitlements either cashed out or paid out on termination.
2. Salary represents cash-based salary expensed during the reporting period including annual leave provision adjustments and therefore may not equal the cash received by the KMP.
3. The LTI expense represents the portion of the independent valuation of active LTI plans expensed through the Profit and Loss in accordance with AASB 2.
4. Mr Greg Jason resigned effective 10 December 2021.
5. Mr Rusty Murdaugh was appointed as Interim President USA from February 2021 to September 2021 when appointed permanently.
The STI Awarded in both years represents the full year award.
6. Mr Geoff Buchanan was appointed as Interim CFO on 22 November 2021. Mr Geoff Buchanan was not a part of the STI award opportunity. The FY2022 and FY2023 award
represents a service bonus (FY2022) and retention bonus (FY2023: $75,000 out of a total of $150,000 payable at end of contract - 30 September 2023) respectively.
7. Mr Christian Johnstone was appointed as CFO on 3 April 2023. Mr Christian Johnstone was not a part of the STI award opportunity for FY2023.
8. Mrs Christy Taylor was promoted to Chief Operating Officer - Transformation USA on 8 May 2023.
9. This category is comprised of other monetary benefits such as car, housing and medical benefits.
38 Austal Limited | Remuneration report
VIII. Reconciliation of realised remuneration and statutory remuneration
The following table reconciles the realised remuneration received by Executive KMP during FY2023
and FY2022 with the statutory remuneration disclosures for those years.
FY2023
KMP
Remuneration
Explanation of Variance
Realised
Statutory
$
$
Variance
$
LTI Vesting
Long Service
Leave
versus
Expense
$
Leave
Provision
$
Provision
Movement
$
Mr Paddy Gregg
Mr Ian McMillan
Mr Rusty Murdaugh
Mr Geoff Buchanan
Mr Christian Johnstone
Mrs Christy Taylor
1,008,781
1,333,888
533,000
986,247
723,958
148,750
103,405
720,524
1,311,838
727,468
160,211
112,416
(325,107)
(187,524)
(325,591)
(3,510)
(11,461)
(9,011)
(213,321)
(189,161)
(287,578)
-
-
(4,027)
(61,469)
(2,663)
-
(1,645)
(301)
-
(50,317)
4,300
(38,013)
(1,865)
(11,160)
(4,984)
FY2022
KMP
Remuneration
Explanation of Variance
Realised
Statutory
$
$
Variance
$
LTI Vesting
Long Service
Leave
versus
Expense
$
Leave
Provision
Movement
Movement
$
$
1
Mr Paddy Gregg
Mr Greg Jason
Mr Ian McMillan
Mr Rusty Murdaugh
Mr Geoff Buchanan
1,673,125
2,067,151
614,828
759,189
261,302
854,170
1,605,635
1,823,285
520,176
531,843
(394,026)
353,526
(94,981)
(217,650)
(11,667)
(332,735)
(20,558)
378,023
(81,930)
(182,042)
-
(4,623)
(1,474)
-
(702)
(40,733)
(19,874)
(11,577)
(35,607)
(10,965)
1. Mr Greg Jason's significant 'LTI Vesting versus Expense' variance represents the difference between zero vesting of LTI rights as disclosed in the
Realised Remuneration table and the reversal of the previously booked Share Based Payment expense in relation to the forfeited FY2020 and FY2021
grants within the Statutory Remuneration table.
Total
$
(325,107)
(187,524)
(325,591)
(3,510)
(11,461)
(9,011)
Total
$
(394,026)
353,526
(94,981)
(217,650)
(11,667)
5. Non-Executive Director remuneration
I.
Application
The Non-Executive Director Remuneration Policy applies to Non-Executive Directors (NED) of the
Company in their capacity as directors and as members of committees.
II.
Fee policy
The fee policy is designed to ensure that remuneration is reasonable, appropriate, and produces
outcomes that fall within the fee limit, at each point of being assessed.
i.
Fee cap
The Remuneration for NED is managed within the aggregate fee limit (AFL) of $3,000,000
approved by shareholders of the Company. The cap has remained unchanged since listing on
the Australian Securities Exchange (ASX) in 1998.
Austal Limited | Remuneration report 39
ii.
Board & committee fees
Remuneration is composed of Board fees and Committee fees. Both fee types include
superannuation to the extent applicable to the incumbent.
NED remuneration is targeted to be at the 50th percentile (where 50% of a reasonable
comparator group are above the median level and 50% are below the median level) for
FY2023.
NED remuneration was last externally benchmarked in FY2022. The fees were adjusted
for CPI in FY2023.
Remuneration for the current Chairman of the Board reflects his continued high level of
contribution to the Company and the Board.
Committee fees recognise additional contributions to the work of the Board by members
of committees. They are similarly referenced to the benchmark group as above.
iii.
NED fee rates
The following table outlines the NED fee policy rates that were applicable:
FY2023
Board of Directors
Audit & Risk Committee
Nomination & Remuneration Committee
FY2022
Board of Directors
Audit & Risk Committee
Nomination & Remuneration Committee
Chair
$
211,894
20,800
20,800
Chair
$
203,360
20,000
20,000
Role
Deputy Chair
$
116,064
N/A
N/A
Role
Deputy Chair
$
111,760
N/A
N/A
Member
$
105,664
10,400
10,400
Member
$
101,600
10,000
10,000
iv.
Termination benefits
Termination benefits are not paid to NED.
III.
Share rights
The NED have agreed annually with the Company to receive 25% of their Board fees (excluding
Committee fees) in the form of share rights in order to accumulate equity holdings up to the
equivalent of one year of Board fees (excluding Committee fees).
The minimum equity holding will be computed in July of each year based upon the volume weighted
average price of Austal shares in the month of June and Board fees for the financial year ahead. The
measurement date for the share rights is the VWAP of the last 5 trading days of each month.
The share rights provided to Mr Giles Everist, Mrs Sarah Adam-Gedge and Mr Chris Indermaur were
approved by shareholders during the 2022 Annual General Meeting.
KMP
Mr Giles Everist
Mrs Sarah Adam-Gedge
Mr Chris Indermaur
Earned
Number
4,727
13,483
12,659
Average fair
value per right
$
Fair value
$
2.46
2.09
2.09
11,646
28,016
26,416
40 Austal Limited | Remuneration report
IV.
NED remuneration in FY2023
The following table outlines the remuneration received by NED of the Company during FY2023 and
the previous year, prepared according to statutory disclosure requirements and applicable accounting
standards:
FY2023
Board Fees
Super-
annuation
Share
Rights
$
$
Cash
$
Mr John Rothwell
Mr Giles Everist
Mrs Sarah Adam-Gedge
Mr Chris Indermaur
Mr Mick McCormack
Mr Lee Goddard
1, 4
4
1, 4
2, 4
3, 4
191,759
20,135
-
31,806
79,682
71,717
3,340
8,367
7,530
118,714
12,465
47,812
5,020
11,646
28,016
26,416
-
-
Total
$
211,894
46,792
116,065
105,663
131,179
52,832
Cash
$
9,050
12,050
28,235
23,181
18,100
9,050
Committee Fees
Super-
annuation
$
950
1,265
2,965
2,434
1,901
950
Total
$
10,000
13,315
31,200
25,615
20,001
10,000
Total
Total
$
221,894
60,107
147,265
131,278
151,180
62,832
Total
541,490
56,857
66,078
664,425
99,666
10,465
110,131
774,556
FY2022
Mr John Rothwell
Mr Giles Everist
Mrs Sarah Adam-Gedge
Mr Chris Indermaur
Mr Mick McCormack
1
1
2
Board Fees
Super-
annuation
$
Share
Rights
$
Cash
$
184,869
18,487
-
92,364
81,233
92,364
69,273
9,236
2,587
9,236
6,927
25,400
27,940
25,400
-
Total
$
203,356
127,000
111,760
127,000
76,200
Committee Fees
Super-
annuation
$
909
2,727
-
1,818
1,818
Cash
$
9,091
27,273
30,000
18,182
18,182
Total
$
10,000
30,000
30,000
20,000
20,000
Total
Total
$
213,356
157,000
141,760
147,000
96,200
Total
520,103
46,473
78,740
645,316
102,728
7,272
110,000
755,316
1. Mr Giles Everist and Mr Chris Indermaur were overpaid $25,400 in cash respectively, for board fees which should have been withheld for share rights during the prior year.
In FY2023, Mr Giles Everist and Mr Chris Indermaur both repaid the prior year overpayment.
2. Mr Mick McCormack's FY2022 board fees paid were $25,400 below the NED rates due to an administrative error. The shortfall, inclusive of superannuation of 10% was
paid in full in FY2023.
3. Mr Lee Goddard was appointed a NED in January 2023.
4. Mr Giles Everist's FY2023 board fees paid were $533 below the NED rates due to an administrative error.
Mr Chris Indermaur's and Mr Mick McCormack's FY2023 board fees paid were $800 below the NED rates due to an administrative error.
Mr Lee Goddard's FY2023 board fees paid were $400 below the NED rates due to an administrative error.
The shortfall will be paid in full in FY2024.
Austal Limited | Remuneration report 41
6.
Equity instruments held by KMP
I.
FY2021 performance rights vesting
Further information relating to the FY2021 Performance Rights vesting is provided on page 36.
II.
FY2022 performance rights
i.
Performance rights
945,219 Performance rights were granted to KMP in FY2022, who were still employed by
Austal and whose rights were not lapsed, forfeited or vested at 30 June 2023.
ii.
Measurement period
100% of the Performance rights granted in FY2022 have a 3 year Measurement period from
1 July 2021 – 30 June 2024.
iii.
Performance criteria
The performance criteria relating to the FY2022 grant of Performance rights to KMP are
detailed below:
Indexed TSR
Award
Stretch
Award
100%
75%
50%
Target
25%
0%
ROE
Award
Stretch
Target
Threshold
Award
100%
75%
50%
25%
0%
0%
2%
4%
6%
8%
10%
0% 2% 4% 6% 8% 10% 12% 14% 16%
TSR Premium to market
ROE
Award
100%
75%
50%
25%
0%
0%
EPSG
Award
Stretch
Target
Threshold
10%
20%
30%
EPSG
Indexed TSR = Austal TSR Premium to Market
ROE = NPAT / Equity (Excluding Reserves)
EPSG = CAGR EPS1 (Base Year) to EPS (Final Year)
1. CAGR = Compound Annual Growth Rate.
42 Austal Limited | Remuneration report
III.
FY2023 performance rights grant
i.
Performance rights grant
Performance rights granted to KMP in FY2023 are depicted in the table below.
The Fair Value per right has been determined by an independent valuer in accordance with
AASB 2 Share Based Payments and does not match the Stretch LTI opportunity as detailed in
the Executive KMP remuneration 2023 award opportunities on page 33.
Name
iTSR
ROE
EPSG
Total
Rights granted
Value @
grant date ($)
Fair Value per right
$
1.54
$
2.36
$
2.36
$
2.09
$
2.09
Mr Paddy Gregg
Mr Ian McMillan
Mr Rusty Murdaugh
138,954
138,954
138,954
51,397
99,640
51,397
99,640
51,397
99,640
Total
289,991
289,991
289,991
416,862
154,191
298,920
869,973
870,269
321,899
624,045
1,816,213
869,973 Performance rights were granted to KMP in FY2023, who were still employed by
Austal and whose rights were not lapsed, forfeited or vested at 30 June 2023.
ii.
Measurement period
100% of the Performance rights granted in FY2023 have a 3 year Measurement period from
1 July 2023 – 30 June 2025.
iii.
Performance criteria
The performance criteria relating to the FY2023 grant of Performance rights to KMP are
detailed below:
Indexed TSR
Award
Stretch
Award
100%
75%
50%
Target
25%
0%
ROE
Award
Stretch
Target
Threshold
Award
100%
75%
50%
25%
0%
0%
2%
4%
6%
8%
10%
0% 2% 4% 6% 8% 10% 12% 14% 16%
TSR Premium to market
ROE
Award
100%
75%
50%
25%
0%
0%
EPSG
Award
Stretch
Target
Threshold
10%
20%
30%
EPSG
Indexed TSR = Austal TSR Premium to Market
ROE = NPAT / Equity (Excluding Reserves)
EPSG = CAGR EPS1 (Base Year) to EPS (Final Year)
1. CAGR = Compound Annual Growth Rate.
Austal Limited | Remuneration report 43
IV.
Changes in equity held by KMP
Balance at
30 June 2022
Other 1, 4
Granted
Vested
Exercised
Lapsed /
Forfeited
Bought
(Sold)
Balance at
Other 2
30 June 2023
Vested
Unvested
FY2023 Movements
-
-
-
-
-
-
(188,418)
(188,418)
242,399
441,683
876,297
242,399
441,683
-
-
-
876,297
1,560,379
684,082
876,297
Executives
Mr Paddy Gregg
Shares
Indeterminate Rights3
Performance Rights
Total
Mr Ian McMillan
Shares
Indeterminate Rights3
Performance Rights
Total
Mr Rusty Murdaugh
Shares
Share Rights
Performance Rights
Total
Mrs Christy Taylor
Shares
Service Rights
Performance Rights
Total
Mr Christian Johnstone
Shares
Indeterminate Rights3
Performance Rights
Total
Non-Executive Directors
Mr John Rothwell
Shares
Total
Mr Giles Everist
Shares
Share Rights
Total
Mrs Sarah Adam-Gedge
Shares
Share Rights
Total
Mr Chris Indermaur
Shares
Share Rights
Total
Mr Mick McCormack
Shares
Share Rights
Total
Mr Lee Goddard
Shares
Share Rights
Total
242,399
292,530
647,853
1,182,782
-
20,582
169,938
190,520
92,443
22,249
377,990
492,682
-
-
-
-
-
-
-
-
32,761,692
32,761,692
30,441
17,760
48,201
20,000
52,844
72,844
-
36,407
36,407
106,920
-
106,920
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,943
32,606
31,401
71,950
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
149,153
416,862
566,015
-
67,692
154,191
221,883
-
-
298,920
298,920
-
-
-
-
-
-
-
-
-
-
-
4,727
4,727
-
13,483
13,483
-
12,659
12,659
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(11,125)
-
-
-
-
-
-
-
-
(62,144)
(62,144)
(11,125)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(52,928)
-
(52,928)
-
-
-
-
-
-
-
-
-
-
-
-
20,582
(20,582)
-
-
22,249
(22,249)
-
-
-
-
-
-
-
-
-
-
-
-
22,487
(22,487)
-
-
-
-
-
-
-
-
-
-
-
-
-
20,582
67,692
324,129
412,403
103,567
-
614,766
718,333
7,943
32,606
31,401
71,950
-
-
-
-
20,582
67,692
-
-
-
324,129
88,274
324,129
103,567
-
-
-
-
614,766
103,567
614,766
7,943
-
7,943
-
-
-
-
32,761,692
32,761,692
32,761,692
32,761,692
-
-
-
20,000
66,327
86,327
-
49,066
49,066
106,920
-
106,920
-
-
-
-
-
-
20,000
66,327
86,327
-
49,066
49,066
106,920
-
106,920
-
-
-
-
32,606
31,401
64,007
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1. Denotes the shares and rights held by Mrs Christy Taylor at the time of her promotion to KMP in May 2023.
2. Denotes the shares held by Mr Giles Everist at the time of his resignation, 9 December 2022.
3. Further information on Indeterminate rights is provided in the Executive KMP remuneration policy.
4. Mr Lee Goddard and Mr Christian Johnstone did not have any equity holdings at the time of their appointment nor movements in FY2023.
44 Austal Limited | Remuneration report
V.
Minimum equity holdings of KMP and NED employed at 30 June 2023
Some KMP and all NED (that have been approved by shareholders to maintain a minimum equity
holding) are required to accumulate and maintain a minimum level of equity holding (Equivalent
shares) with value equal to or greater than a specified percentage of annual TFR.
Shares, Share Rights and vested Indeterminate Rights all contribute toward the satisfaction of the
minimum equity holding. Unvested Performance Rights do not contribute toward the target.
Equity Holding at 30 June 2023
Equiv't Shares
Value ($)
FY2023
TFR ($)
Equity Holding % of TFR
Target
30 Jun 2023
Target
Introduced
Value / share
Executives
2.37
Mr Paddy Gregg
684,082
1,621,274
1,008,781
161%
100%
Jan 2021
Non-Executive Directors
Mr John Rothwell
Mr Giles Everist
2
Mrs Sarah Adam-Gedge
Mr Chris Indermaur
Mr Mick McCormack
32,761,692
77,645,210
-
86,327
49,066
106,920
-
204,595
116,286
253,400
Board Fees1
211,894
105,664
116,064
105,664
105,664
36643%
-
176%
110%
240%
100%
100%
100%
100%
100%
Nov 2017
Nov 2017
Nov 2017
Oct 2018
Sep 2020
1. Includes Board Fees and excludes Committee Fees.
2. Denotes the shares held by Mr Giles Everist at the time of his resignation, 9 December 2022.
7.
Other related matters
I.
Board composition
The NRC reviews the structure, size and composition of the Board annually, taking inputs from
investors and other independent advisors received during the year into account. The current practice
continues of maintaining at least three independent NED on the Board.
The Committee also notes the Chairman at Austal is aged over 70 years but agree that the Chairman’s
intimate knowledge of the shipbuilding industry, of Austal and its major customers, together with his
demonstrated high level of commitment, meant that he remains a significant asset to the Group.
II.
Details of contractual provisions for KMP
Name
Employer
Duration
Group
Individual
Termination Notice Period
Mr Paddy Gregg
Mr Ian McMillan
Mr Rusty Murdaugh
Mr Geoff Buchanan
Mr Christian Johnstone
Mrs Christy Taylor
Austal Limited
Austal Ships Pty Ltd
Austal USA LLC
Austal Limited
Austal Limited
Austal USA LLC
Unlimited
Unlimited
Unlimited
6 months
Unlimited
Unlimited
6 months
6 months
None
1 month
3 months
None
6 months
6 months
None
1 month
3 months
None
Termination
Benefits 1
6 months
6 months
None
Nil
3 months
None
1. The Termination Benefit Limit under the Corporations Act is 12 months of the average prior 3 years salary unless Shareholder approval is obtained.
Austal may choose to terminate the contracts immediately by making a payment equal to the Group
Notice Period fixed remuneration in lieu of notice. Executives are not entitled to this termination
payment in the event of termination for serious misconduct or other nominated circumstances.
Executives will be entitled to the payment of any fixed remuneration calculated up to the termination
date, any leave entitlement accrued at the termination date and any payment or award of STI or LTI
permitted under the remuneration policy upon termination of employment is described in the relevant
sections of this report.
Austal Limited | Remuneration report 45
All NED enter into a service agreement with the Company in the form of a letter of appointment on
appointment to the Board. The letter summarises the Board policies and terms, including
compensation relevant to each director. The appointment letters specify a term of three years before
each NED is required to be put forward for re-election in accordance with regulatory requirements.
III.
Other transactions with KMP
There were no other transactions involving KMP other than compensation and transactions concerning
shares and performance rights as discussed in other sections of the Remuneration Report.
IV.
Remuneration of KMP at Austal USA
Pursuant to mandatory measures in place to mitigate foreign ownership, control and influence (FOCI),
the remuneration of KMP and executives at Austal’s wholly owned subsidiary, Austal USA, is set by
the Board of Austal USA. This includes determination of the extent to which any performance
measures have been met for long and short term incentive eligibility.
V.
Use of external remuneration consultants
The Board approved and engaged an external remuneration consultant to provide KMP remuneration
recommendations and advice during the reporting period. The consultants and the amount payable for
the information and work that led to their recommendations are listed below:
i.
Korn Ferry
Korn Ferry were engaged for the following services during FY2023:
Benchmarking for Executive remuneration in FY2023 ($44,004 excluding GST).
ii.
Independence from Executive KMP
The Board is satisfied that the KMP remuneration recommendations received were free from
undue influence from KMP to whom the recommendations related for the following reasons:
the policy for engaging external remuneration consultants is being adhered to and is
operating as intended.
the Board has been closely involved in all dealings with the external remuneration
consultants.
each KMP remuneration recommendation received during the year was accompanied by
a legal declaration from the consultant to the effect that their advice was provided free
from undue influence from the KMP to whom the recommendations related.
End of Remuneration Report
46 Austal Limited | Remuneration report
Auditor independence
The Board of Directors
Austal Limited
100 Clarence Beach Rd
Henderson, WA
6166, Australia
31 August 2023
Dear Board Members
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Brookfield Place, Tower 2
123 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
Tel: +61 8 9365 7000
Fax: +61 8 9365 7001
www.deloitte.com.au
Auditor’s Independence Declaration to Austal Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to
provide the following declaration of independence to the Directors of Austal Limited.
As lead audit partner for the audit of the financial statements of Austal Limited for
the year ended 30 June 2023, I declare that to the best of my knowledge and belief,
there have been no contraventions of:
(i) the auditor independence requirements of the Corporations Act 2001 in relation to the
audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours faithfully
DELOITTE TOUCHE TOHMATSU
David Newman
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network
Austal Limited | Auditor independence 47
Consolidated statement of profit and loss and other
comprehensive income for the year ended
30 June 2023
Notes
2023
$’000
2022
$’000
Continuing operations
Revenue
Cost of sales
Gross profit
Other income and expenses
Administration expenses
Marketing expenses
Finance income
Finance costs
(Loss) / profit before income tax
Income tax benefit / (expense)
(Loss) / profit after tax
Other comprehensive income (OCI)
Amounts that may subsequently be reclassified to profit and loss:
Cash flow hedges
- Net (loss) / gain
- Income tax benefit / (expense)
- Total
Foreign currency translations
- Net gain
- Total
Amounts not to be reclassified to profit and loss in subsequent periods:
Asset revaluation reserve
- Net gain
- Income tax expense
- Total
Other comprehensive income for the period
Total comprehensive income for the year
(Loss) / earnings per share ($ per share)
Basic (loss) / earnings per share
Diluted (loss) / earnings per share
4
5
5
5
9
9
9
6
6
1,585,034
(1,485,930)
1,429,044
(1,198,762)
99,104
230,282
24,040
(108,221)
(19,765)
1,784
(12,456)
7,612
(94,546)
(22,686)
135
(8,369)
(15,514)
112,428
1,740
(13,774)
(32,863)
79,565
(4,698)
1,514
(3,184)
22,830
22,830
59,439
(14,302)
45,137
64,783
2,458
(752)
1,706
53,680
53,680
54,773
(13,858)
40,915
96,301
51,009
175,866
(0.038)
(0.038)
0.220
0.219
The above consolidated statement of profit and loss and other comprehensive income should be read in conjunction with the accompanying notes.
48 Austal Limited | Consolidated financial statements
Consolidated statement of financial position as at
30 June 2023
Assets
Current
Cash and cash equivalents
Inventories and work in progress
Trade and other receivables
Prepayments
Derivatives
Income tax receivable
Total
Non - current
Property, plant and equipment
Intangible assets and goodwill
Prepayments
Derivatives
Right of use assets
Other financial assets
Deferred tax assets
Total
Total
Liabilities
Current
Progress payments received in advance
Trade and other payables
Provisions
Derivatives
Income tax payable
Lease liabilities
Deferred grant income
Total
Non - current
Interest bearing loans and borrowings
Provisions
Derivatives
Lease liabilities
Deferred grant income
Deferred tax liabilities
Total
Total
Net assets
Equity attributable to owners of the parent
Contributed equity
Reserves
Retained earnings
Total
Notes
10
4, 17
15
16
28, 29
9
20
22
16
28, 29
21
25
9
4
18
19
28, 29
9
21
14
11
19
28, 29
21
14
9
13
2023
$’000
2022
$’000
179,201
329,137
135,047
45,730
1,358
117
690,590
962,541
38,328
52,209
87
160,468
16,289
6,916
240,113
263,070
132,085
13,012
5,835
16,955
671,070
799,364
37,525
3,959
64
152,513
14,933
10,017
1,236,838
1,018,375
1,927,428
1,689,445
(217,212)
(134,586)
(125,795)
(1,127)
(9,920)
(4,982)
(15,324)
(99,084)
(151,726)
(98,325)
(1,734)
(195)
(4,198)
(9,728)
(508,946)
(364,990)
(129,499)
(76,394)
(357)
(105,976)
(100,634)
(56,804)
(124,515)
(2,182)
(584)
(105,406)
(93,306)
(74,177)
(469,664)
(400,170)
(978,610)
(765,160)
948,818
924,285
144,518
369,147
435,153
948,818
143,932
302,454
477,899
924,285
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
Austal Limited | Consolidated financial statements 49
Consolidated statement of changes in equity for the
year ended 30 June 2023
Foreign
Currency
Employee
Cash Flow
Common
Issued
Capital
$’000
Reserved
Shares 1
$’000
Retained
Earnings
$’000
Transl'n
Reserve
$’000
Benefits
Reserve
$’000
Hedge
Reserve
$’000
Control
Reserve
$’000
Asset
Reval'n
Reserve
$’000
Total
Equity
$’000
Equity at 1 July 2021
142,558
(892)
427,108
66,131
7,989
2,075
(17,594)
146,663
774,038
Equity at 30 June 2022
146,236
(2,304)
477,899
119,811
8,878
3,781
(17,594)
187,578
924,285
Comprehensive income
Profit for the year
Other comprehensive income / (loss)
Total
Other equity transactions
Dividends provided for or paid
Share based payments expense
Shares issued to employee share trust
Shares or proceeds transferred to beneficiaries
Remeasurement gain on retirement benefits
Other
Total
Movement
Comprehensive income
(Loss) for the year
Other comprehensive income / (loss)
Total
Other equity transactions
Dividends provided for or paid
Share based payments expense
Shares issued to employee share trust
Shares or proceeds transferred to beneficiaries
Remeasurement gain on retirement benefits
Other
Total
Movement
-
-
-
-
-
-
-
-
-
-
3,675
3
-
-
(3,675)
2,263
-
-
-
-
-
-
-
-
-
-
-
-
1,459
80
-
-
(1,459)
506
-
-
79,565
-
-
53,680
79,565
53,680
-
-
-
-
1,706
1,706
(28,870)
-
-
-
-
96
-
-
-
-
-
-
-
-
2,850
-
(2,266)
305
-
889
889
-
-
-
-
-
-
-
1,706
3,678
(1,412)
(28,774)
3,678
(1,412)
50,791
53,680
(13,774)
-
-
22,830
(13,774)
22,830
-
-
-
-
(3,184)
(3,184)
(28,972)
-
-
-
-
-
-
-
-
-
-
-
-
-
2,442
-
(586)
54
-
1,910
-
-
-
-
-
-
-
1,539
(953)
(28,972)
1,539
(953)
(42,746)
22,830
1,910
(3,184)
-
-
-
-
-
-
-
-
-
-
-
-
40,915
40,915
79,565
96,301
175,866
-
-
-
-
-
-
-
(28,870)
2,850
-
-
305
96
(25,619)
40,915
150,247
-
-
-
-
-
-
-
-
-
-
-
-
45,137
45,137
-
-
-
-
-
-
-
(13,774)
64,783
51,009
(28,972)
2,442
-
-
-
54
(26,476)
45,137
24,533
Equity at 30 June 2023
147,775
(3,257)
435,153
142,641
10,788
597
(17,594)
232,715
948,818
1. Reserved shares are held in relation to an employee share trust.
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
50 Austal Limited | Consolidated financial statements
Consolidated statement of cash flows for the year
ended 30 June 2023
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Income tax benefit / (paid)
Interest paid
Interest received
Net cash from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Payment for intangible assets
Payment for right of use asset
Proceeds from sale of property, plant and equipment
Proceeds from disposal of assets held for sale
Receipts of government infrastructure grants
Net cash used in investing activities
Cash flows from financing activities
Dividends paid
Principal component of lease payments
Payment of borrowing costs
Notes
2023
$’000
2022
$’000
1,660,053
(1,566,307)
1,331,964
(1,261,203)
3,640
(12,456)
1,784
86,714
(126,557)
(2,066)
-
1,063
-
24,785
(28,339)
(5,058)
135
37,499
(116,329)
(767)
(47,820)
1,398
4,383
31,625
(102,775)
(127,510)
(28,972)
(9,088)
-
(28,870)
(8,638)
(823)
5
7
20
22
21
21
12
Net cash used in financing activities
(38,060)
(38,331)
Net decrease in cash and cash equivalents
(54,121)
(128,342)
Cash and cash equivalents
Cash and cash equivalents at beginning of year
Net decrease in cash and cash equivalents
Net foreign exchange differences
240,113
(54,121)
(6,791)
346,899
(128,342)
21,556
Cash and cash equivalents at end of year
10
179,201
240,113
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
Austal Limited | Consolidated financial statements 51
Notes to the consolidated financial statements
Basis of preparation
Corporate information
The financial report of the Austal Limited Group of Companies (the Group or the Company) for the year ended
30 June 2023 was authorised for issue in accordance with a resolution of the Directors on 31 August 2023.
Austal Limited is a limited liability company incorporated and domiciled in Australia whose shares are publicly
traded on the Australian Securities Exchange (ASX) under the code ASB.
The principal activities of the Group during the year were the design, manufacture and sustainment of high
performance vessels. These activities were unchanged from the previous year.
Basis of preparation
I
Introduction
The financial report is a general-purpose financial report, which has been prepared in accordance with the
requirements of the Corporations Act 2001 and the Australian Accounting Standards Board (AASB).
The financial report also complies with International Financial Reporting Standards (IFRS), as issued by the
International Accounting Standards Board.
The financial report has been prepared on a historical cost basis, except for derivative financial instruments
and land and buildings that have been measured at fair value.
The financial report is presented in Australian dollars and all values are rounded to the nearest thousand
dollars ($’000) (unless otherwise stated) under the option available to the Group under ASIC Corporations
(Rounding in Financial/Directors’ Reports) Instrument 2016 / 191. The Company is an entity to which the
Instrument applies.
The financial report presents the figures of the consolidated entity, unless otherwise stated.
Austal Limited is a for profit entity.
II
Reporting structure
The notes to the consolidated financial statements have been divided into eight main sections as follows:
1.
Basis of preparation
This section focuses on the basis of consolidation, foreign currency transactions and translation,
accounting judgments and estimates, new and amended accounting standards adopted by the Group,
and other new accounting standards issued but not yet effective.
2.
Current year performance
This section focuses on the results and performance of the Group, including profitability, earnings
per share, cash generation, and the return of cash to shareholders via dividends.
52 Austal Limited | Notes to the consolidated financial statements
3.
Capital structure
This section focuses on the long term funding of the Group including cash, interest bearing loans and
borrowings, contributed equity and Government grants.
4. Working capital
This section focuses on shorter term working capital concepts such as trade receivables,
trade payables, work in progress and inventories, and provisions.
5.
Infrastructure & other assets
This section focuses on property, plant and equipment, intangibles, impairment and other assets.
6.
Financial risk management
This section focuses on the Group’s approach to financial risk management, fair value measurements,
foreign exchange hedging and the associated derivative financial instruments.
7.
Unrecognised items
This section focuses on commitments and contingencies that are not recognised in the financial
statements and events occurring after the balance date.
8.
The Group, management and related parties
This section focuses on the corporate structure of the Group, parent entity data, key management
personnel compensation and related party transactions.
III
Basis of consolidation
The consolidated financial statements comprise the financial statements of the Group for the year ended
30 June 2023.
Subsidiaries are all of those entities over which the Group has power over the entity, exposure or rights to
variable returns from its involvement with the entity and the ability to use its power over the entity to affect
its returns. The existence and effect of potential voting rights that are currently exercisable or convertible are
considered when assessing whether the Group controls another entity.
Financial statements of foreign controlled entities presented in accordance with overseas accounting
principles are adjusted to comply with Group policy and generally accepted accounting principles in Australia
for consolidation purposes. All intercompany balances, transactions, unrealised gains and losses resulting
from intra-Group transactions and dividends have been eliminated in preparing the consolidated financial
statements.
Subsidiaries are fully consolidated from the date on which control is obtained by the Group and cease to be
consolidated from the date on which control is transferred out of the Group.
Investments in subsidiaries held by Austal Limited are accounted for at cost in the separate financial
statements of the parent entity less any impairment charges.
IV
Foreign currency transactions and translation
Both the functional and presentation currency of Austal Limited is Australian Dollars (AUD). The Company
determines the most appropriate functional currency for each entity within the Group and items included in
the financial statements of each entity are measured using that functional currency.
Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange
rates ruling applicable at the date of the transaction. Monetary assets and liabilities denominated in foreign
currencies are retranslated at the rate of exchange ruling applicable at the balance date. All exchange
differences arising from the above procedures are taken to Other Comprehensive Income.
Austal Limited | Notes to the consolidated financial statements 53
The functional currency of the subsidiaries undertaking the Group’s operations in the USA, Vietnam,
Singapore and the Philippines is United States Dollars (USD).
The assets and liabilities of the overseas subsidiaries are translated into the presentation currency of
Austal Limited at the closing foreign exchange rate for the reporting date. The Profit and Loss is translated at
the average exchange rates for the period. The exchange differences arising on translation are taken directly
to a separate reserve in equity. The deferred cumulative amount recognised in equity relating to that
particular foreign operation is recognised in the Profit and Loss on disposal of a foreign entity.
V
Accounting judgements and estimates
The Directors are required to make judgements, estimates and assumptions about the carrying amounts of
assets and liabilities in the application of the Group’s accounting policies. The estimates and associated
assumptions are based on historical experience and other factors that are considered relevant. Actual results
may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised if the revision affects only that period
or in the period of the revision and future periods if the revision affects both current and future periods.
Information on material estimates and judgements considered when applying the accounting policies can be
found in the following notes:
Key accounting judgements and estimates
Contract revenue, expected construction profits at completion and onerous contracts
Research and development tax credits
Deferred tax assets
Tax treatment for royalties on intellectual property
Estimation of useful lives of assets
Impairment of non-financial assets
Leases
Provisions
Share based payments
Note
4
5
9
9
20, 22
20, 23
21
19, 31
36
VI
New and amended standards adopted by the Group
The Group has applied all new and amended accounting standards and interpretations effective from
1 July 2022, including:
AASB 2020-3 Amendments to Australian Accounting Standards – Annual Improvements 2018-2020
and Other Amendments
AASB 2021-7 Amendments to Australian Accounting Standards – Effective Date of Amendments to
AASB 10 and AASB 128 and Editorial Corrections
The adoption of these standards did not have any effect on the financial position or performance of the
Group.
The Group has not early adopted any standards, interpretations or amendments that have been issued but
are not yet effective.
54 Austal Limited | Notes to the consolidated financial statements
VII Other new accounting standards issued but not yet effective:
The following new or amended standards in issue but not yet effective are not expected to have a significant
impact on the Group’s consolidated financial statements:
AASB 2014-10 Amendments to Australian Accounting Standards – Sale or Contribution of Assets
between an Investor and its Associate or Joint Venture
AASB 2015-10 Amendments to Australian Accounting Standards – Effective Date of Amendments to
AASB 10 and AASB 128
AASB 2017-5 Amendments to Australian Accounting Standards – Effective Date of Amendments to
AASB 10 and AASB 128 and Editorial Corrections
AASB 2021-7 Amendments to Australian Accounting Standards – Effective Date of Amendments to
AASB 10 and AASB 128 and Editorial Corrections
AASB 2020-1 Amendments to Australian Accounting Standards – Classification of Liabilities as Current
or Non-current
AASB 2020-6 Amendments to Australian Accounting Standards – Classification of Liabilities as Current
or Non-current – Deferral of Effective Date
AASB 2022-6 Amendments to Australian Accounting Standards – Non-current Liabilities with Covenants
AASB 2022-5 Amendments to Australian Accounting Standards – Lease Liability in a Sale and
Leaseback
AASB 17 Insurance Contracts, AASB 2020-5 Amendments to Australian Accounting Standards –
Insurance Contracts, AASB 2022-1 Amendments to Australian Accounting Standards – Initial
Application of AASB 17 and AASB 9 – Comparative Information and AASB 2022-8 Amendments to
Australian Accounting Standards – Insurance Contracts: Consequential Amendments
AASB 2021-2 Amendments to Australian Accounting Standards – Disclosure of Accounting Policies and
Definition of Accounting Estimates
AASB 2021-5 Amendments to Australian Accounting Standards – Deferred Tax related to Assets and
Liabilities arising from a Single Transaction
AASB 2021-6 Amendments to Australian Accounting Standards – Disclosure of Accounting Policies:
Tier 2 and Other Australian Accounting Standards
AASB 2022-7 Editorial Corrections to Australian Accounting Standards and Repeal of Superseded and
Redundant Standards
Austal Limited | Notes to the consolidated financial statements 55
Current year performance
Operating segments
I
Disclosures
USA
Australasia
Unallocated
Adjustments
Total
Shipbuilding
Support
$’000
$’000
Total
$’000
Shipbuilding
Support
$’000
$’000
Total
$’000
$’000
$’000
$’000
Elimination /
998,116
226,920
1,225,036
219,473
140,412
359,885
-
-
-
2,846
3,682
6,528
998,116
226,920
1,225,036
222,319
144,094
366,413
-
-
-
113
1,585,034
(6,528)
-
(6,415)
1,585,034
Year ended 30 June 2023
Revenue
External customers
Inter-segment 1
Total
(Loss) / Profit before tax
Earnings before interest and tax
(9,498)
14,677
5,179
6,720
9,057
15,777
Finance income
Finance expenses
-
-
-
-
-
-
-
-
-
-
-
-
(26,421)
1,784
(12,456)
623
-
-
(4,842)
1,784
(12,456)
(Loss) / profit before income tax
(9,498)
14,677
5,179
6,720
9,057
15,777
(37,093)
623
(15,514)
Depreciation and amortisation
(36,208)
(7,709)
(43,917)
(10,183)
(5,715)
(15,898)
Impairment reversal
-
-
-
176
-
176
-
-
-
-
(59,815)
176
Balance sheet
Segment assets
Segment liabilities
Year ended 30 June 2022
Revenue
External customers
Inter-segment 1
Total
Profit / (loss) before tax
1,240,189
232,691
1,472,880
294,251
144,747
438,998
(700,414)
(58,307)
(758,721)
(79,031)
(84,657)
(163,688)
20,598
(72,956)
(5,048)
1,927,428
16,755
(978,610)
USA
Australasia
Unallocated
Adjustments
Total
Shipbuilding
Support
$’000
$’000
Total
$’000
Shipbuilding
Support
$’000
$’000
Total
$’000
$’000
$’000
$’000
Elimination /
880,101
175,821
1,055,922
278,727
-
-
-
6,978
94,356
3,905
373,083
10,883
880,101
175,821
1,055,922
285,705
98,261
383,966
-
-
-
39
1,429,044
(10,883)
-
(10,844)
1,429,044
Earnings before interest and tax
122,105
11,636
133,741
11,863
2,755
14,618
(27,905)
208
120,662
Finance income
Finance expenses
-
-
-
-
-
-
-
-
-
-
-
-
135
(8,369)
-
-
135
(8,369)
Profit / (loss) before income tax
122,105
11,636
133,741
11,863
2,755
14,618
(36,139)
208
112,428
Depreciation and amortisation
(20,648)
(5,026)
(25,674)
(13,599)
(5,415)
(19,014)
Impairment (loss)
-
-
-
(2,556)
-
(2,556)
-
-
-
-
(44,688)
(2,556)
Balance sheet
Segment assets
Segment liabilities
1,025,103
186,937
1,212,040
291,595
111,504
403,099
(467,017)
(71,081)
(538,098)
(93,830)
(66,119)
(159,949)
76,895
(81,280)
(2,589)
1,689,445
14,167
(765,160)
1. Inter-segment revenues, investments, receivables and payables are eliminated on consolidation.
56 Austal Limited | Notes to the consolidated financial statements
Group Revenue from external customers
By geographical location of customers
USA
Australia
Europe
Asia
South America
Middle East
Other
Total
Analysis of unallocated
(Loss) / profit before tax
Administration expenses
Marketing expenses
Research and development credits
Foreign exchange gains
Finance expenses
Finance income
Total
Segment assets
Cash
Deferred tax assets
Other receivables
Income tax receivable
Other
Total
Segment liabilities
Deferred tax liabilities
Creditors and provisions
Total
2023
$’000
2022
$’000
1,211,155
327,057
13,865
24,065
6,314
2,578
-
1,055,922
292,293
59,867
-
5,713
2,830
12,419
1,585,034
1,429,044
2023
$’000
2022
$’000
(20,150)
(9,159)
1,838
1,050
(12,456)
1,784
(17,810)
(11,395)
642
658
(8,369)
135
(37,093)
(36,139)
6,508
6,818
144
117
7,011
20,598
(54,892)
(18,064)
(72,956)
41,085
9,648
3,196
16,955
6,011
76,895
(70,870)
(10,410)
(81,280)
Austal Limited | Notes to the consolidated financial statements 57
Group Non-current assets 1
Geographical location
USA
Australia
Asia
Total
Composition
Property, plant and equipment
Intangible assets
Right of use assets
Total
2023
$’000
2022
$’000
950,788
127,674
82,875
1,161,337
962,541
38,328
160,468
1,161,337
792,753
127,471
69,178
989,402
799,364
37,525
152,513
989,402
1. Excludes financial instruments, prepayments, other financial assets and deferred tax assets.
II
Identification of reportable segments
The Group is organised into four business segments for management purposes. This is based on the location
of the production facilities, related sales regions, operating results and types of activity.
The Chief Executive Officer, who is the Chief Operating Decision Maker (CODM), monitors the performance
of the business segments separately for the purpose of making decisions. Segment performance is evaluated
based on EBIT. Finance costs, finance income and income tax are managed on a Group basis
(i.e. Unallocated).
The CODM monitors the tangible, intangible and financial assets attributable to each segment for the
purposes of monitoring segment performance and allocating resources between segments. All assets are
allocated to reportable segments with the exception of financial instruments, prepayments, deferred tax
assets and income tax refunds. Goodwill has been allocated to reportable segments as described in Note 22.
III
Reportable segments
The reportable segments are:
1.
USA Shipbuilding
The USA manufactures high performance defence vessels for the US Navy and Coast Guard.
2.
USA Support
The USA provides on-going support and maintenance of Austal and non-Austal vessels to the
US Navy, principally in the USA and other international jurisdictions.
3.
Australasia Shipbuilding
The Australasia Shipbuilding segment comprises Austal’s Australia, Philippines and Vietnam
shipbuilding operations. These operations act as a single business unit for tendering, scheduling,
resource planning and management accountability.
Australasia manufactures high performance vessels for markets worldwide, excluding the USA.
58 Austal Limited | Notes to the consolidated financial statements
4.
Australasia Support
The Australasia Support segment comprises Austal’s Australia, Oman and Trinidad & Tobago
operations. These locations act as a single business unit for allocation of resources, training, on-going
support and maintenance for high performance vessels.
IV
Accounting policies, inter-segment transactions and unallocated items
The accounting policies used for reporting segments internally are the same as those utilised for reporting
the accounts of the Group. Inter-entity sales are recognised based on an arm’s length pricing structure in
accordance with the Group’s transfer pricing policy.
Certain unallocated items are not considered to be part of the core operations of any segment.
Revenue
I
Disaggregation of Revenue
Revenue
Shipbuilding
Support
Total
2023
$’000
2022
$’000
1,217,702
367,332
1,158,867
270,177
1,585,034
1,429,044
II
Recognition and measurement
Revenue represents income derived from contracts for the provision of goods and services by the Company
and its subsidiary undertakings to customers in exchange for consideration in the ordinary course of the
Group’s activities.
The Group derives the following types of revenue:
1.
Vessel construction
Vessel construction / shipbuilding revenue includes the design and construction of both defence and
commercial vessel platforms. Defence vessels include advanced naval and other defence vessels and
commercial vessels include passenger ferries, vehicle passenger ferries, offshore and windfarm
vessels.
2.
Vessel support
Vessel support revenue includes through-life capability management and vessel support services,
including crew training and instruction, vessel servicing, repairs and maintenance, integrated logistics
support, vessel sustainment and information management systems support. Austal also provides
comprehensive refit services and management of annual dockings to naval, government and
commercial operators.
Vessel finance for Cape-class Patrol Boats 9 & 10 (CCPB 9 & 10)
Austal entered into a finance arrangement with National Australia Bank (NAB) and the Royal
Australian Navy (RAN) for the construction of CCPB 9 & 10 in December 2015.
NAB financed the purchase of the vessels and chartered the vessels to RAN for an initial 3 year term
which was subsequently extended to April 2022 for CCPB 9 and May 2022 for CCPB 10.
Austal Limited | Notes to the consolidated financial statements 59
This arrangement results in non-cash entries being recorded in Austal’s statutory reporting during the
charter period for notional revenue, notional depreciation and notional interest. Notional revenue of
$3.3 million was reported in FY2022 up to 28 October 2021 when Austal was released from the
buyback guarantee.
The Group’s accounting policy in respect of revenue in accordance with AASB 15 is as follows:
Performance obligations
Upon approval by Austal and its counter party to a contract, each contract is assessed to identify each
promise to transfer either a distinct good or service or a series of distinct goods or services that are
substantially the same and have the same pattern of transfer to the customer.
Separate performance obligations
Goods and services are distinct and accounted for as separate performance obligations in the contract
if the customer can benefit from them either on their own or together with other resources that are
readily available to the customer and they are separately identifiable in the contract.
Combining contracts into a single performance obligation
Contracts are combined into one performance obligation for the purposes of revenue and profit
recognition where individual contracts do not result in a performance obligation on the basis that it is
not distinct and do not have independent utility to the customer.
Multi vessel contracts
Austal regularly enters into contracts with an obligation to deliver multiple vessels under a single
contract. Austal assesses such multi vessel contracts to determine whether each vessel in the contract
represents a distinct performance obligation or whether there is a single performance obligation to
deliver a series of vessels that are substantially the same and have same pattern of transfer to the
customer.
Transaction price
Total transaction price
The total transaction price at the start of each contract is estimated as the amount of consideration to
which the Group expects to be entitled in exchange for transferring the promised goods and services
to the customer, excluding sales taxes.
Variable consideration
Variable consideration, such as price escalation, is included based on the expected value or most
likely amount only to the extent that it is highly probable that there will not be a reversal in the
amount of cumulative revenue recognised.
The transaction price does not include estimates of consideration resulting from contract
modifications, such as change orders, until they have been approved by the parties to the contract.
Allocation of total transaction price to each performance obligation
The total transaction price is allocated to the performance obligations identified in the contract in
proportion to their relative stand-alone selling prices. There are typically no observable stand-alone
selling prices given the bespoke nature of many of the Group’s products and services, which are
designed and / or manufactured under contract to each customer’s individual specifications. Instead,
stand-alone selling prices are typically estimated based on expected costs plus contract margin
consistent with the Group’s pricing principles.
Revenue and profit recognition
Revenue is recognised as performance obligations are satisfied as control of the goods and services is
transferred to the customer.
The Group determines whether each performance obligation within a contract is satisfied over time or
at a point in time.
60 Austal Limited | Notes to the consolidated financial statements
Revenue recognition over time
Performance obligations are satisfied over time if one of the following criteria is satisfied:
The customer simultaneously receives and consumes the benefits provided by the Group’s
performance as it is performed;
The Group’s performance creates or enhances an asset that the customer controls as the asset is
created or enhanced; or
The Group’s performance does not create an asset with an alternative use to the Group and it has
an enforceable right to payment for performance completed to date.
The Group has determined that most of its contracts satisfy the criteria for recognition over time,
either because:
the customer simultaneously receives and consumes the benefits provided by the Group’s
performance as it is performed (typically sustainment contracts); or
the Group’s performance does not create an asset with an alternative use to the Group and it has
an enforceable right to payment for performance completed to date (typically shipbuilding
contracts).
Satisfaction of performance obligations over time or at a point in time
Revenue is recognised at the point in time that control is transferred to the customer if the criteria for
revenue recognition over time are not met. Control is typically transferred to the customer when legal
title passes to the customer and Austal has a legal right to payment, for example, upon delivery or
acceptance of invoice.
Measuring progress
The Group recognises revenue using an input method, based on costs incurred in the period for each
performance obligation to be recognised over time. Revenue and attributable margin are calculated by
reference to reliable estimates of transaction price and total expected costs, after making suitable
allowances for technical and other risks. Revenue and associated margin are therefore recognised
progressively as costs are incurred, and as risks have been mitigated or retired. The Group does not
include long lead time materials where they do not represent progress. The Group has determined that
this method faithfully depicts the Group’s performance in transferring control of the goods and
services to the customer.
Multi vessel contracts representing a single performance obligation
The Group monitors the costs of each individual vessel under multi vessel contracts to identify risks
and additional costs that may arise as a result of first of class issues or achievement of productivity
improvements that are expected to be achieved from vessel to vessel (i.e. a learning curve).
Contingencies and additional costs are included in the cost estimate for each vessel under
multi vessel contracts to ensure that revenue recognition over time appropriately reflects the presence
of cost performance risks and outcomes.
Onerous contract provisions
Expected losses are recognised immediately as an expense when it is probable that total contract
costs will exceed total contract revenue (i.e. the contract has become onerous).
Contract modifications
The Group’s contracts are often amended for changes in customers’ requirements and specifications.
A contract modification exists when the parties to the contract approve a modification that either
changes existing or creates new enforceable rights and obligations. The effect of a contract
modification on the transaction price and the Group’s measure of progress towards the satisfaction of
the performance obligation to which it relates is recognised in one of the following ways:
1. Prospectively as an additional, separate contract;
Austal Limited | Notes to the consolidated financial statements 61
2. Prospectively as a termination of the existing contract and creation of a new contract; or
3. As part of the original contract using a cumulative catch up.
The majority of the Group’s contract modifications are treated under either 1 (for example, the
requirement for additional distinct goods or services) or 3 (for example, a change in the specification
of the distinct goods or services for a partially completed contract), although the facts and
circumstances of any contract modification are considered individually as the types of modifications
will vary contract-by-contract and may result in different accounting outcomes.
Costs to obtain a contract
The Group expenses pre-contract bidding costs which are incurred regardless of whether a contract is
awarded. The Group does not typically incur costs to obtain contracts that it would not have incurred
had the contracts not been awarded.
Costs to fulfil a contract
Contracts recognised over time
Contract fulfilment costs in respect of over time contracts are expensed as incurred.
Contracts recognised at a point in time
Contract fulfilment costs in respect of point in time contracts are accounted for under
AASB 102 Inventories.
III
Remaining performance obligations (work in hand)
The transaction price allocated to remaining performance obligations (unsatisfied or partially satisfied) at
30 June 2023 is set out below:
Transaction price allocated to remaining performance obligations pursuant to customer contracts
Committed but not recognised as liabilities payable:
- Within one year
- One to five years
Total
2023
$’000
2022
$’000
1,222,146
6,649,014
1,474,991
1,493,467
7,871,160
2,968,458
The transaction price associated with unsatisfied or partially satisfied performance obligations does not include variable
consideration that is constrained.
IV
Vessel construction and support contracts in progress
Net carrying amount
Work in progress
Progress payments received in advance
Total due from customers
2023
$’000
2022
$’000
319,835
(217,212)
255,566
(99,084)
102,623
156,482
62 Austal Limited | Notes to the consolidated financial statements
1.
Recognition and measurement
Construction and support work in progress represents the Group’s right to consideration for services
provided to customers for which the Group’s right remains conditional upon something other than the
passage of time.
Amounts are generally reclassified to trade receivables when contract performance obligations have
been certified or invoiced to the customer.
Progress payments received in advance arise where payment is received prior to work being performed.
Revenue of $45.7 million recognised in the current period was included in the progress payments
received in advance (PPIA) balance at the beginning of the period (FY2022: $88.2 million).
V
Significant accounting judgements and estimates
1.
Contract revenue and expected construction profits at completion
The assessment of contract revenue in accordance with the Group’s accounting policies requires
significant estimates to be made for total contract revenues, total contract costs and the current
percentage of completion. Estimates were made by management with respect to total contract
revenues, and total contract costs, which had a resulting impact on the percentage of completion, in
line with the Group’s accounting policy for contract revenue.
2.
Contingencies
Significant judgement is required in relation to the determination of cost contingencies that are
included within the estimated total contract costs for each vessel project at balance date.
Examples of risks
The Group includes contingencies in individual vessel projects to allow for risks associated with
estimates of material volumes and costs, labour hours including productivity improvements from ship
to ship in multi vessel programs, labour rates, future overhead rates, liquidated damages for
contractual commitments and other risks that may be identified for each individual project on a case
by case basis such as the incorporation and development of novel technologies and production
methods and achievement of key milestones.
Consumption and release of contingencies
Contingencies will either be consumed or released as progress is made on each vessel, and the risks
are either realised or retired and / or certain milestones are achieved. Successful mitigation of the
risks and / or successful achievement of the milestones can be estimated with greater certainty in the
latter stages of the completion of each particular vessel. The profit recognised on relevant vessels will
decrease in future reporting periods in the event that initial contingency estimates do not adequately
cover unplanned cost increases. The profit recognised on relevant vessels will increase in future
reporting periods in the event that initial contingency estimates exceed any unplanned cost increases
that may eventuate.
USA
USA shipbuilding cost performance on LCS & EPF has continued to improve and the remaining
contingencies have been released with the impending completion of the final vessels.
LCS
Contingencies after shareline (risk sharing mechanism) held for LCS vessels at 30 June 2023 was
$nil (FY2022: $98 million).
LCS 32 & LCS 34 were delivered during FY2023. Although a portion of the contingencies were
consumed during the year, a re-assessment of the level of remaining risks, as originally planned in
FY2021 following the LCS 28 design changes introduced in FY2019, allowed the release of all
remaining contingencies in FY2023.
Austal Limited | Notes to the consolidated financial statements 63
EPF
Contingencies after shareline held for EPF vessels at 30 June 2023 was $nil (FY2022: $16 million).
EPF 13 was delivered during FY2023. Although a portion of the contingencies were consumed during
the year, a re-assessment of the level of remaining risks, as originally planned in FY2021, following
the EPF 13 design changes introduced in FY2019, allowed the release of all remaining contingencies
in FY2023.
Other Programs
Future judgments about the appropriate level of contingencies to be held for each new vessel could
result in an increase or decrease in the profit recognised on relevant vessels in FY2024 and future
reporting periods.
Australasia
Australasia is completing a number of vessels under multi vessel contracts.
First in class vessels carry heightened cost risk associated with vessel performance, schedule
adherence and material consumption and labour productivity.
Multi vessel contracts provide the opportunity for efficiency improvements from vessel to vessel which
are typically built into customer pricing and hence achievement of improvements from vessel to vessel
(i.e. a learning curve) represents additional cost risk.
Contingencies held at 30 June 2023 for undelivered vessels in the Australasia business unit were
$4 million (FY2022: $16 million). This was equivalent to 5.2% of ETC (FY2022: 3.1%).
64 Austal Limited | Notes to the consolidated financial statements
Other profit and loss
I
Disclosure
Other income and expenses
Government infrastructure grants amortised
Sale of scrap materials
Sundry income
Gain on sale of joint venture
Vessel warranties
Loss on disposal of plant and equipment
Net foreign exchange gain
Total
Finance income
Interest income
Finance costs
Interest payable to unrelated parties
Amortisation of capitalised loan origination costs
Total
Net finance costs
Depreciation and amortisation
Depreciation of property, plant and equipment
Depreciation of right of use assets
Amortisation of intangible assets
Total
Impairment loss
2023
$’000
2022
$’000
15,573
2,031
1,968
-
2,278
(160)
2,350
24,040
3,707
3,644
1,576
2,654
(3,776)
(563)
370
7,612
1,784
135
(11,866)
(590)
(12,456)
(10,672)
(48,573)
(9,581)
(1,661)
(59,815)
(7,996)
(373)
(8,369)
(8,234)
(35,180)
(7,771)
(1,737)
(44,688)
Impairment reversal / (loss) on plant and equipment
176
(2,556)
Employee benefits 1
Wages and salaries
Annual leave expense
Post-retirement benefits
Workers' compensation costs
Share based payments expense
Long service leave expense
Total
Research and development credits 2
Research and development credits
1. Disclosed within cost of sales, administrative and marketing expenses.
2. Disclosed within cost of sales.
(404,744)
(23,201)
(11,296)
(6,933)
(2,442)
(1,208)
(382,942)
(22,194)
(10,332)
(2,545)
(2,850)
(2,114)
(449,824)
(422,977)
3,732
4,712
Austal Limited | Notes to the consolidated financial statements 65
Auditors' remuneration 1
Amounts received or due and receivable by Deloitte Touche Tohmatsu Australia and related
network firms for:
Audit or review of the financial statements
Group
Controlled entities
Total
Other assurance services
Non-audit services
Taxation advice and compliance services
Consulting services
Total
Total
Other auditors and firms:
Audit or review of the financial reports
Subsidiaries
Non-audit services
Taxation advice and compliance services
Consulting services
Total
2023
$
2022
$
(626,600)
(1,082,111)
(425,500)
(933,966)
(1,708,711)
(1,359,466)
-
-
(49,217)
-
(175,239)
-
(49,217)
(175,239)
(1,757,928)
(1,534,705)
(131,020)
(25,121)
(28,714)
-
(159,734)
(27,883)
-
(53,004)
Total
(1,917,662)
(1,587,709)
1. The portion of the auditor's remuneration payable in USD was converted at a USD / AUD exchange rate of 0.6721
in FY2023 (FY2022: 0.7254).
II
Recognition & measurement
The following recognition and measurement criteria must be met before the following specific items are
recognised in the Profit and Loss:
1.
Grants relating to expense items
Grants include US Government infrastructure grants and training reimbursement grants. Grants are
recognised when there is reasonable assurance that the grant will be received and all attaching
conditions will be complied with.
All grants are recognised as income when they relate to an expense item. The grants are recognised
over the periods necessary to match the grant to the costs that they are intended to compensate.
66 Austal Limited | Notes to the consolidated financial statements
2.
Research and Development (R&D) credits
The Group receives tax credits for eligible R&D expenditure. The Group accounts for its R&D tax
credits using a “hybrid” approach, whereby tax credits received up to the Group’s statutory tax rate
are accounted for as an income tax benefit under AASB 112, and the amount of R&D tax credits in
excess of the Group’s statutory tax rate are accounted as a Government grant under AASB 120.
The excess R&D credits are recognised as a reduction to each vessel’s cost estimate at completion
when there is reasonable assurance that the credits will be received and utilised. The entire excess
credit is recognised in cost of sales and changes the calculation of percent complete which impacts
the timing of revenue recognition for the projects.
The net impact to profit before tax in FY2023 was $3.7 million (FY2022: $4.7 million).
The future tax benefit of carry forward R&D credits where deemed to be probable of recovery are
recognised in Other Non-Current Assets. Further information relating to the R&D credits is provided in
Note 26.
3.
Finance costs
Finance costs directly attributable to the acquisition, construction or production of a qualifying asset
are capitalised as part of the cost of that asset. All other finance costs are expensed in the period that
they occur. There were no qualifying assets in FY2023 (FY2022: None).
Finance costs include interest payments, amortisation of capitalised loan origination costs and other
costs that an entity incurs in connection with the borrowing of funds.
4.
Sale of scrap materials
Revenue for the sale of scrap is recognised when the significant risks and rewards of ownership of the
materials have passed to the buyer. Risk and rewards of ownership are considered to have passed to
the buyer at the time of delivery of the goods to the customer.
5.
Foreign exchange gains and losses
Foreign exchange gains and losses included in the Profit and Loss comprise fair value adjustments on
non-derivative financial assets (such as foreign currency denominated loans) and gains and losses on
cash flow hedges that were deemed to be ineffective during the accounting period.
III
Significant accounting judgements and estimates
1.
R&D credits
Management has made judgements regarding which expenditure is classified as eligible for the credit,
including assessing activities to determine whether they are conducted for the purposes of generating
new knowledge, and whose outcome cannot be known or determined in advance.
Austal Limited | Notes to the consolidated financial statements 67
Earnings per share (EPS)
I
Calculation
Net (loss) / profit after tax
2023
2022
Net (loss) / profit attributable to ordinary equity holders of the parent
$’000
(13,774)
79,565
Weighted average number of ordinary shares
Basic
Effect of dilution
Diluted
(Loss) / Earnings per share
Basic (loss) / earnings per share
Diluted (loss) / earnings per share
II
Measurement
Number
Number
362,399,476
361,337,051
2,757,824
1,867,104
Number
365,157,300
363,204,155
$ / share
$ / share
(0.038)
(0.038)
0.220
0.219
Basic EPS is calculated by dividing Net profit / (loss) after tax for the year attributable to ordinary equity
holders of the parent by the weighted average number of ordinary shares outstanding during the year.
Diluted EPS is calculated by dividing the Net profit / (loss) after tax for the year attributable to ordinary
equity holders of the parent by the weighted average number of ordinary shares outstanding during the year
plus the weighted average number of ordinary shares that would be issued on the conversion of all potentially
dilutive ordinary shares into ordinary shares.
In FY2023, the effect of rights is anti-dilutive given the net (loss) attributable to ordinary equity holders of
the parent. As a result, the rights have been excluded and basic and diluted EPS are the same.
III
Information concerning the classification of securities
1.
Performance rights
Performance rights granted to executives under the Group’s Long Term Incentive Plan are included in
the calculation of diluted EPS where the conditions would have been met at the reporting date. There
were 1,959,193 performance rights that were potentially dilutive at 30 June 2023
(30 June 2022: 1,582,526 performance rights).
Further information relating to the performance rights is provided in Note 36.
2.
Share rights
Share rights may be provided to KMP as part of total fixed remuneration. The share rights are treated
as effective shares and therefore included in the calculation of basic EPS.
Further information relating to the share rights is provided in Note 36.
3.
Service Rights
Service rights are included in the determination of diluted EPS. There were 798,631 service rights
that were potentially dilutive at 30 June 2023 (30 June 2022: 284,578 service rights).
Further information relating to the service rights is provided in Note 36.
68 Austal Limited | Notes to the consolidated financial statements
4.
Other equity transactions
Austal issued 583,721 shares to the Employee Share trust in November 2022 in relation to the
vesting of the FY2020 LTI plan, FY2022 STI equity (indeterminate rights), and share rights issued to
Non-Executive Directors.
There have been no additional transactions involving ordinary shares or potential ordinary shares
between the reporting date and the date of completion of these financial statements.
Reconciliation of net profit after tax to net cash flows from operations
Net (loss) / profit after tax
Adjustments for non cash profit and loss items:
Depreciation and amortisation
(Reversal of) / impairment of plant and equipment
Net loss on disposal of property, plant and equipment
Share based payments expense
CCPB 9 & 10 notional charter income
Interest expense
Gain on disposal of assets held for sale
Amortisation of borrowing costs
Deferred government grant income
Research and development tax credits recognised
Non-cash mark to market revaluations
2023
$’000
2022
$’000
(13,774)
79,565
59,815
(176)
160
2,442
-
4,834
-
590
(15,573)
(3,732)
(1,088)
44,688
2,556
563
2,850
(3,316)
3,559
(2,654)
373
(3,707)
(4,712)
389
Total
47,272
40,589
Changes in assets and liabilities:
Increase / (decrease) in income tax (current and deferred)
Increase / (decrease) in provisions
(Increase) / decrease in trade and other receivables
(Increase) / decrease in inventories and work in progress
(Increase) / decrease in prepayments
(Increase) / decrease in other financial assets
(Decrease) / increase in trade and other payables
Decrease / (increase) in progress payments in advance
Total
Net cash inflow from operating activities
1,899
101,682
(2,962)
(66,067)
(80,968)
(1,356)
(17,140)
118,128
4,524
(693)
6,197
(84,741)
(2,180)
58
18,346
(24,166)
53,216
(82,655)
86,714
37,499
Austal Limited | Notes to the consolidated financial statements 69
Dividends paid and proposed
I
Dividends on ordinary shares
Dividends paid on ordinary shares
Unfranked final dividend for the prior year, 4 cps (2022: unfranked, 4 cps)
Unfranked interim dividend for the current year, 4 cps (2022: unfranked, 4 cps)
Total
Dividend declared subsequent to the reporting period end (not recorded as liability)
2023
$’000
2022
$’000
(14,474)
(14,498)
(14,396)
(14,474)
(28,972)
(28,870)
Unfranked final dividend for the current year 3 cps (2022: unfranked, 4 cps)
(10,873)
(14,474)
The dividend declared in the prior year was an estimate of the amount that would be paid and hence does
not match the actual amount paid during the current year.
II
Franking credit balance
Opening balance
Franking credits movement from the payment / (refund) of income tax
Movement
Closing balance
2023
$’000
2022
$’000
3,403
2,966
-
-
437
437
3,403
3,403
The franking credit balance is subject to change as a result of any positive settlement of the royalty issue
with the ATO. For further information refer to Note 9VI3.
70 Austal Limited | Notes to the consolidated financial statements
Income and other taxes
I
Income tax expense
Major components of tax benefit / (expense) are:
Consolidated profit and loss
Current income tax
Current income tax charge
Adjustments in respect of current income tax of the previous year
Total
Deferred income tax
Relating to origination and reversal of temporary differences
Adjustments in respect of deferred income tax of the previous year
Total
Total income tax benefit / (expense)
Other comprehensive income (OCI)
2023
$’000
2022
$’000
(26,306)
(617)
(18,538)
(2,020)
(26,923)
(20,558)
30,153
(1,490)
28,663
1,740
(10,924)
(1,381)
(12,305)
(32,863)
Current and deferred income tax related items charged or credited directly to OCI
Current and deferred gains and losses on foreign currency contracts
Deferred gains on revaluation of property, plant and equipment
Total income tax (expense) charged to OCI
1,514
(14,302)
(752)
(13,858)
(12,788)
(14,610)
A reconciliation between tax benefit / (expense) and the product of accounting (loss) / profit before income tax multiplied by the Group’s applicable
income tax rate is as follows:
Accounting (loss) / profit before income tax from continuing operations
(15,514)
112,428
Income tax at the Group’s statutory income tax rate of 30% (2022: 30%)
USA combined federal and state income tax rate of 25% (2022: 25%)
Philippines gross income tax (GIT) regime
Other foreign tax rate differences
USA revalued deferred balances for change in weighted average state rate
USA withholding tax leakage due to losses in Australia
Non-assessable R&D credits in cost of sales
Recognition of prior year unrecognised Australian R&D credits
Carry forward tax losses not recognised
Transfer pricing adjustments in respect of intercompany royalties
Valuation of share based payments
Other non-assessable or non-deductible items
Foreign income taxes
Non-deductible capital expenses
Adjustments in respect of current and deferred income tax of the previous year
Total Adjustments
4,654
(2,231)
104
403
1,160
-
1,120
6,685
(273)
(4,192)
(322)
(524)
(2,737)
-
(2,107)
(2,914)
(33,728)
9,046
262
(65)
(2,364)
(413)
1,413
-
(3,745)
(954)
245
(21)
-
862
(3,401)
865
Income tax benefit / (expense) reported in the profit and loss
1,740
(32,863)
Income tax receivable / (payable)
Income tax receivable
Income tax payable
117
(9,920)
16,955
(195)
Austal Limited | Notes to the consolidated financial statements 71
II
Analysis of temporary differences
Deferred income tax - USA
Deferred tax assets
Deferred grant income
Payables
Trade and other receivables
Provisions
Deferred gains and losses on foreign currency contracts
Facility lease
Losses available for offset against future taxable income
R&D
Other
Total
Deferred tax liabilities
Property, plant and equipment
Work in progress
Intangibles
Payables
Deferred gains and losses on foreign currency contracts
Statement of Financial Position
Movement in Profit and Loss
2023
$’000
2022
$’000
2023
$’000
2022
$’000
28,671
1,359
60
38,282
342
890
28
14,150
188
83,970
(111,805)
(28,301)
(157)
(104)
(35)
26,034
4,163
118
5,935
463
371
27
-
-
37,111
(94,258)
(16,259)
(689)
(82)
-
1,668
(2,860)
(60)
31,148
-
490
-
13,714
182
44,282
(2,570)
(11,116)
540
-
-
6,934
(1,518)
(1,199)
1,024
-
312
-
-
-
5,553
(8,737)
(10,963)
100
-
-
Total
(140,402)
(111,288)
(13,146)
(19,600)
Net deferred tax (liability)
(56,432)
(74,177)
31,136
(14,047)
Deferred income tax - Australia
Deferred tax assets
Provisions
Payables
Cash
Deferred gains and losses on foreign currency contracts
Facility lease
CCPB 9 & 10
Other
Total
Deferred tax liabilities
Property, plant and equipment
Deferred gains and losses on foreign currency contracts
Prepayments
Other
Total
11,950
11,369
583
61
33
819
-
613
14,059
(4,990)
(391)
(1,762)
-
(7,143)
406
489
146
520
-
1,031
13,961
(332)
(2,261)
(1,572)
51
(4,114)
581
227
(428)
-
300
-
(467)
213
(1,946)
-
(190)
-
(2,136)
(815)
(14)
(90)
-
309
(7)
698
81
2,281
-
(611)
-
1,670
Net deferred tax asset
6,916
9,847
(1,923)
1,751
Deferred income tax - Other
Deferred tax assets
Deferred tax liabilities
Net deferred tax (liability) / asset
-
(372)
(372)
170
-
170
(550)
-
(550)
-
(9)
(9)
Net deferred tax (liability)
(49,888)
(64,160)
28,663
(12,305)
72 Austal Limited | Notes to the consolidated financial statements
III
Austal Group Tax Strategy
Austal’s Group Tax Strategy has been endorsed by Austal’s Audit & Risk Committee (ARC) and is subject to
annual review and approval. This strategy applies to Austal Limited and its worldwide subsidiary companies.
1.
Tax risk management and governance
Austal’s tax risk management and governance processes are supported through its Tax Risk
Management Standard that is approved by the Board of Directors. The ARC assists the Board in
fulfilling its oversight responsibilities by reviewing, monitoring and making recommendations in
relation to tax risk management and governance practices.
The standard includes:
Ensuring that the roles and responsibilities for the management of tax risks are documented and
understood;
Maintaining a qualified and adequately resourced tax team to manage the tax control framework
and day to day tax affairs;
Requiring tax review of specified transactions and events and obtaining external advice where
appropriate; and
Regular reporting of key tax issues to the Chief Financial Officer and to the Board of Directors
and ARC.
2.
Tax principles
Austal observes these principles in its approach to tax. It will:
Fulfil its tax obligations in accordance with tax laws and practice of the tax jurisdictions in which
it operates.
Pay the amount of tax which is legally due at the correct time.
Maintain an open, transparent and collaborative relationship with tax authorities.
Act with integrity to protect the reputation of Austal.
3.
Tax planning
Austal seeks to manage its business in a tax-efficient manner, compliant with the tax laws, rules and
regulations of the jurisdiction it operates in. Transactions are undertaken for commercial and
economic business reasons; Austal will not knowingly participate in, facilitate nor promote artificial or
contrived tax planning arrangements for the purposes of tax avoidance.
Austal Limited is part of a global consolidated group that may be subject to additional taxation under
the OECD Pillar Two tax reforms. These reforms apply to multinational entities which revenues
exceeding EUR 750 million and would apply a ‘top up’ tax to profits in low taxing jurisdictions. In
accordance with the mandatory exception introduced into AASB 112 Income Taxes, the Austal
Limited group has not recognised any deferred taxes arising from the Pillar Two reforms. Austal is
currently undertaking a comprehensive review of its systems in order to prepare for the
implementation of the Pillar Two regime.
4.
Tax risk appetite
Tax risk will inevitably arise given the scale of the business and the number of tax jurisdictions in
which Austal operates, the judgements that are required to interpret complex tax regulations and the
continually changing nature of tax laws.
Austal practices prudent management of its tax affairs through the application of its Tax Risk
Management Standard. Austal proactively seeks to identify, evaluate, manage and monitor tax
uncertainties and risks to ensure that they are appropriately addressed. Transfer pricing is calculated
Austal Limited | Notes to the consolidated financial statements 73
using the “arm’s length” principle and structured so that the tax results are consistent with the
underlying economic consequences.
5.
Relationship with tax authorities
Austal is committed to engaging with the regulatory authorities with integrity, honesty, respect,
fairness, transparency and a spirit of co-operation.
6.
UK specific comments
Austal Group’s tax strategy is regarded as satisfying the statutory obligation under Paragraph 22(2) of
Schedule 19 Finance Act 2016 (‘Qualifying Company’) for Austal UK Limited.
IV
Recognition and measurement
1.
Current tax assets and liabilities
Current tax assets and liabilities for the current and prior periods are measured at the amount
expected to be recovered from, or paid to, taxation authorities. The tax rates and tax laws used to
compute the amount are those that are enacted or substantively enacted at the balance date.
2.
Deferred income tax
Deferred income tax is provided on all temporary differences at the balance date between the tax
bases of assets and liabilities and their carrying amounts for financial reporting purposes, except
when:
The deferred income tax liability arises from the initial recognition of goodwill, or an asset or
liability in a transaction that is not a business combination and, at the time of the transaction,
affects neither the accounting profit nor taxable Profit and Loss; or
The taxable temporary differences associated with investments in subsidiaries, associates or joint
ventures, and the timing of the reversal of the temporary differences can be controlled and it is
probable that the temporary differences will not reverse in the foreseeable future.
3.
Deferred income tax asset recognition
Deferred income tax assets are recognised for all deductible temporary differences and carry-forward
tax assets and losses to the extent that the availability of taxable profit against which the deductible
temporary differences is probable; and the deferred tax assets can be utilised, except when:
The deferred income tax asset relating to the deductible temporary difference arises from the
initial recognition of an asset or liability in a transaction that is not a business combination and,
at the time of the transaction, affects neither the accounting profit nor taxable Profit and Loss;
The deductible temporary differences are associated with investments in subsidiaries, associates
and interests in joint ventures in which case a deferred tax asset is only recognised to the extent
that taxable profits will be available in the foreseeable future.
The carrying amount of deferred income tax assets is reviewed at each balance date and reduced to
the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part
of the deferred income tax asset to be utilised.
Unrecognised deferred tax assets are reassessed at each balance date and are recognised to the extent
that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set
off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to
the same taxable entity and the same taxation authority.
74 Austal Limited | Notes to the consolidated financial statements
4.
Deferred income tax asset and liability measurement
The US federal rate of income tax is 21.0% (FY2022: 21.0%) and the weighted average of individual
US states in which Austal operates was 4.02% for FY2023 (FY2022: 4.3%). The weighted average
tax rate changes year on year based on the distribution of activity between the states.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to
the year when the asset is realised or the liability will be settled, based on tax rates and tax laws that
have been enacted or substantively enacted at the balance date.
Amounts arising from the re-measurement of deferred balances is disclosed separately in the
tax expense reconciliation.
5.
Income taxes relating to equity items
Income taxes relating to items recognised directly in equity are only recognised in equity and not in
the Profit and Loss.
V
Tax consolidation
Austal Limited is the head entity in a Tax Consolidated Group comprising of Austal Limited and its 100%
owned Australian resident subsidiaries that was implemented 1 July 2002. Members of the Group entered
into a tax sharing arrangement in order to allocate income tax expense to the wholly owned subsidiaries on a
pro-rata basis.
The agreement provides for the allocation of income tax liabilities between the entities in the event that the
head entity defaults on its tax payment obligations. The possibility of default was assessed to be remote at
the reporting date.
The current and deferred tax amounts for the Tax Consolidated Group are allocated amongst the entities in
the Tax Consolidated Group using a stand-alone taxpayer approach whereby each entity in the Tax
Consolidated Group measures its current and deferred taxes as if it had continued to be a separately taxable
entity in its own right. Deferred tax assets and deferred tax liabilities are measured by reference to the
carrying amounts of the assets and liabilities in each entity’s statement of financial position and their tax
values applying under tax consolidation.
Any current or deferred tax assets or liabilities arising from unused tax losses assumed by the head entity
from the subsidiaries in the Tax Consolidated Group are recognised in conjunction with any tax funding
arrangement amounts. The Tax Consolidated Group recognises deferred tax assets arising from unused tax
losses of the Tax Consolidated Group to the extent that it is probable that future taxable profits of the
Tax Consolidated Group will be available against which the asset can be utilised. Any subsequent period
adjustments to deferred tax assets arising from unused tax losses assumed from subsidiaries are recognised
by the head entity only.
The members of the Tax Consolidated Group have a tax funding arrangement which sets out the funding
obligations of members of the Tax Consolidated Group in respect of tax amounts. The tax funding
arrangements require payments to or from the head entity to be equal to the current tax liability (asset)
assumed by the head entity and any tax-loss deferred tax asset assumed by the head entity.
No amounts have been recognised as tax consolidation contribution or distribution adjustments in preparing
the accounts for the head entity for the current year.
VI
Significant accounting judgements and estimates
Uncertainties exist with respect to the interpretation of complex tax regulations, changes in tax laws, and the
amount and timing of future taxable income. Differences arising between the actual results and the
assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax
income and expense already recorded given the wide range of international business relationships and the
long term nature and complexity of existing contractual agreements.
Austal Limited | Notes to the consolidated financial statements 75
1.
Deferred tax assets
Deferred tax assets are recognised as deductible temporary differences because management
considers that it is probable that future taxable profits will be available to utilise those temporary
differences.
Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable
profit will be available against which the losses can be utilised. Significant management judgement is
required to determine the amount of deferred tax assets that can be recognised, based upon the likely
timing and the level of future taxable profits together with future tax planning strategies.
The Group has not recognised a deferred tax asset on the carry forward tax losses and Australian R&D
credits because there is sufficient uncertainty in the Group’s ability to utilise these in the short term.
The Group will continue to assess the recognition criteria against the probability of future taxable
profits.
Note that the Australian Consolidated Tax Group consists of the Australian Shipbuilding and Support
operations that comprise part of the Australasia segments as well as the Austal Limited Corporate
Head Office and hence the taxable income of the Australian Consolidated Tax Group is different from
the profitability of the Australasia segments.
Unrecognised deferred tax assets in respect of the Australian Consolidated Tax Group losses at 30
June 2023 were:
Unrecognised Australian tax losses (tax effected values)
Opening balance
True-up of prior year tax losses
Losses incurred in the current year
Total
Closing balance
2023
$’000
2022
$’000
5,625
5,520
(2,860)
-
(3,637)
3,742
(2,860)
105
2,765
5,625
Austal also claimed R&D tax offsets for prior years in FY2023 and FY2022. The offset was claimed by
adding back accounting expenditure subject to R&D tax incentive and reduced carried forward losses
for those years. See note 26 for details of unrecognised R&D tax credits carried forward.
Due to the Group’s hybrid approach to recognising R&D tax offsets partially as an income tax and
partially as a government grant, the amounts disclosed in Note 26 include amounts that are partially
unrecognised deferred tax assets and partially unrecognised government grants that may arise in the
future.
2.
Audits by tax authorities
The Group establishes a provision based on reasonable estimates, for the possible consequences of
audits by the tax authorities of the respective countries in which it operates. The amount of such
provisions is based on various factors, such as experience of previous tax audits and differing
interpretations of tax regulations by the taxable entity and the responsible tax authority. Such
differences in interpretation may arise for a wide variety of issues depending on the conditions
prevailing in the respective domicile of the Group companies.
3.
Mutual Agreement Procedures (MAP) and Bilateral Advance Pricing Arrangement
(BAPA)
The Competent Authorities of Australia and the United States of America accepted Austal into the
Mutual Agreement Procedures (MAP) and Bilateral Advance Pricing Arrangement (BAPA) programs in
relation to the double taxation of intercompany royalties on intellectual property deployed from
Australia to the USA.
76 Austal Limited | Notes to the consolidated financial statements
Austal is engaging with the Competent Authorities on these programs and responding to the
information requests issued by both competent authorities.
Austal has accounted for and paid tax in Australia based on the ATO’s position and the outcomes of
the MAP and BAPA processes may generate tax refunds or tax payable in either jurisdiction. Austal is
currently unable to determine what the outcomes of these processes may be nor the timeline to
resolution.
The total additional tax relating to royalties on vessels that have been delivered in all years up to
30 June 2023 was $(26.3) million (FY2022: $(22.0) million).
$(4.2) million (FY2022: $(7.6) million) of the $(26.3) million (FY2022: $(22.0) million) has been
paid in cash in periods up to and including FY2023 (FY2022).
The remaining $(22.1) million (FY2022: $(14.4) million) has not had a cash impact in all years up to
30 June 2023, because the additional royalty income arose in loss years or in years when tax losses or
R&D credits were utilised to offset the additional tax liability.
4.
Other taxes
Revenues, expenses and assets are recognised net of the amount of Goods and Services Tax (GST) or
Value Added Tax (VAT) except when:
The GST or VAT incurred on a purchase of goods and services is not recoverable from the taxation
authority, in which case the GST or VAT is recognised as part of the cost of acquisition of the asset or
as part of the expense item; and
Receivables and payables which are stated with the amount of GST or VAT included.
The net amount of GST or VAT recoverable from, or payable to, the relevant taxation authority is included as
part of receivables or payables in the statement of financial position.
Austal Limited | Notes to the consolidated financial statements 77
Capital structure
Cash and cash equivalents
I
Net carrying amount
Cash
Cash at bank and in hand
Total
2023
$’000
2022
$’000
179,201
240,113
179,201
240,113
II
Recognition and measurement
Cash and short term deposits in the Balance Sheet comprise cash at bank, cash in hand and short term
deposits with an original maturity of three months or less.
Cash and cash equivalents for the purposes of the Cash Flow Statement consists of cash and cash
equivalents (as defined above) net of any cash held as a guarantee.
Interest bearing loans and borrowings
I
Net carrying amount
Non - current
Go Zone Bonds
Total
II
Recognition and measurement
2023
$’000
2022
$’000
(129,499)
(124,515)
(129,499)
(124,515)
Loans and borrowings are initially recognised at the fair value of the consideration received less directly
attributable transaction costs. Loans and borrowings are subsequently measured at amortised cost using the
effective interest method.
The fair values of all classes of borrowings are not materially different to their carrying amounts since the
interest payable on those borrowings is either close to current market rates or they are of a short term nature.
78 Austal Limited | Notes to the consolidated financial statements
III
Go Zone Bonds (GZB)
The Gulf Opportunity Zone Bonds (Go Zone Bonds or GZB) are a form of indebtedness that was authorised by
the US Federal Government to incentivise private investment in infrastructure in geographical areas that were
affected by Hurricane Katrina in 2005. Austal qualified to borrow US$225 million with a 30 year maturity to
invest in the development of shipbuilding infrastructure in Austal USA between FY2008 & FY2013.
Go Zone Bonds are tax-exempt municipal bonds in the United States and attracted an average coupon rate of
2.5485% in FY2023 (FY2022: 0.0989%). GZB bondholders are secured by letters of credit issued by
Austal’s banking syndicate with a maturity date of December 2024 for both Series 2011A and 2011B. The
average cost of the letters of credit in FY2023 was 1.5354% (FY2022: 1.5354%).
Austal has redeemed (repaid) a cumulative amount of ~ US$137.5 million (FY2022: US$137.5 million) of
GZB funds and owes US$87.5 million at 30 June 2023 (30 June 2022: US$87.5 million).
Austal has the option of redeeming the outstanding GZB balance, in whole or in part, at any time during the
term of the indebtedness with a 30 day notice to bondholders.
IV
Revolving credit facility – Cash Loans
Revolving credit facility - cash loans
Total facility Limit
Facilities used at reporting date
Facilities unused at reporting date
2023
$’000
2022
$’000
50,000
-
50,000
50,000
-
50,000
Austal re-financed the Syndicated Facility Agreement during FY2022. The Syndicated Facility Agreement
has a $280 million revolving credit facility (RCF). The RCF has a $50 million cash loan sub limit.
The Syndicated Facility Agreement matures in December 2024.
Austal Limited | Notes to the consolidated financial statements 79
V
Performance guarantees (bonding) facilities
Total facilities available
Revolving credit facility
Surety facilities
Total
Facilities used at reporting date
Revolving credit facility
Surety facilities
Total
Facilities unused at reporting date
Revolving credit facility
Surety facilities
Total
2023
$’000
2022
$’000
280,000
250,000
530,000
280,000
250,000
530,000
(21,103)
(866)
(21,969)
(116,396)
(835)
(117,231)
258,897
249,134
508,031
163,604
249,165
412,769
Any unused portion of the entire $280 million RCF can be used for non-financial performance guarantees,
up to $20 million of any unused portion can be used for financial performance guarantees, and up to
$50 million of any unused portion can be used for cash loans as described above.
Austal had a total of $420 million of uncommitted and unsecured Surety facilities at 30 June 2023
(30 June 2022: $420 million). However, only $250 million of the Surety facilities are available for the
issuance of non-financial performance guarantees in accordance with a limitation within the Syndicated
Facility Agreement.
80 Austal Limited | Notes to the consolidated financial statements
Reconciliation of financing cash flow to interest bearing debt
I
Reconciliation
FY2023
Current borrowings
Non-current borrowings
30 June 2022
$’000
-
(124,515)
Total financing liabilities
(124,515)
FY2022
Current borrowings
Non-current borrowings
30 June 2021
$’000
(32,205)
(114,999)
Total financing liabilities
(147,204)
Cash charges
Non-cash changes
Debt
Repay /
(Draw)
$’000
Payment
of borrowing
costs
$’000
CCPB 9 & 10
Debt
Reduction1
$’000
CCPB 9 & 10
De-recognition
$’000
Foreign
exchange
movement
$’000
Amortisation
of borrowing
costs
$’000
-
-
-
-
-
-
-
-
-
-
-
-
-
(4,394)
(4,394)
-
(590)
(590)
30 June 2023
$’000
-
(129,499)
(129,499)
Cash charges
Non-cash changes
Debt
Repay /
(Draw)
$’000
Payment
of borrowing
costs
$’000
CCPB 9 & 10
Debt
Reduction1
$’000
CCPB 9 & 10
De-recognition
$’000
Foreign
exchange
movement
$’000
Amortisation
of borrowing
costs
$’000
30 June 2022
$’000
-
-
-
-
823
823
3,066
-
29,139
-
-
(9,966)
-
(373)
-
(124,515)
3,066
29,139
(9,966)
(373)
(124,515)
1. CCPB 9 & 10 debt reduction is equal to the difference between the notional charter income and the notional interest expense.
Contributed equity and reserves
I
Contributed equity
1.
Net carrying amount
Shares
$’000
2023
2022
2023
2022
Ordinary shares on issue
1 July
361,858,154
359,894,288
146,236
142,558
Shares issued to Employee Share Trust
583,721
1,963,866
Shares or proceeds transferred for beneficiaries
-
-
1,459
80
3,675
3
30 June
362,441,875
361,858,154
147,775
146,236
Reserved shares
1 July
(1,088,675)
(278,528)
Shares issued to Employee Share Trust or sold
Shares or proceeds transferred for beneficiaries
(583,721)
215,621
(1,963,866)
1,153,719
30 June
(1,456,775)
(1,088,675)
(2,304)
(1,459)
506
(3,257)
(892)
(3,675)
2,263
(2,304)
Net
360,985,100
360,769,479
144,518
143,932
Austal Limited | Notes to the consolidated financial statements 81
2.
Recognition and measurement
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new
shares or options are shown in equity as a deduction, net of tax, from the proceeds of the new shares
or options. Ordinary shares have no par value and the company does not have a limited amount of
authorised capital.
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
Reserved shares
Austal Limited equity instruments which are issued and held by a trustee under the Employee Share
Trust (EST) are classified as Reserved shares and are deducted from Equity. No gain or loss is
recognised in the Other Comprehensive Income on the purchase, sale, issue or cancellation of the
Group’s own equity instruments.
3.
Movements in ordinary share capital
The movement in ordinary shares during year ended 30 June 2023 is comprised of shares issued as
part employee share plans.
The Group announced an unfranked FY2022 final dividend of 4.0 cents per share, followed by an
unfranked FY2023 interim dividend of 4.0 cents per share which was announced on
24 February 2023.
Austal established an Employee Share Trust (EST) during FY2019 for the purpose of acquiring,
holding and transferring shares in connection with equity based remuneration established by the
Company for the benefit of participants in those plans. Austal issued 583,721 shares to the trust
during the year ended 30 June 2023 for the FY2020 LTI plan, FY2022 STI equity (indeterminate
rights) and share rights issued to Non-Executive Directors (30 June 2022: 1,963,866 shares to the
trust for the FY2019 LTI plan, FY2021 STI equity (indeterminate rights), and share rights issued to
Non-Executive Directors).
II
Reserves
The reserves are shown within the Consolidated Statement of Changes in Equity for the year ended
30 June 2023.
1.
Foreign currency translation reserve (FCTR)
This reserve is used to record exchange differences arising from the translation of the financial
statements of foreign subsidiaries.
2.
Employee benefits reserve
This reserve is used to:
Record the value of equity benefits provided to employees and Directors as part of their
remuneration, and
Record the re-measurement of the retirement benefits liability for the Philippines.
Further information relating to share based payment plans for the Group is provided in Note 36.
3.
Cash flow hedge reserve
This reserve records the portion of the gain or loss on hedging instruments in cash flow hedges that
are determined to be effective hedges.
82 Austal Limited | Notes to the consolidated financial statements
4.
Common control reserve
This reserve represents the premium paid on the acquisition of historical minority interests in a
controlled entity.
5.
Asset revaluation reserve
This reserve is used to record increases in the fair value of land and buildings.
Government grants relating to assets
I
Net carrying amount
Deferred grant income
Current
Infrastructure development
Total
Non - current
Infrastructure development
Total
Total
Movements in grants
1 July
Grants received during the year
Amortised to the profit and loss
Foreign exchange rate adjustment
Net movement
30 June
2023
$’000
2022
$’000
(15,324)
(15,324)
(9,728)
(9,728)
(100,634)
(93,306)
(100,634)
(93,306)
(115,958)
(103,034)
(103,034)
(67,800)
(24,785)
15,573
(3,712)
(31,625)
3,707
(7,316)
(12,924)
(35,234)
(115,958)
(103,034)
II
Recognition and measurement
Austal has received grants from various Government bodies in the USA to fund the infrastructure required for
the expansion of the Group’s USA operations in Mobile, Alabama.
The fair value of grants related to assets is credited to a deferred income liability account and is released to
the Profit and Loss over the expected useful life of the relevant asset.
The fair value of grants related to expense items is recognised as income over the periods necessary to match
the grants on a systematic basis to the costs that they are intended to compensate.
Government grants are only recognised when received or when there is reasonable assurance that the grant
will be received and all attaching conditions will be complied with.
Austal Limited | Notes to the consolidated financial statements 83
Working capital
Trade and other receivables
I
Net carrying amount
Trade and other receivables
Trade amounts owing by unrelated entities
Expected credit losses
Total
II
Recognition and measurement
2023
$’000
2022
$’000
135,297
(250)
132,553
(468)
135,047
132,085
Trade receivables represent receivables in respect of which the Group’s right to consideration is
unconditional subject only to the passage of time. Trade receivables are non-derivative financial assets
accounted for in accordance with the Group’s accounting policy for non-derivative financial assets as set out
in AASB 9 Financial Instruments.
Trade and other receivables are measured at amortised cost. A gain or loss on trade and other financial
assets that is subsequently measured at amortised cost is recognised in the Profit and Loss when the asset is
derecognised or impaired. Interest income from these financial assets is included in finance income using
the effective interest rate method.
The average credit period on trade receivables ranges from 30 to 45 days in most cases. The Group used the
expected credit loss model in determining the recoverability of trade receivables as per AASB 9.
The Group applies the simplified approach permitted by AASB 9 which requires expected lifetime losses to
be recognised from initial recognition of the receivables without the need to identify significant increases in
credit risk (i.e. no distinction is needed between 12 month and lifetime expected credit losses).
The expected credit loss model requires the Group to account for expected credit losses at each reporting
date to reflect changes in credit risk since initial recognition of the financial assets, meaning that a credit
default does not need to have occurred before credit losses are recognised.
III
Ageing analysis of trade and other receivables
Not yet due
0-30
31-60
61-90
90+
Impaired
Total
Days past due
30 June 2023
30 June 2022
$’000
$’000
112,682
8,328
5,433
8,537
317
76,506
38,366
2,458
11,804
3,419
(250)
(468)
135,047
132,085
Past due is defined under AASB 9 to mean any amount outstanding for one or more days after the
contractual due date. Past due amounts relate to a number of trade receivable balances where for
various reasons the payment terms may not have been met. These receivables have been assessed to be fully
recoverable.
IV
Fair value of trade and other receivables
The carrying amount of the receivables is assumed to be the same as their fair value due to their short term
nature.
84 Austal Limited | Notes to the consolidated financial statements
Prepayments
I
Disclosure
Prepayments
Current
Non-current
Total
2023
$’000
2022
$’000
45,730
52,209
97,939
13,012
3,959
16,971
II
Recognition and measurement
Prepayments represent goods or services which the Group has paid upfront, to fix pricing and lead times for
critical goods or services, but the underlying asset will not be consumed until a future period. The Group
expenses the prepayment over the corresponding period that the asset is consumed. During FY2023, Austal
USA made prepayments for long lead time materials to fix costs related to future vessel programs.
Inventories and work in progress
I
Net carrying amount
Inventories and work in progress
Work in progress
Other inventory
Total
2023
$’000
2022
$’000
319,835
9,302
255,566
7,504
329,137
263,070
II
Recognition and measurement
Stock and finished goods are valued at the lower of cost and net realisable value.
Cost of stock is determined on the weighted average cost basis.
Further information relating to work in progress (WIP) is provided in Note 4.
III
Inventories
Inventories includes raw materials and WIP (accrued income) recognised in respect of contracts with
customers which have been determined to fulfil the criteria for over time revenue recognition under
AASB 15. The Group does not typically build inventory to stock because material is ordered specifically for
each shipbuilding project and receipted to WIP on arrival from the supplier. Inventories are stated at the
lower of cost and net realisable value in line with AASB 102.
Austal Limited | Notes to the consolidated financial statements 85
Trade and other payables
I
Disclosure
Trade and other payables
2023
$’000
2022
$’000
Trade and other payables owed to unrelated entities 1
Total
(134,586)
(151,726)
(134,586)
(151,726)
1. Trade payables are unsecured and non-interest bearing.
II
Recognition and measurement
Trade payables and other payables are carried at amortised cost and represent liabilities for goods and
services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group
becomes obliged to make future payments in respect of the purchase of these goods and services.
III
Fair value of trade and other payables
The carrying amounts of trade and other payables are assumed to be the same as their fair values, due to
their short term nature.
86 Austal Limited | Notes to the consolidated financial statements
Provisions
I
Net carrying amount
Employee
Workers'
Onerous
Benefits
Compensation
Contracts
Warranty
Remediation
$’000
$’000
$’000
$’000
$’000
Other
$’000
Total
$’000
Provisions at 30 June 2022
(57,251)
(5,100)
(10,094)
(12,621)
-
(15,441)
(100,507)
Arising during the year
Utilised
Unused amounts reversed
Effects of foreign exchange
(153,838)
169,259
140
(1,240)
(6,903)
(163,796)
3,172
3,713
(105)
52,524
-
(1,471)
(6,099)
7,505
242
(30)
(10,131)
-
-
-
(598)
3,184
3,128
(338)
(341,365)
235,644
7,223
(3,184)
Movement
14,321
(123)
(112,743)
1,618
(10,131)
5,376
(101,682)
Provisions at 30 June 2023
(42,930)
(5,223)
(122,837)
(11,003)
(10,131)
(10,065)
(202,189)
Employee
Workers'
Onerous
Benefits
Compensation
Contracts
Warranty
Remediation
$’000
$’000
$’000
$’000
$’000
Other
$’000
Total
$’000
Provisions at 30 June 2022
Current
Non-current
Total
Provisions at 30 June 2023
Current
Non-current
Total
(55,069)
(2,182)
(5,100)
(10,094)
(12,621)
-
-
-
(57,251)
(5,100)
(10,094)
(12,621)
-
-
-
(15,441)
-
(98,325)
(2,182)
(15,441)
(100,507)
(40,345)
(2,585)
(5,223)
-
(55,559)
(67,278)
(11,003)
-
(3,600)
(6,531)
(10,065)
-
(125,795)
(76,394)
(42,930)
(5,223)
(122,837)
(11,003)
(10,131)
(10,065)
(202,189)
II
Recognition and measurement
Provisions are recognised when:
The Group has a present obligation (legal or constructive) as a result of a past event;
It is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation; and
A reliable estimate can be made of the amount of the obligation.
Provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability if the
effect of the time value of money is material.
Austal Limited | Notes to the consolidated financial statements 87
III
Information about individual provisions and significant accounting estimates
1.
Employee Benefits
Liabilities for wages and salaries, including non-monetary benefits and accumulated sick leave
expected to be wholly settled within 12 months of the reporting date are recognised in other payables
in respect of employees’ services up to the reporting date. They are measured at the amounts
expected to be paid when the liabilities are settled.
The Group does not expect its long service leave and annual leave benefits provision to be wholly
settled within 12 months of each reporting date. The Group recognises a liability for long service and
annual leave measured as the present value of expected future payments to be made in respect of
services provided by employees up to the reporting date using the projected unit credit method.
Consideration is given to expected future wage and salary levels, experience of employee departures
and periods of service. Expected future payments are discounted using market yields at the reporting
date on high quality corporate bonds with terms to maturity and currencies that match, as closely as
possible, the estimated future cash outflows.
2. Workers’ compensation
A provision for workers’ compensation is recognised based on monthly reports received from a claims
administrator, American Longshore Mutual Association Limited, (USA) and insurance broker, Aon Risk
Services Australia Limited, (Australia) for the expected costs of current claims and claims incurred
but not reported at the balance date.
3.
Onerous contract (T-ATS Program)
Austal was awarded its first steel construction contract by the United States Navy in
September 2021, a build of two Towing, Salvage and Rescue Ships (T-ATS 11 and 12). The contract
also provided options for up to three additional T-ATS vessels. Two of the options were exercised and
awarded in July 2022 (T-ATS 13 and 14), and the final fifth vessel was awarded in June 2023 (T-ATS
15). These vessels are the first to be constructed in the Company’s new steel panel line.
Management conducts quarterly reviews of costs contained within the Estimates at Completion (EACs)
of each vessel. During FY2022, this process identified a number of drivers of increased cost that
resulted in the program being declared onerous, resulting in the recognition of a provision of
$10.1 million at 30 June 2022. The drivers of the onerous contract provision recognised during
FY2022 included cost inflation on materials and labour, as well as cost impacts relating to design
specifications and increased bills of material.
Following the completion of updated EACs for the T-ATS program, for which the percentage
completion was at very early stages as at 31 December 2022, the onerous provision increased to
$59.6 million at 31 December 2022 due to a range of factors similar to those identified during the
FY2022 EAC review, including forecast increases in labour hours and costs. During H2 FY2023,
further EAC growth predominantly driven by increases in labour hours resulted in an increased
onerous contract provision as at 30 June 2023 .
Management have reviewed the EACs as part of the year end process and applied judgement in
calculating an onerous contract provision using a probability weighted approach in line with AASB
137. The judgements applied are detailed below that resulted in a total contract loss of
$182.3 million and an onerous contract provision of $122.8 million at 30 June 2023.
An independent third party performed a limited scope review in July 2023 of the labour hours
contained within the EACs and presented a range of scenarios to management. Management has
adopted a probability weighted approach to calculate the onerous contract provision which is balanced
between primarily the program office EACs and a lower probability weighting applied to the most likely
case from the independent third-party report.
Management has performed sensitivities on the key assumptions in the onerous contract provision
calculation which are discussed below.
88 Austal Limited | Notes to the consolidated financial statements
Significant accounting judgement and estimates relating to the T-ATS Program
onerous contract provision
The onerous contract provision assessment requires management to make certain estimates regarding
the unavoidable costs and the expected economic benefits of the contract. These estimates require
significant management judgment, given the time period over which the vessels will be constructed,
being FY2024 – FY2027, and are subject to risk and uncertainty and accordingly changes in
economic conditions can affect these assumptions. The critical assumptions applied when estimating
the present value of the provision are set out below:
Labour costs: Represent the forecast cost of labour which can vary depending on market labour
rates, the mix of skilled labour required as the program progresses and the productivity achieved
especially as the vessel program matures. The forecast labour rate takes account of inflationary
increases. The labour hour sensitivity includes the impact of direct labour costs and also overheads
related to contract fulfilment.
Overhead forecast rate: The overhead rate reflects estimated costs directly related to contract
fulfillment (in addition direct costs of production), divided by forecast labour hours taking into
account historic and forecast production hours of the current facility.
Materials costs: Forecast materials costs takes into account inflationary increases and are based on
latest supplier quotations. Increases or decreases can arise with movements in materials costs over
time.
Cost performance index (CPI): CPI is a measure of the program cost efficiencies and is determined
by a number of factors, but primarily the structural and labour hour components of construction which
would be expected to be more variable in first in class vessel builds.
Learning curve: The learning curve reflects the improved efficiencies that are expected as the
learnings from the construction of the first vessel are applied to subsequent vessel construction.
Learning curve assumptions are based on the actual learning curves experienced on other programs
run by the Company. The labour hours sensitivity below reflects a varied or alternate learning curve
achievement.
Incentives: Where incentives exist within a program that are dependent on future performance, an
estimate is made at each reporting date as to the economic benefits that are expected to be received
under the contract. This assessment takes into account historic performance with respect to similar
incentives, and also performance on the specific program to date.
Discount rate: A risk free rate of 4% has been applied to the provision based on the time phasing of
the estimate to complete / forecast costs.
Requests for Equitable Adjustment (REA): Management have assessed submitted REAs and
applied judgement to quantify the expected recovery from these claims. Management will continue to
review the ability to expand the quantum of the REA and, if justified, submit this for resolution.
Reasonably possible changes to key assumptions: Actual costs and cash outflows can materially
differ from the current estimate, positively or negatively, as a result of inflationary cost increases,
supply chain challenges, labour efficiencies, design and/or specification changes and structural
complexities.
Sensitivity analysis performed: The critical assumptions for which a reasonably possible change in
the assumption and the impact to the onerous contract provision have been displyed in the sensitivity
table below.
Concept
% Change
Impact on provision
Labour Hours
Materials
Overhead Rate
$’000
+
$’000
-
5.0%
5.0%
5.0%
10,731
7,711
4,484
(10,594)
(7,679)
(4,484)
Austal Limited | Notes to the consolidated financial statements 89
4. Warranties
A provision for warranty is made upon delivery of each vessel in Australasia based on the estimated
future costs of warranty repairs. The estimated future costs are based on the Group’s history of
warranty claims made on similar vessels within their warranty periods. The Company subsequently
monitors the provision to ensure it is adequate for all known warranty claims and an estimation for
unknown warranty claims. Any increases or decreases in the provision are recognised in the Profit and
Loss for the period.
5.
Remediation
A provision is recognised relating to remediation of the contamination of the Austal Cairns lease site.
Austal became party to Deeds of Remediation when it acquired the BSE Maritime business in
November 2020. The site is leased from Far North Queensland Ports Corporation Limits (Ports North).
The Cairns lease site had historical contamination in the wet lease areas that existed well before 2012
when BSE Maritime assumed the leases.
Austal has undertaken significant work to understand the contamination risk and developed several
potential solutions to address the long-term contamination on the site. Austal remains engaged in
discussion with Ports North on the immediate and long term obligations, and has confirmed its’
willingness to work collaboratively with Ports North based on allocating appropriate resources and
attention to dredging or other solutions that will provide a long-term solution for the site which
addresses the requirements of both Ports North and Austal.
The remediation provision represents management's best estimate of the costs that will be incurred to
fulfill these obligations and involves a significant degree of judgement and estimation uncertainties.
Factors considered in the estimation process include the extent of the impacted areas and the
complexity of the remediation process. Changes in these factors could impact the ultimate provision
amount required.
As more information becomes available or as circumstances change, Austal may need to adjust the
remediation provision accordingly. Any adjustments will be recognised in the period when they are
identified, and the impact will be disclosed in the appropriate reporting period.
6.
Corporate investigations
Following resolution of the Australian regulatory investigations with ASIC in October 2022, the Group
continues to engage with the US Department of Justice (DOJ) and Securities and Exchange
Commission (SEC) regarding their respective investigations into alleged fraudulent activities by former
Austal USA personnel during 2013 – 2016. A $2.5 million (FY2022: $8.2 million) provision has
been recorded based on the best estimate of the probable incremental professional services costs
relating to this matter (which sits within ‘Other’ in the table reflecting net carrying amounts).
Each of the DOJ and SEC have now commenced formal proceedings alleging fraudulent conduct by
the three ex-employees. Refer to Note 31 for further information.
7.
Dividends
A provision for dividends is not recognised as a liability unless the dividends are declared, determined
or publicly recommended on or before the reporting date. An interim dividend of 4.0 cents per share
was issued for the half year 31 December 2022 (FY2022 H1: 4.0 cents per share).
An unfranked dividend of 3.0 cents per share cents per share has been declared post year end and is
not recognised as a liability for the year ended 30 June 2023 (FY2022 H2: 4.0 cents per share).
90 Austal Limited | Notes to the consolidated financial statements
Infrastructure & other assets
Property, plant and equipment
I
Net carrying amount
Balance 30 June 2022
Gross carrying amount at fair value
Gross carrying amount at cost
Freehold
Land and
Leasehold
Plant and
Buildings
Improvements
Equipment
$’000
$’000
$’000
Capital
WIP
$’000
742,999
-
-
-
-
46,020
323,504
44,867
Accumulated depreciation and impairment
(165,636)
(11,906)
(180,484)
-
Total
$’000
742,999
414,391
(358,026)
Net carrying amount
Balance 30 June 2023
577,363
34,114
143,020
44,867
799,364
Gross carrying amount at fair value
Gross carrying amount at cost
892,687
-
-
-
-
51,966
347,266
70,233
Accumulated depreciation and impairment
(187,211)
(14,895)
(197,505)
-
892,687
469,465
(399,611)
Net carrying amount
705,476
37,071
149,761
70,233
962,541
II
Reconciliation of movement for the year
Balance 1 July 2021
Additions
Transfer in / (out)
Disposals 1
Depreciation charge for the year
Impairment (loss)
Revaluation
Effects of foreign exchange
Freehold
Land and
Leasehold
Plant and
Buildings
Improvements
Equipment
$’000
$’000
$’000
Capital
WIP
$’000
Total
$’000
455,264
35,365
131,762
21,819
644,210
111
43,382
(5)
(14,978)
-
54,773
38,816
-
-
-
(1,782)
(2,294)
-
2,825
41,638
10,818
(31,065)
(18,420)
(262)
-
8,549
74,580
(54,200)
-
-
-
-
2,668
116,329
-
(31,070)
(35,180)
(2,556)
54,773
52,858
Total
122,099
(1,251)
11,258
23,048
155,154
Balance 30 June 2022
577,363
34,114
143,020
44,867
799,364
Additions
Transfer in / (out)
Disposals
48,722
18,720
(18)
88
3,506
(9)
23,911
7,146
(352)
Depreciation charge for the year
(19,269)
(1,952)
(27,352)
Impairment reversal
Revaluation
Effects of foreign exchange
-
59,439
20,519
147
-
1,177
29
-
3,359
53,836
(29,372)
(845)
-
-
-
1,747
126,557
-
(1,224)
(48,573)
176
59,439
26,802
Total
128,113
2,957
6,741
25,366
163,177
Balance 30 June 2023
705,476
37,071
149,761
70,233
962,541
1. The disposal relates to the CCPB 9 & 10 derecognition.
Austal Limited | Notes to the consolidated financial statements 91
III
Recognition and measurement
Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment
losses.
Land and buildings are measured at fair value less accumulated depreciation on buildings and any
impairment losses recognised after the date of revaluation. Valuations are performed on a regular basis to
ensure that the fair value of a revalued asset does not differ materially from its carrying value.
The carrying amount of land and buildings would be recognised as detailed in the table below if they were
measured using the historic cost model.
Land and Buildings valued using cost model
Cost
Accumulated depreciation and impairment
Net carrying amount
2023
$’000
2022
$’000
566,384
(156,782)
485,917
(140,419)
409,602
345,498
Any revaluation surplus is recorded in Other Comprehensive Income and credited to the Asset Revaluation
Reserve in equity, except to the extent that it reverses a revaluation decrease of the same asset previously
recognised in the Profit and Loss, in which case the increase is recognised in the Profit and Loss.
A revaluation deficit is recognised in the Profit and Loss except to the extent that it offsets an existing
surplus on the same asset recognised in the Asset Revaluation Reserve.
Accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the
asset and the net amount is restated to the revalued amount of the asset. Any revaluation reserve relating to
the particular asset being sold is transferred to retained earnings upon disposal.
IV
De-recognition and disposal
An item of property, plant and equipment is derecognised upon disposal or when no further future economic
benefits are expected from its use.
Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is included in the Profit and Loss in the year the asset is
derecognised.
V
Key judgements and accounting estimates
1.
Impairment of non-financial assets
The Group assesses whether there is an indication that an asset may be impaired at each reporting
date. The Group considered impairment triggers including observable indications, significant market,
technological, economic or legal changes that have occurred, significant decreases in market interest
rates or market rates of return, the market capitalisation of the Group compared to the net assets of
the Group, evidence that any major asset or process is obsolete or damaged and other evidence from
internal reporting.
Further information relating to impairment testing of non-current assets is provided in Note 23.
The carrying values of plant and equipment are reviewed for impairment at each reporting date,
with the recoverable amount being estimated when events or changes in circumstances indicate the
carrying value of the asset may be impaired. The recoverable amount of plant and equipment is the
higher of fair value less costs to sell and value in use. The estimated future cash flows are discounted
to their present value using a post-tax discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset in assessing value in use.
92 Austal Limited | Notes to the consolidated financial statements
The recoverable amount for an asset that does not generate largely independent cash inflows is
determined for the cash-generating unit to which the asset belongs, unless the asset’s value in use
can be estimated to be close to its fair value.
An impairment exists when the carrying value of an asset or a cash-generating unit exceeds its
estimated recoverable amount. The asset or cash-generating unit is then written down to its
recoverable amount.
Impairment losses on plant and equipment are recognised in the Profit and Loss.
The asset or cash-generating unit that suffered an impairment is tested for possible reversal of the
impairment whenever events or changes in circumstances indicate that the impairment may have
reversed.
The key assumptions used to determine the recoverable amount for cash-generating units (CGU) are
disclosed and further explained in Note 23.
2.
Estimation of useful lives of assets
The estimation of the useful lives of assets has been based on historical experience. The condition of
the assets is assessed at least once per year and considered against the remaining useful life.
Adjustments to useful life are made when considered necessary.
Depreciation is calculated on a straight-line or diminishing value basis over the estimated useful life
of the asset.
The following useful lives have been adopted as follows:
Buildings – 20 to 40 years.
Plant and Equipment – 2 to 10 years.
Leasehold Improvements – term of lease.
The assets’ residual values, useful lives and amortisation methods are reviewed, and adjusted at the
reporting date as appropriate.
3.
Revaluation of land and buildings
The Company’s land and buildings consist of shipyard facilities in Australia and USA.
The Company determined that these constitute one class of asset under AASB 13, based on the
nature, characteristics and risk of the property.
The Company engages external, independent valuers to determine the fair value of the land and
buildings whom have appropriate qualifications and recent experience in the fair value measurement
of land and buildings in the relevant locations. The valuers engaged for 30 June 2023 were members
of either the Australian Property Institute or the USA Appraisal Institute.
The valuation methodologies for Australia and the USA utilised a variety of sources and approaches
based on highest and best use which is consistent with the Group’s current use of the assets,
including:
the cost approach that reflects the cost to a market participant to construct assets of comparable
utility and age, adjusted for obsolescence;
capitalised income projections based on a property’s estimated net market income, and a
capitalisation rate derived from an analysis of market evidence; and
current prices in an active market for properties of a different nature or recent prices of similar
properties in less active markets, adjusted to reflect those differences.
The independent revaluation is renewed every three to five years or earlier as required. The Company
undertakes an assessment in the years in between obtaining independent valuations to ensure that the
latest independent valuation remains appropriate and representative of fair value as at the reporting
date. The Company categorises the fair value measurement as a level 2 because the inputs and
assumptions used in arriving at the at the fair value are observable.
Austal Limited | Notes to the consolidated financial statements 93
The last independent revaluation of the Australia land and buildings occurred during FY2023.
This resulted in an increase in the valuation of $9.0 million (before deferred tax) recognised in Other
Comprehensive Income.
The last independent revaluation of the USA land and buildings occurred during FY2023.
This resulted in an increase in the valuation of $50.4 million (before deferred tax) recognised in Other
Comprehensive Income.
4.
Impairment of assets Australasia
The Austal Philippines shipyard and floating dry dock (Austal Lewek Hercules) sustained damage as a
result of Typhoon Odette, which struck the Philippines in December 2021. Damages net of insurance
proceeds of $2.6 million were recognised in FY2022 through an impairment charge in cost of sales.
In FY2023, there was an impairment reversal of $0.2 million relating to the impairment charge in the
prior year. Further insurance proceeds for the shipyard damage are anticipated but have not been
provided for as they do not meet the requirement of virtual certainty.
Leases
I
Amounts recognised in the statement of financial position
Right of use assets
Properties
Equipment
Motor vehicles
Total
Lease liability
Current lease liability
Non-current lease liability
Total
2023
$’000
2022
$’000
160,451
152,377
1
16
5
131
160,468
152,513
2023
$’000
2022
$’000
(4,982)
(105,976)
(4,198)
(105,406)
(110,958)
(109,604)
The difference between the right of use assets and lease liability is primarily driven by the purchase of
Marine Group Boat Works lease for consideration of US$33 million ($47.8 million) in FY2022. An
incremental borrowing rate (IBR) of 5.15% was determined. Please see Note 24 for further information.
Additions to the right of use assets during the reporting period were $13.3 million
(FY2022: $104.3 million). The maturity analysis of lease liabilities is included in Note 27.
94 Austal Limited | Notes to the consolidated financial statements
II
Amounts recognised in the statement of profit and loss
Amounts recognised in the Profit and Loss
Depreciation for right of use assets
Properties
Equipment
Motor vehicles
Total
Interest expense (included in finance costs)
Expense relating to short term leases, low value leases and leases with variable payments
Financing cash flows for repayment of principal element of lease liability
III
Lease liabilities
2023
$’000
2022
$’000
(9,564)
(7,753)
(3)
(14)
(4)
(14)
(9,581)
(7,771)
(4,834)
(2,746)
(9,088)
(3,311)
(2,398)
(8,638)
Liabilities arising from a lease are initially measured on a present value basis by discounting the following
lease payments to their present value:
Fixed payments (including in-substance fixed payments), less any lease incentives receivable;
Variable lease payments that are based on an index or a rate, initially measured using the index or rate
as at the commencement date;
Amounts expected to be payable by the group under residual value guarantees;
The exercise price of a purchase option if the group is reasonably certain to exercise that option; and
Payments of penalties for terminating the lease, if the lease term reflects the group exercising that
option.
Lease payments to be made under reasonably certain extension options are also included in the
measurement of the liability.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily
determined, which is generally the case for leases in the Group, the incremental borrowing rate is used,
being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset
of similar value to the right of use asset in a similar economic environment with similar terms, security and
conditions.
Subsequent to initial recognition, lease liabilities are carried at amortised cost. Payments are allocated
between repayment of principal and borrowing costs, which are charged to profit or loss over the lease period
so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Austal Limited | Notes to the consolidated financial statements 95
IV
Right of use assets
Right of use assets are initially recognised at cost, comprising:
The amount of the lease liability;
Any lease payments made at or before the commencement date, less any incentives received;
Initial direct costs; and
Restoration costs.
Subsequently, right of use assets are depreciated over the shorter of the asset’s useful life and lease term on
a straight-line basis.
V
Short term leases, leases of low value assets and leases containing variable payments
Payments associated with short term leases of equipment and vehicles and all leases of low value assets are
recognised on a straight-line basis as an expense in profit or loss. Short term leases are leases with a lease
term of 12 months or less.
VI
Key judgements and accounting estimates
The Group determines the lease term as the non-cancellable term of the lease. The non-cancellable term is
adjusted for periods covered by an option to extend the lease if it is reasonably certain that the option will be
exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be
exercised.
The Group applies judgement in evaluating whether it is reasonably certain that it will exercise the option to
renew or terminate the lease. After the commencement date, the Group reassesses the lease term if there is
a significant event or change in circumstances that is within its control and affects its ability to exercise or
not to exercise the option to renew or to terminate.
The interest rate implicit in the lease cannot readily be determined. The Group therefore uses an Incremental
Borrowing Rate (IBR) to measure lease liabilities. The IBR is the rate of interest that the Group would have
to pay to borrow the funds necessary to obtain an asset of a similar value to the right of use asset, in a
similar economic environment, over a similar term and with a similar security. The use of an IBR therefore
requires estimation when no observable rates are available.
96 Austal Limited | Notes to the consolidated financial statements
Intangible assets and goodwill
I
Net carrying amount
Balance 30 June 2022
Cost
Accumulated amortisation and impairment
Computer
Software
$’000
Other
Goodwill
Intangibles
$’000
$’000
Total
$’000
28,078
(25,001)
31,643
-
4,161
(1,356)
63,882
(26,357)
Net carrying amount
3,077
31,643
2,805
37,525
Balance 30 June 2023
Cost
Accumulated amortisation and impairment
30,959
(27,068)
31,870
-
4,310
(1,743)
67,139
(28,811)
Net carrying amount
3,891
31,870
2,567
38,328
II
Reconciliation of movement for the year
Balance 1 July 2021
Additions
Disposals
Amortisation for the year
Effects of foreign exchange
Total
Computer
Software
$’000
Other
Goodwill
Intangibles
$’000
$’000
Total
$’000
3,557
31,131
2,883
37,571
767
(31)
(1,426)
210
(480)
-
-
-
512
512
-
-
(311)
233
(78)
767
(31)
(1,737)
955
(46)
Balance 30 June 2022
3,077
31,643
2,805
37,525
Additions
Disposals
Amortisation for the year
Effects of foreign exchange
Total
2,066
-
(1,331)
79
814
-
-
-
227
227
-
-
(330)
92
(238)
2,066
-
(1,661)
398
803
Balance 30 June 2023
3,891
31,870
2,567
38,328
Austal Limited | Notes to the consolidated financial statements 97
III
Recognition and measurement
Intangible assets acquired separately are initially measured at cost and subsequently carried at cost less any
accumulated amortisation and any accumulated impairment losses. Internally generated intangible assets,
excluding capitalised development costs, are not capitalised and expenditure is charged against the Profit
and Loss in the year in which the expenditure is incurred.
The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite
lives are amortised over the useful life and assessed for impairment whenever there is an indication that the
intangible asset may be impaired. The amortisation period and the amortisation method for an intangible
asset with a finite useful life is reviewed at least once per financial year.
Changes in the expected useful life or the expected pattern of consumption of future economic benefits
embodied in the asset are accounted for by changing the amortisation period or method, as appropriate,
which results in a change in accounting estimate. The amortisation expense on intangible assets with finite
lives is recognised in the Statement of Comprehensive Income in the expense category consistent with the
function of the intangible asset.
A summary of the policies applied to the Group’s intangible assets is as follows:
1.
Computer software
Computer software is initially measured at cost and amortised on a diminishing value basis over the
estimated useful life of each asset.
The following useful lives have been adopted as follows:
Computer software – 2 to 5 years.
The assets’ residual values, useful lives and amortisation methods are reviewed, and adjusted at the
reporting date as appropriate.
2.
Goodwill
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration
transferred and the amount recognised for non-controlling interest over the net identifiable assets
acquired and liabilities assumed in a business combination.
Goodwill is measured at cost less any accumulated impairment losses after initial recognition.
Goodwill acquired in a business combination is allocated to each of the Group’s Cash Generating
Units (CGU) that are expected to benefit from the combination from the acquisition date for the
purpose of impairment testing, irrespective of whether other assets or liabilities acquired are assigned
to those units.
Goodwill is tested annually for impairment regardless of whether impairment indicators are identified.
The impairment is determined for goodwill by assessing the recoverable amount of each CGU or group
of CGUs to which the goodwill relates. An impairment loss is recognised when the recoverable amount
of the CGU is less than its carrying amount. Impairment losses relating to goodwill cannot be reversed
in future periods.
Goodwill allocated to a CGU that has a partial disposal of the operation within that unit is included in
the carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed
in these circumstances is measured based on the relative values of the disposed operation and the
portion of the CGU retained.
98 Austal Limited | Notes to the consolidated financial statements
Impairment testing of non-current assets
I
Review cycle
Cash generating units (CGUs) within the Group are assessed for impairment at least annually where they hold
goodwill or indefinite life intangible assets. In addition to this, all CGUs are assessed for impairment when
impairment indicators are identified. Non-current assets are reviewed on an annual basis in accordance with
the Group’s accounting policies to determine whether there is an impairment indicator. An estimate of the
recoverable amount is made where an impairment indicator exists.
II
Cash generating units (CGU)
The recoverable amounts are assessed at the CGU level as identified below:
USA Shipbuilding
USA Support
Australasia Shipbuilding
Australasia Support
III
Allocation of assets to CGU
Corporate assets and corporate overheads have been allocated to CGUs to the extent that they are used to
support the operations of the CGU.
Goodwill acquired through business combinations has been allocated to the following segments:
USA Support – a carrying amount of $6.7 million
Australasia Support – a carrying amount of $25.2 million
IV
Assessment of recoverable amounts and sensitivity to changes in assumptions
For the year ended 30 June 2023, management assessed whether there were any indicators of impairment.
The Company’s market capitalisation at 30 June 2023 was below its net assets and management considered
this factor as an impairment indicator at 30 June 2023 resulting in the need for an impairment assessment
across all CGUs. The Company also concluded that a trigger was present within the Australasia Shipbuilding
CGU due to a lack of commercial vessel awards in FY2023.
The recoverable amount of the CGUs was determined based on value in use calculations using 5 year cash
flow projections and terminal value cash flows.
Key inputs used in the cash flow projections include but are not limited to the profitability of currently
contracted work, and the assumed value, probability, and timing of securing currently uncontracted projects.
Changes in these inputs may have an impact on the cash flow projections.
Consideration has been given below as to whether any reasonably possible changes to key assumptions may
result in an impairment arising.
1.
USA Shipbuilding
The recoverable amount of the USA Shipbuilding CGU was assessed and the Company concluded that
the recoverable amount of the CGU is greater than its carrying value, as during FY2023 there were
multiple shipbuilding awards replenishing the order book. The OPC and T-AGOS awards evidence
continued demand from the US Coast Guard and US Navy respectively. Consequently no impairment
is required as a result of this analysis. There is no goodwill in the USA Shipbuilding CGU.
Further disclosure in relation to the USA Shipbuilding CGU impairment assessment is shown below in
the significant accounting judgement and estimates section.
Austal Limited | Notes to the consolidated financial statements 99
2.
USA Support
The recoverable amount of the USA Support CGU was assessed and the Company concluded that the
recoverable amount of the CGU is greater than its carrying value, due to the expansion of the
San Diego operations which were established in December 2021 and increased capacity to conduct
support activities in Singapore post COVID-19. Consequently no impairment is required as a result of
this analysis.
Further disclosure in relation to the USA Support CGU impairment assessment is shown below in the
significant accounting judgement and estimates section.
3.
Australasia Shipbuilding
In its assessment for indicators of impairment as at 30 June 2023, the Company concluded that a
trigger was present within the Australasia Shipbuilding CGU due to the lack of of new vessel awards in
FY2023.
The recoverable amount of the Australasia Shipbuilding CGU was assessed, and the Company
concluded that the recoverable amount of the CGU is greater than its carrying value.
Key factors supporting this conclusion are the likelihood of further defence contracts arising following
the release of Navy’s Surface Combatant Fleet Review expected early FY2024 and commercial
shipbuilding awards that are expected to arise as a result of the increased demand in the commercial
shipbuilding market which has been observed from order enquiries and independent market
assessments. Consequently no impairment is required as a result of this analysis. There is no goodwill
in the Australasia Shipbuilding CGU.
Impairment sensitivity:
It was identified that failure to secure further commercial and defence shipbuilding contracts in
FY2024 beyond completion of the Guardian–class Patrol Boats and Cape-class Patrol Boats 11 – 18
would result in an impairment.
Further disclosure in relation to the Australasia Shipbuilding CGU impairment assessment is shown
below in the significant accounting judgement and estimates section.
4.
Australasia Support
In addition to the impairment trigger identified due to the presence of the market capitalisaton
deficit, an annual impairment assessment is also required as goodwill has been allocated to the CGU.
The recoverable amount of the Australasia Support CGU was assessed and the Company concluded
that the recoverable amount of the CGU is greater than its carrying value, assuming current contracts
continue to be extended. Consequently no impairment is required as a result of this analysis.
Further disclosure in relation to the Australasia Support CGU impairment assessment is shown below
in the significant accounting judgement and estimates section.
100 Austal Limited | Notes to the consolidated financial statements
V
Significant accounting judgement and estimates
1.
Recoverable amount of the CGU
The following table sets out the key assumptions used to assess the recoverable amounts in the USA
Shipbuilding, USA Support, Australasia Shipbuilding and Australasia Support CGUs:
Concept
USA
Shipbuilding
Assumption
USA
Support
Assumption
Australasia
Shipbuilding
Assumption
Australasia
Support
Assumption
Growth assumptions
Contract awards
Contract awards
Contract awards
Contract awards
EBIT margin
Commercial in
Confidence
Commercial in
Confidence
Commercial in
Confidence
Commercial in
Confidence
Perpetuity growth rate
Post tax discount rate
Average inflation on costs
2.5%
9.5%
3.2%
2.5%
9.5%
3.2%
0.0%
9.5%
4.0%
0.0%
9.5%
4.0%
2.
Growth assumptions
Growth assumptions are based on future vessel construction and service projects (awarded and
uncontracted). The assumptions are based on historical experience of the size of the vessel that
customers typically contract and the corresponding average tender pricing. The CGUs growth
assumptions are underpinned by the following:
USA Shipbuilding - continued demand from the US Coast Guard and US Navy.
USA Support - the expansion of the San Diego operations and increased capacity to conduct support
activities in Singapore post COVID-19.
Australasia Shipbuilding - the likelihood of further defence contracts arising following the release of
Navy’s Surface Combatant Fleet Review and commercial shipbuilding awards that are expected to
arise as a result of the increased demand in the commercial shipbuilding market.
Australasia Support - current contracts for which it is assumed they continue to be extended.
3.
EBIT margin
EBIT margins were based upon historical averages adjusted for prevailing economic conditions and
forecasts. These have not been disclosed as they are considered to be commercially sensitive.
4.
Perpetuity growth rate
Austal has taken a conservative view and included a 0% (FY2022: 0%) perpetuity growth rate in
Australasia and a 2.5% (FY2022: N/A) perpetuity growth rate in USA in its calculation of the terminal
value.
5.
Post tax discount rate
Discount rates are determined with regards to the risks specific to each CGU, taking into
consideration the location, time value of money and individual risks of the underlying assets that have
not been incorporated in the cash flow estimates.
Austal has adopted a post tax discount rate of 9.5% (FY2022: 9.3%) for the USA and Australasian
CGUs.
Austal Limited | Notes to the consolidated financial statements 101
6.
Inflation on costs
Estimates are obtained from published indices for the countries from which materials are sourced,
as well as data relating to specific commodities. Forecast figures for a period of 10 years are used if
data is publicly available, otherwise historical material price movements are used as an indicator of
future price movements.
As a result of the impairment assessments performed for each of the CGUs as detailed above, no
impairment was required as at 30 June 2023.
Marine Group Boat Works (MGBW) asset purchase
Austal USA acquired assets and leases through an asset acquisition from Marine Group Boat Works (MGBW)
on 15 December 2021.
The right of use asset and corresponding lease liability at acquisition was valued at US$38.7 million. The
right of use asset included a commitment of US$13.3 million to capital investments within the first five
years of the lease. The IBR of 5.15% was determined and applied to opening balances. The lease had a
duration of 29 years to November 2050.
The purchase consideration of US$33.5 million was separately assigned to the net book value of the
property, plant & equipment acquired of US$0.5 million and an additional right of use asset of
US$33.0 million. The additional right of use asset was associated with the future economic benefits which
the lease will provide in the expansion of Austal USA’s Support business. The additional right of use asset is
being depreciated on a straight-line basis over the term of the lease. There is no corresponding lease liability
for this additional right of use asset as it represents the purchase consideration paid.
Please refer to 30 June 2022 Annual Report for further information.
Investments and other financial assets
I
Net carrying amount
Other financial assets
Collateral 1
Security deposits
Total
2023
$’000
2022
$’000
14,994
1,295
16,289
14,025
908
14,933
1. Austal USA has a legal obligation to provide cash collateral to ensure that workers' compensation claims will be paid if they are upheld.
II
Recognition and measurement
The Group classifies its financial assets in the following measurement categories:
Financial Assets to be measured subsequently at fair value (either through Other Comprehensive
Income, or through the Profit and Loss); and
102 Austal Limited | Notes to the consolidated financial statements
Financial Assets to be measured at amortised cost.
The Group measures a financial asset at initial recognition at its fair value plus transaction costs that are
directly attributable to the acquisition of the financial asset in the case of a financial asset not measured
at fair value through the Profit and Loss.
The Group subsequently measures derivative financial instruments at fair value. Gains and losses on
derivative financial instruments that do not qualify for hedge accounting are recognised in the
Profit and Loss for the period. The effective portion of any change in the fair value of a derivative financial
instrument designated as a cash flow hedge is recognised in Other Comprehensive Income and presented in
the Cash Flow Hedge Reserve in equity. Amounts recognised in equity are reclassified from reserves into the
cost of the underlying transaction and recognised in the Profit and Loss when the underlying transaction
affects the Profit and Loss. The ineffective portion of any change in the fair value of the instrument is
recognised in the Profit and Loss immediately. Where a derivative financial instrument is designated as a fair
value hedge, changes in the fair value of the underlying asset or liability attributable to the hedge risk, and
gains and losses on the derivative financial instrument, are recognised in the Profit and Loss for the period.
Collateral in the statement of financial position comprises collateral deposits with an original maturity of one
year or more. Collateral and security deposits are classified as receivables and measured at amortised cost.
Other non-current assets
I
Net carrying amount
Research and development credits
Recognised
USA
Total
Unrecognised
Australia
Total
2023
$’000
2022
$’000
-
-
-
-
14,089
14,089
18,983
18,983
II
Recognition and measurement
All USA R&D credits that were generated have been utilised to partially offset the FY2023 income tax
liability and hence there are no carried forward R&D credits as at 30 June 2023.
III
Unrecognised R&D credits
A non-current asset has not been recognised in relation to $14.1 million (FY2022: $19.0 million) of carry
forward R&D tax credits that have been generated in the Australian Consolidated Tax Group because there is
sufficient uncertainty in the Group’s ability to utilise these in the short term. The Group will continue to
assess the recognition criteria against the probability of future taxable profits.
Austal Limited | Notes to the consolidated financial statements 103
Financial risk management
Financial risk management
This note explains the Group’s exposure to financial risks and how these risks could affect future financial
performance. Current year Profit and Loss information has been included where relevant to add further context.
Risk
Exposure arising from
Market risk - interest rate
Long-term borrowings at variable rates
Market risk - interest rate
Cash, trade receivables and derivative financial
instruments
Market risk - foreign currency
Credit risk
Liquidity
Future commercial transactions and
recognised financial assets and liabilities not
denominated in the functional currency
Cash, short term deposits, trade receivables
and derivative financial instruments
Monitoring
Sensitivity analysis
Sensitivity analysis
Cash flow forecast,
Sensitivity analysis
Ageing analysis,
Credit ratings
Management
Sustainable gearing levels
across business cycles
Excess cash invested in
high-interest deposit accounts
Forward foreign exchange
contracts and forward currency
options
Monitoring of credit allowances
Borrowings, trade payables and derivative
financial instruments
Rolling cash flow forecasts
Availability of committed credit
lines and borrowing facilities
Objectives and policy
The objective of the Group’s financial risk management policy is to reduce the impacts of external threats to
the Group and to afford the opportunity to seek further investments.
Ultimate responsibility for identification and control of financial risks rests with the Board of Directors. The Board
reviews and agrees policies for managing each of the risks identified below, including hedging cover of foreign
currency, credit allowances and future cash flow forecast projections.
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis
of measurement and the basis on which income and expenses are recognised, in respect of each class of financial
asset, financial liability and equity instrument are disclosed in the relevant notes to the financial statements.
I
Market risk
Market risk is the risk that changes in interest rates and foreign exchange rates will affect the Group’s
earnings, cash flows and carrying values of its financial statements.
1.
Interest rate risk
Source of risk
The Austal Group is exposed to interest rate risk from changes in interest rates on its outstanding
borrowings, derivative instruments and investments from the possibility that changes in interest rate
risk will affect future cash flows or the fair value of financial instruments.
Risk mitigation
The cash, debt and bank covenants of the Group are monitored and re-forecasted on a monthly basis
in order to monitor interest rate risk. A variable interest rate policy is maintained to ensure repayments
are carried out as soon as practicable, where fixed interest rates are less flexible. Consideration is
given to potential renewal of existing positions and alternative financing structures.
104 Austal Limited | Notes to the consolidated financial statements
Exposure
The Group had the following exposures to interest rate risk at the end of the reporting period:
Financial assets
Cash and cash equivalents
Derivative contracts
Total
Financial liabilities
Interest bearing liabilities
Derivative contracts
Total
Net exposure
Sensitivity
2023
$’000
2022
$’000
179,201
1,445
240,113
5,899
180,646
246,012
(129,499)
(1,484)
(124,515)
(2,318)
(130,983)
(126,833)
49,663
119,179
Profit and Loss is sensitive to higher or lower interest income from cash and cash equivalents and
interest expenses on borrowings as a result of changes in interest rates. There would be no material
impact on other components of Equity as a result of changes in interest rates.
The following table demonstrates the sensitivity to a reasonable change in interest rates to the Profit
and Loss after tax. A normal level of volatility has been assessed as 100 basis points and the
sensitivity below has been calculated on that basis.
Post tax gain / (loss)
+1.00% (100 basis points)
-1.00% (100 basis points)
2023
$’000
2022
$’000
396
(396)
1,352
(1,352)
The sensitivity analysis assumes that the change in interest rates is effective from the beginning of
the financial year and the balances are constant over the year.
2.
Foreign currency risk
Source of risk
The Group is exposed to currency risk on sales, purchases or components for construction that are
denominated in a currency other than the respective functional currencies of the Group entities,
primarily Australian Dollars (AUD) for the Australia operations and US Dollars (USD) for the USA,
Philippines and Vietnam operations. The Group is also exposed to foreign exchange movements
(primarily in USD) on the translation of the earnings, assets and liabilities of its foreign operations.
The Group’s transactions are primarily denominated in USD, AUD and EUR.
Austal Limited | Notes to the consolidated financial statements 105
Risk mitigation
The Group’s objective is to minimise the risk of a variation in the rate of foreign exchange used to
convert foreign currency revenues and expenses and assets or liabilities to the functional currency of
each Group entity by utilising the following techniques:
Negotiation of contracts to adjust for adverse exchange rate movements.
Using natural hedges.
Using financial instruments, such as foreign currency exchange contracts and swaps.
Exposure
The Group’s financial assets and liabilities exposed to foreign currency risk at 30 June 2023 were:
Balance 30 June 2023
Financial assets
Cash and cash equivalents
Trade and other receivables
Derivatives
Total
Financial liabilities
Trade and other payables
Derivatives
Total
Balance 30 June 2022
Financial assets
Cash and cash equivalents
Trade and other receivables
Derivatives
Total
Financial liabilities
Trade and other payables
Derivatives
Total
All values are stated in AUD equivalent
AUD
$’000
USD 1
$’000
EUR 2
$’000
Other
$’000
Total
$’000
148
-
-
148
(150)
(603)
(753)
268
-
1,015
1,283
(185)
(19)
(204)
8
-
221
229
-
(742)
(742)
1,089
2,002
209
3,300
(438)
(120)
(558)
1,513
2,002
1,445
4,960
(773)
(1,484)
(2,257)
All values are stated in AUD equivalent
AUD
$’000
USD 1
$’000
EUR 2
$’000
Other
$’000
Total
$’000
255
-
-
255
(5)
(836)
(841)
1,599
-
1
1,600
32
-
5,769
5,801
(9)
(4)
(7)
(1,131)
(13)
(1,138)
1,590
692
129
2,411
(523)
(347)
(870)
3,476
692
5,899
10,067
(544)
(2,318)
(2,862)
1. Spot USD / AUD exchange rate at 30 June 2023 was 0.6666 (30 June 2022: 0.6901).
2. Spot EUR / AUD exchange rate at 30 June 2023 was 0.6108 (30 June 2022: 0.6582).
106 Austal Limited | Notes to the consolidated financial statements
Sensitivity
A 10 per cent strengthening or weakening of the Australian Dollar against the following currencies
would have increased / (decreased) net profit after tax and equity below at balance date with all other
variables held constant as illustrated:
NPAT higher / (lower)
Equity higher / (lower)
2023
$’000
2022
$’000
2023
$’000
2022
$’000
Judgement of reasonable possible movements
USD / AUD - 10% lower
USD / AUD - 10% higher
EUR / AUD - 10% lower
EUR / AUD - 10% higher
4,590
(3,756)
372
(305)
2,240
(1,832)
333
(273)
227,871
(188,313)
393
(321)
188,053
(155,425)
(3,258)
2,666
1. Spot USD / AUD exchange rate at 30 June 2023 was 0.6666 (30 June 2022: 0.6901).
2. Spot EUR / AUD exchange rate at 30 June 2023 was 0.6108 (30 June 2022: 0.6582).
The foreign currency translation of USD denominated net assets would have significantly affected the
equity at the reporting date. The Group had US$675.8 million of USD denominated net assets at 30
June 2023 (FY2022: US$483.4 million).
Summary of forward foreign exchange contracts
The following table summarises the AUD equivalent value of the forward foreign exchange agreements
by currency. Foreign currency amounts are translated at rates current at the reporting date.
The ‘Buy’ amounts represent the AUD equivalent of commitments to purchase foreign currencies, and
the ‘Sell’ amounts represent the AUD equivalent of commitments to sell foreign currencies.
2023
2022
Buy
Sell
Buy
Sell
Average
Forward
Rate
AUD
Equivalent
$'000
Average
Forward
Rate
AUD
Equivalent
$'000
Average
Forward
Rate
AUD
Equivalent
$'000
Average
Forward
Rate
AUD
Equivalent
$'000
USD
Buy USD
(Sell USD)
Buy USD
(Sell USD)
less than 3 months
3 - 12 months
> 12 months
0.7011
0.6819
0.6680
Total
EUR
20,213
3,521
302
24,036
0.7316
0.6990
0.6868
(6,372)
(7,086)
(16,566)
(30,024)
0.7102
0.7307
-
12,491
12,789
-
25,280
0.7366
0.7391
0.7310
(471)
(15,581)
(4,769)
(20,821)
Buy EUR
(Sell EUR)
Buy EUR
(Sell EUR)
less than 3 months
3 - 12 months
> 12 months
0.6212
0.5940
0.6098
Total
0.6241
0.6314
0.6056
3,143
6,331
8,517
17,991
(2,813)
(70)
(541)
(3,424)
0.5714
0.5846
0.5616
0.5987
0.5983
0.6313
177
3,331
2,628
6,136
(11,089)
(43,756)
(298)
(55,143)
Austal Limited | Notes to the consolidated financial statements 107
II
Credit risk
Credit risk is the risk of financial loss to the Group as a result of customers or counterparties to financial
assets failing to meet their contractual obligations.
1.
Source of risk
The Group is exposed to counterparty credit risk from trade and other receivables and financial
instrument contracts that are outstanding at the reporting date.
2.
Risk mitigation
Trade receivables
The Group only trades with recognised, creditworthy third parties. The Group’s policy is that all
customers who wish to trade on credit terms are subject to credit verification procedures, which are
conducted internally. The Group, while exposed to credit related losses in the event of
non-performance by counterparties to financial instruments, does not expect counterparties to fail to
meet their obligations given their credit ratings.
The Group minimises concentrations of credit risk and the risk of default of counterparties in relation
to cash and cash equivalents and financial instruments by spreading them amongst a number of
financial institutions.
Vessel sales contracts are structured to ensure that the Group is paid milestone progress payments
from the client to cover the ongoing cost of the vessel construction.
Financial instruments
The Group’s policy is to minimise the risk that the principal amount will not be recovered and the risk
that funds will not be available when required whilst at the same time obtaining the maximum return
relative to the risk. The Group’s policy is to restrict its investment of surplus cash funds to financial
institutions with a Standard and Poor’s credit rating of at least A-2, and for a period not exceeding
3 months to manage this risk. The Group is able to undertake investments in short term deposits to
achieve this objective.
Other financial assets
The Group’s exposure to counterparty credit default risk arising from the other financial assets of the
Group, which comprise cash and cash equivalents and certain derivative instruments, is equal to the
carrying amount of these instruments. The maximum exposure to credit risk at the reporting date is
disclosed in Note 15.
Cash and term deposits are predominantly held with three tier-one financial institutions which are
considered to be low credit risk.
III
Liquidity risk
Liquidity risk is the risk that the Group is not able to refinance its debt obligation or meet other cash outflow
obligations when required.
1.
Source of risk
Exposure to liquidity risk derives from the Group’s operations and from the external interest bearing
liabilities that it holds.
2.
Risk mitigation
The liquidity position of the Group is managed to ensure sufficient liquid funds are available to meet
financial commitments in a timely and cost-effective manner.
The Group’s policy is to continually review the Group’s liquidity position including cash flow forecasts
to determine the forecast liquidity position and maintain appropriate liquidity levels.
Critical assumptions include input costs, project pipeline, exchange rates and capital expenditure.
108 Austal Limited | Notes to the consolidated financial statements
The Group aims to hold a minimum liquidity buffer of $60 million between cash on hand and
undrawn non-current committed funding to meet any unforeseen cash flow requirements.
Further information relating to the Group’s committed finance facilities, including the maturity dates
of these facilities, is provided in Note 10 and Note 11.
3.
Exposure
The contractual cash flow and maturities of financial liabilities, including interest payments are as
follows:
Years to maturity
0 - 1
$’000
1 - 5
$’000
> 5
$’000
Total 1
$’000
Balance 30 June 2023
Derivative financial assets / (liabilities)
Outflow
Inflow
(40,615)
(18,290)
40,785
17,744
Net derivative financial assets / (liabilities)
170
(546)
(120,408)
-
-
(131,441)
(8,907)
(26,126)
(135,843)
(129,315)
(157,567)
(135,843)
(422,725)
Years to maturity
0 - 1
$’000
1 - 5
$’000
> 5
$’000
Total 1
$’000
-
-
-
-
-
-
-
-
-
-
(58,905)
58,529
(376)
(120,408)
(131,441)
(170,876)
(79,464)
83,608
4,144
(127,942)
(125,211)
(198,706)
(127,942)
-
-
(125,211)
(8,717)
(30,712)
(159,277)
(136,659)
(155,923)
(159,277)
(451,859)
Non-derivative financial liabilities
Trade and other payables
Go Zone Bond facility
Lease liabilities
Total
Balance 30 June 2022
Derivative financial assets / (liabilities)
Non-derivative financial liabilities
Trade and other payables
Go Zone Bond facility
Lease liabilities
Total
1. Contractual cash flows include interest.
Outflow
Inflow
(73,754)
78,531
(5,710)
5,077
Net derivative financial assets / (liabilities)
4,777
(633)
The Group had $50.0 million (FY2022: $50.0 million) of unused cash loan credit facilities available
for immediate use at the reporting date and $179.2 million (FY2022: $240.1 million) in cash and
cash equivalents, which can be used to meet its liquidity needs.
Austal Limited | Notes to the consolidated financial statements 109
IV
Offsetting financial instruments
The Group presents its assets and liabilities on a gross basis. Derivative financial instruments entered into by
the Group are subject to enforceable master netting arrangements such as the International Swaps and
Derivatives Associations (ISDA) master netting agreement. All outstanding transactions under an ISDA
agreement are terminated in certain circumstances, for example, when a credit event such as a default
occurs. The termination value is assessed and only a single net amount is payable in settlement of all
transactions.
The amounts set out in the liquidity risk table represent the derivative financial assets and liabilities of the
Group that are subject to those arrangements and are presented on a gross basis.
Derivatives and hedging
I
Cash flow hedges
The effective portion of any change in the fair value of a derivative financial instrument designated as a
hedge of cash flows relating to a highly probable forecast transaction (income or expense) is recognised in
Other Comprehensive Income and presented in the Cash Flow Hedge Reserve in equity. The ineffective
portion of any change in the fair value of the instrument is recognised in the Profit and Loss immediately.
II
Fair value hedges
Where a derivative financial instrument is designated as a fair value hedge, changes in the fair value of the
underlying asset or liability attributable to the hedged risk, and gains and losses on the derivative
instrument, are recognised in the Profit and Loss for the period.
III
Fair value through profit and loss
Gains and losses on derivative financial instruments that do not qualify for hedge accounting are recognised
in the Profit and Loss for the period.
IV
Financial liabilities
Loans, overdrafts, and trade and other payables are measured at amortised cost, except where fair value
hedge accounting is applied.
110 Austal Limited | Notes to the consolidated financial statements
Fair value measurements
I
Fair value
The value of the Group’s financial assets and liabilities is calculated using the following techniques
depending on the type of financial instrument as follows:
The fair value of financial assets and financial liabilities traded in active markets is the quoted market
price at the reporting date.
The fair value of forward exchange contracts is calculated using discounted cash flows, reflecting the
credit risk of various counterparties. Future cash flows are calculated based on the contract rate,
observable forward interest rates and foreign exchange rates. Adjustments for the currency basis are
made at the end of the reporting period.
The nominal value less expected credit losses of trade receivables and payables are assumed to
approximate their fair values due to their short term maturity.
1.
Fair value hierarchy
The table below analyses financial instruments carried at fair value by valuation method. The different
levels have been defined as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset
or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data.
Balance 30 June 2023
Financial assets
Derivatives
Financial liabilities
Derivatives
Balance 30 June 2022
Financial assets
Derivatives
Financial liabilities
Derivatives
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
-
1,445
-
1,445
-
(1,484)
-
(1,484)
-
5,899
-
5,899
-
(2,318)
-
(2,318)
2.
Fair value of financial assets and liabilities carried at amortised cost
Cash and cash equivalents, trade and other receivables, and trade and other payables are carried at
amortised cost which equals their fair value.
Interest bearing liabilities are carried at amortised cost and have a carrying value of $129.5 million
(30 June 2022: $124.5 million) which equals their fair value. Further information is provided in
Note 11.
Austal Limited | Notes to the consolidated financial statements 111
Unrecognised items
Commitments and contingencies
Capital commitments
Property, plant and equipment
Total
Guarantees
Bank performance guarantees1
Sureties
Total
2023
$’000
2022
$’000
(31,056)
(13,566)
(31,056)
(13,566)
(21,103)
(866)
(116,396)
(835)
(21,969)
(117,231)
1. The bank performance guarantees are secured by a mortgage over land and buildings and floating charges over cash, receivables,
work in progress that is not owned by customers and plant and equipment.
I
Commitments - Guarantees
Refer to Note 11 for information regarding performance guarantees.
II
Contingencies
The Group occasionally receives claims and writs for damages and other matters arising from its operations
in the course of its normal business. The Group entities may also have potential financial liabilities that
could arise from historical commercial contracts. No material losses are anticipated in respect of any of
those contingencies.
A specific provision is made where it is deemed appropriate in the opinion of the directors, otherwise the
directors deem such matters are either without merit or of such kind or involve such amounts that would not
have a material adverse effect on the results or financial position of Austal if disposed of unfavourably.
112 Austal Limited | Notes to the consolidated financial statements
Corporate investigations
As described in previous annual and half year reports and ASX announcements, the Company resolved civil legal
proceedings with ASIC in October 2022. The Group continues to engage with the US Department of Justice (DOJ)
and the Securities and Exchange Commission (SEC) regarding their respective investigations into alleged fraudulent
activities by former Austal USA personnel during 2013 – 2016 concerning Austal’s Littoral Combat Ship (LCS)
program.
Following their investigations, on 31 March and 1 April 2023 respectively the DOJ and SEC commenced formal
proceedings against 3 ex-employees of Austal USA.
According to the DOJ allegation, the 3 former employees:
“…agreed and schemed to make and cause others to make false and misleading statements about Austal USA’s
financial performance on the LCS program and Austal USA’s overall financial condition to defraud Austal Limited’s
shareholders and the investing public.”
The DOJ claims that the purpose of the scheme to defraud was:
“(a) to maintain and increase the share price of Austal Limited’s stock; and (b) to unjustly enrich [the 3 former
employees] and others through the continued receipt of compensation, stock and other benefits.”
As a result, Austal Limited reporting inaccurately overstated progress on the LCS contract. This was corrected by
the Company in July 2016.
In addition, the SEC’s indictment of the 3 individuals includes an allegation that the 3 former employees “aided
and abetted Austal’s misconduct by knowingly or severely recklessly providing substantial assistance to Austal’s
violations of the Exchange Act”. The sections of the Exchange Act referred to in the SEC indictment prohibit
individuals and companies that issue securities in the USA from engaging in fraudulent or deliberately misleading
behaviour.
While the SEC’s complaint and the DOJ’s indictment are each focused on the conduct of those employees, the
indictment documents also include reference to Austal USA and Austal Limited – in particular it is noted that the
SEC complaint includes the above claim that the 3 ex-employees aided and abetted Austal’s breach of the
Exchange Act. No indictments or charges have been made against either Austal Limited or Austal USA, however the
group is engaging with both the DOJ and the SEC to fully understand the nature of any potential allegations or
proceedings against either company, and to work constructively towards a negotiated outcome of same. As part of
this process, the group has and will continue to cooperate with both regulators in their proceedings against the
former employees. This has to date included the provision of many thousands of documents, volunteering personnel
for interviews and other responses to informal requests for information, and the presentation of specific material
sought principally by the DOJ to assist their investigations.
In addition to cooperating to the fullest extent practicable, the Company has undertaken, and continues, a
substantial overhaul of its internal compliance framework, particularly at Austal USA. This has involved the
appointment of recognised leaders in US compliance to reshape and enhance the Company’s compliance programs,
the introduction of substantial new practices and processes, and the appointment of dedicated and qualified full
time compliance professionals as part of Austal USA’s senior leadership team.
The Group is confident that the significant steps it has taken in enhancing its compliance framework and its
ongoing cooperation with both regulators will be taken into account in determining whether there are any potential
consequences arising from matters identified by the investigation in the US, as well as ensuring such
circumstances do not happen again.
Nevertheless, it is still possible that the US regulatory investigations could lead to civil or criminal proceedings
resulting in the application of penalties, damages, and/or possibly suspension or debarment from future
US Government contracts.
Although no indictments or charges have been made against Austal Limited or Austal USA at the current time,
typically the kinds of remedies available to the DOJ and SEC can include:
Non-prosecution agreements, deferred prosecution agreements or potentially seeking a plea of guilty by one
or more group companies to alleged offences;
The installation of a ‘monitor’ within the organisation (at the company’s cost) to oversee and ensure
compliance measures are adhered to, and reporting back to the DOJ on same; and
Austal Limited | Notes to the consolidated financial statements 113
The imposition of fines or penalties, which can also include a requirement for restitution of losses if these
have been sustained by shareholders. The extent of the fines or penalties are subject to many factors
including the DOJ sentencing guidelines which consider a number of quantitative and qualitative factors.
Given the range of potential remedies and outcomes, the Group is currently not able to determine the potential
magnitude of fines or penalties if any that may be levied or what other measures may be required as part of any
negotiated outcome, since the matter is still under discussion with regulators. As a result the Group is not in a
position to make any provision for such fines, penalties or other adverse outcomes at this stage. Any of these
potential outcomes could have a material adverse effect on the Group’s consolidated financial position, results of
operations, or cash flows.
Events after the balance date
I
Dividend proposed
An unfranked final dividend of 3.0 cents per share has been declared for FY2023 post 30 June 2023
(FY2022 final: 4.0 cents per share, unfranked).
II
Other
The Directors are not aware of any other significant events since the reporting date.
114 Austal Limited | Notes to the consolidated financial statements
The Group, management and related parties
Parent interests in subsidiaries
The consolidated financial statements include the financial statements of Austal Limited and the material
subsidiaries listed in the following table.
Unless otherwise stated, they have share capital consisting solely of ordinary shares that are held directly by the
group, and the proportion of ownership interests held equals the voting rights held by the group.
Company
Country of incorporation
Principal place of business
2023
2022
Equity Interest
Austal Ships Pty Ltd
Austal Muscat LLC1
Austal Service Darwin Pty Ltd
Austal UK Ltd
Austal Viet Nam Co Ltd
Austal Holdings Inc
Austal USA LLC
Austal USA Service LLC
Austal USA Advanced Technologies Inc
Austal Philippines Pty Ltd
Austal Lewek Hercules Inc
Austal Australasia Pty Ltd
Austal Cairns Pty Ltd
Austal Brisbane Pty Ltd
Australia
Oman
Australia
Australia
Oman
Australia
United Kingdom
United Kingdom
Vietnam
Vietnam
USA
USA
USA
USA
Australia
Philippines
Australia
Australia
Australia
USA
USA
USA
USA
Philippines
Philippines
Australia
Australia
Australia
100%
70%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
70%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
1. Austal Ships Pty Ltd owns 70% of the shareholdings in Austal Muscat LLC but consolidates 100% of profits less commission paid to the
minority interest holder.
Related party disclosures
Group policy is that all transactions with related parties are conducted on commercial terms and conditions.
No related party transactions occurred with the consolidated entity other than the remuneration of Directors and
KMP and the matters disclosed in this report.
Key management personnel (KMP) compensation
KMP Compensation
Short-term employee benefits
Post-employment benefits
Long term benefits
Share-based payments
Total
2023
$’000
2022
$’000
4,016
298
66
760
5,140
5,498
227
27
542
6,294
Detailed remuneration disclosures are provided in the Remuneration Report commencing on page 23.
Austal Limited | Notes to the consolidated financial statements 115
Share based payments
I
Performance rights
The following changes in performance rights took place during the year:
Balance at
Grant Year
30 June 2022
Granted
Vested
Forfeited
/ Lapsed
Balance at
30 June 2023
Expiry date
FY2021
FY2022
FY2023
Total
739,628
1,943,748
-
-
-
1,870,548
2,683,376
1,870,548
-
-
-
-
(739,628)
(218,052)
(128,130)
-
1,725,696
1,742,418
30 Jun 2023
30 Jun 2024
30 Jun 2025
(1,085,810)
3,468,114
The Board has the discretion to decide if performance rights will lapse or vest.
II
Service rights
The following changes in service rights took place during the year:
Balance at
Grant Year
30 June 2022
Granted
Vested
Forfeited
/ Lapsed
Balance at
30 June 2023
Expiry date
FY2020
FY2021
FY2022
FY2023
Total
298,110
365,332
581,472
-
1,244,914
-
-
-
584,520
584,520
-
-
-
-
-
(34,913)
(47,834)
(60,354)
(63,540)
263,197
317,498
521,118
520,980
30 Jun 2024
30 Jun 2025
30 Jun 2026
30 Jun 2027
(206,641)
1,622,793
Service rights were introduced in FY2020 to offer a long term incentive to non-KMP. Service rights have a
vesting period of 5 years. The only vesting criteria is fulfilment of the 5 year service period.
III
Recognition - equity settled transactions
The Group provides benefits to employees (including KMP) of the Group in the form of share-based
payments, whereby employees render services in exchange for shares or rights over shares (equity settled
transactions).
Equity settled benefits have been provided to senior management and Directors under the following plans in
the current and prior years:
The Long Term Incentive Plan (LTI Plan)
The Short Term Incentive Plan (STI Plan)
TFR share rights
No account is taken of any performance conditions, other than conditions linked to the price of the shares of
Austal Limited (market conditions) if applicable in valuing equity settled transactions.
116 Austal Limited | Notes to the consolidated financial statements
The cost of these equity settled transactions with employees is recorded by reference to the fair value at the
date at which they are granted. The cost of equity settled transactions is recognised, together with a
corresponding increase in equity, over the period in which the performance conditions are fulfilled, ending
on the date on which the relevant employees become fully entitled to the award (the vesting period).
The cumulative expense recognised for equity settled transactions at each reporting date until vesting date
reflects (i) the extent to which the vesting period has expired and (ii) the number of awards that will
ultimately vest in the opinion of the Directors of the Group. This opinion is formed based on the best
available information at the reporting date. No adjustment is made for the likelihood of market performance
conditions being met because the effect of these conditions is included in the determination of fair value at
grant date. The Profit and Loss charge or credit for a period represents the movement in cumulative expense
recognised as at the beginning and end of that period.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is
conditional upon a market condition. An expense is recognised as if the terms had not been modified.
An expense is also recognised for any modification that increases the total fair value of the share-based
payment arrangement, or is otherwise beneficial to the employee, as measured at the date of modification.
An equity settled award that is cancelled is treated as if it had vested on the date of cancellation, and any
expense not yet recognised for the award is recognised immediately, however, cancelled awards and new
awards are treated as if they were a modification of the original award if a new award is substituted for the
cancelled award and designated as a replacement award on the date that it is granted, as described in the
previous paragraph.
Shares in the Group held by the Employee Share Trust (EST) are classified and disclosed as Reserved Shares
and deducted from equity in the Statement of Changes in Equity. Further information relating to Reserved
Shares is provided in Note 13.
IV
Recognised share-based payment expenses
The expense recognised for share based payments during the year is shown in the table below:
Share-based payments expense
Expense arising from equity-settled share-based payment transactions
(2,442)
(2,850)
2023
$’000
2022
$’000
V
Significant accounting judgements and estimates
The Group is required to estimate the fair value of equity-settled share-based payment transactions with
employees at the grant date. Estimating the fair value requires determination of the most appropriate
valuation model which is dependent on the terms and conditions of the grant. This estimate also requires
determination of the most appropriate inputs to the valuation model including the expected life of the share
rights, volatility and dividend yield.
The Group has applied the Black Scholes option pricing model to estimate the fair value of the rights with
non-market based vesting conditions. A hybrid employee share option pricing model has been applied to
estimate the fair value of rights with market based vesting conditions.
Austal Limited | Notes to the consolidated financial statements 117
Parent entity information
Information relating to Austal Limited, the parent entity, is detailed below:
Balance sheet
Assets
Current
Non - current
Total
Liabilities
Current
Non - current
Total
Net assets
Equity
Contributed equity
Employee benefits reserve
Asset revaluation reserve
Cash flow hedge reserve
Retained earnings
Total
Income
Net profit after tax
Total comprehensive income
2023
$’000
2022
$’000
163,243
328,028
163,967
317,948
491,271
481,915
(8,482)
(6,602)
(11,239)
(1,275)
(15,084)
(12,514)
476,187
469,401
144,518
10,111
17,665
373
143,932
8,255
11,332
90
303,520
305,792
476,187
469,401
26,700
33,317
124,010
124,049
Austal Limited provides parent company guarantees in respect of contract performance by various members of the
Austal Group including Austal USA LLC, Austal Ships Pty Ltd, Austal Philippines Pty Ltd and
Austal Holdings Vietnam Pty Ltd.
118 Austal Limited | Notes to the consolidated financial statements
Directors’ declaration
I state in accordance with a resolution of the Directors of Austal Limited, that:
In the opinion of the Directors:
The financial statements and notes of the consolidated entity are in accordance with the
Corporations Act 2001, including:
Giving a true and fair view of the consolidated entity’s financial position at 30 June 2023 and of its
performance for the year ended on that date; and
Complying with Accounting Standards (including the Australian Accounting Interpretations) and
Corporations Regulations 2001.
The financial Statements and notes also comply with International Financial Reporting Standards as disclosed
in Note 2.
In the opinion of the Directors, there are reasonable grounds to believe that the consolidated entity will be able to
pay its debts as and when they become due and payable at the date of this declaration.
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 2023.
John Rothwell AO
Chairman
on behalf of the Board
31 August 2023
Austal Limited | Directors’ declaration 119
Independent audit report to the members of Austal
Limited
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Tower 2
Brookfield Place
123 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
Tel: +61 8 9365 7000
Fax: +61 8 9365 7001
www.deloitte.com.au
Independent Auditor’s Report to the members
of Austal Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Austal Limited (the “Company”) and its subsidiaries (the “Group”) which
comprises the consolidated statement of financial position as at 30 June 2023, the consolidated statement of profit and
loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement
of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of
significant accounting policies and other explanatory information, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
Giving a true and fair view of the Group’s financial position as at 30 June 2023 and of its financial performance
for the year then ended; and
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards
are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are
independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001
and the ethical requirements of the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial
report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the
directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial report for the current period. These matters were addressed in the context of our audit of the financial report
as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
120 Austal Limited | Independent audit report
Key Audit Matter
Revenue recognition
As disclosed in Note 4, Shipbuilding revenue
for the year ended 30 June 2023 was $1,218
million (USA Shipbuilding $998 million,
Australasia Shipbuilding $220 million – refer
Note 3).
Vessel construction revenues are recognised
over time as performance obligations are
fulfilled after assessing factors relevant to
each contract, including the following, as
applicable:
determining the stage of completion
and measurement of progress towards
satisfaction of performance obligations;
estimating total contract revenue and
costs, including the estimation of
contingencies, the most significant
elements of which relate to the
recognition of cost contingencies on the
LCS and EPF programs in USA
Shipbuilding;
determining the contractual
entitlement, and assessment of
customer approval of contract
modifications, variations, and
acceptance of claims; and
We focused on recognition of vessel
construction revenue as a key audit
matter due to the number and type of
estimation events over the course of a
contract life, the unique nature of
individual contract terms, and the high
level of judgement required in
estimating and accounting for cost
contingencies.
How the scope of our audit responded to the Key Audit Matter
Our audit procedures performed in relation to revenue recognition
included but were not limited to:
evaluating the design and implementation of controls in respect
of the underlying project costs and the recognition of revenue,
and testing the operating effectiveness of relevant controls;
holding discussions with key project managers on the risks and
opportunities in relation to certain individual contracts;
selecting a sample of contracts for testing based on a number of
quantitative and qualitative factors which indicate that a greater
level of judgement is required in recognising revenue, including
consideration of historical issues identified, variations and
claims, delay risk, high potential impact and high likelihood of
risk events and potential loss making contracts:
o obtaining an understanding of the contract terms and
conditions of relevant contracts to evaluate whether
these were reflected in the Group’s estimate of forecast
costs and revenue;
o testing a sample of costs incurred to date and agreeing
these to supporting documentation;
o testing contractual entitlement relating to contract
modifications, variations and claims recognised within
contract revenue to supporting documentation and the
underlying contracts;
o evaluating the probability of recovery of contract assets
by reference to the status of contract negotiations,
historical recoveries and other supporting
documentation;
o assessing the level of cost contingencies on the LCS and
EPF programs in USA Shipbuilding;
o evaluating the reasonableness of the future overhead
rates used in the estimation of costs in USA Shipbuilding
by comparing the overhead assumptions to actual
historic overhead rates, and the estimate of future
overheads based on future workload in the order book,
and consideration of normal production capacity;
o evaluating significant exposures to liquidated damages
for potential late delivery of vessels where relevant; and
o evaluating historical accuracy of forecasted costs to
complete by comparing actual performance to
forecasts.
We also assessed the adequacy of the relevant disclosures in the
financial statements.
Austal Limited | Independent audit report 121
In addition to the procedures outlined above associated with
Shipbuilding revenue, our incremental audit procedures performed in
relation to the T‐ATS onerous contract provision included but were not
limited to:
evaluating the design and implementation of controls in respect
of the calculation of the T‐ATS onerous contract provision;
utilsiing our internal engineering specialists to assist in:
o assessing the reasonableness of labour hours on
selected vessels based on project‐to‐date productivity
trends and comparison to historic data;
o assessing the reasonableness of forecast non‐labour
costs, and program risks and opportunities;
o assessing the reasonableness of the learning curve
assumption, by comparing it to historic actual data
across the LCS and EPF programs, and comparison
against external market data.
agreeing forecast hours per vessel to underlying program office
data, including quantifying the non‐recurring hours incurred on
the first vessel;
assessing the appropriateness of costs included in the onerous
contract provision, including direct costs, and an allocation of
other costs that relate directly to fulfilling the contract;
evaluating the reasonableness of future overhead rates used in
the onerous provision calculation by comparing the overhead
assumptions to actual historic overhead rates, and the estimate
of future overheads based on normal production capacity;
evaluating the probability of recovery of variable consideration
based on review of supporting documentation and by reference
to the underlying contracts;
evaluating external experts’ scope of work and assessing the
independence, competence and objectivity of experts used by
management;
assessing the probabilities allocated to various forecast loss
scenarios for reasonableness;
assessing the reasonableness of the discount rate applied, by
comparison to external data; and
testing the model for mathematical accuracy.
We also assessed the adequacy of the relevant disclosures in the
financial statements.
Towing, Salvage and Rescue Ship (T‐ATS)
onerous contract provision
As disclosed in Note 19, an onerous contract
provision of $122.8 million has been
recognised in relation to the T‐ATS contract
as at 30 June 2023.
The quantification of the onerous contract
provision requires significant judgement and
estimation including, but not limited to the
following matters:
identifying and quantifying the costs
that relate to the T‐ATS contract,
including not only the direct costs of
delivery, but also an allocation of other
costs that relate directly to fulfilling the
contract;
quantifying the non‐recurring hours /
costs associated with the first vessel in
the T‐ATS program;
estimating the assumed learning curve
associated with the construction of
subsequent vessels;
forecasting future labour and material
costs / rates;
identifying and quantifying program
risks and opportunities, including the
probability of recovery of variable
consideration;
assessing the probability of different
program loss outcomes which then
form the basis of the probability
weighted onerous contract provision;
and
estimating the appropriate discount
rate used to calculate the present value
of the cash flows.
The principal reasons
for the onerous
contract provision being a key audit matter
are the quantum of the onerous contract
loss, combined with the fact that there is a
significant level of judgement applied by the
Group in selecting the methodology and
arriving at the assumptions mentioned
above.
This, in turn, leads to a high degree of
auditor judgement and effort in performing
procedures and evaluating the Group’s
methodology, significant assumptions and
estimates.
122 Austal Limited | Independent audit report
Carrying amount of non‐current assets –
Australasia Shipbuilding
As at 30 June 2023, the carrying value of
intangible assets and property, plant and
equipment was $1,001 million as disclosed in
Notes 20 and 22.
Long lived assets in relation to the Australasia
Shipbuilding Cash Generating Unit (CGU) was
$98.5 million, which includes land & buildings
of $33.6 million which are carried at fair
value.
The Group prepared a value in use model to
assess the recoverable value of the CGU as a
whole.
This requires the Group to exercise
significant judgement, with key assumptions
including the level of uncontracted revenue
included in the forecast, assumptions
related to the value and timing of future
contract wins and forecast operating
margins.
Our procedures included, but were not limited to:
understanding the process that the Group undertakes to develop
the value in use model;
assessing historical forecasting accuracy by comparing actual
performance to budgets;
challenging the forecast revenue with consideration of:
o the value and timing of contracted work;
o the value, probability of win, and timing assigned to
securing forecast uncontracted work; and
o external industry data, where available.
in‐conjunction with our valuation specialists independently
calculating the discount rate;
evaluating the reasonableness of operating margins with
reference to past performance and knowledge of the business;
testing the value in use models for mathematical accuracy; and
performing sensitivity analysis on the forecast revenue,
operating margins, terminal growth assumptions and discount
rate.
We also assessed the adequacy of the disclosures in Notes 20, 22 and
23.
Other Information
The directors are responsible for the other information. The other information comprises the information included in
the Group’s annual report for the year ended 30 June 2023 but does not include the financial report and our auditor’s
report thereon.
Our opinion on the financial report does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial report or our knowledge obtained
in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are required to report that fact. We have nothing to
report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view
in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the
directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is
free from material misstatement, whether due to fraud or error.
Austal Limited | Independent audit report 123
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic
alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian
Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and
maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may
cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the
financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the
audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may
cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and
whether the financial report represents the underlying transactions and events in a manner that achieves fair
presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the financial report. We are responsible for the direction,
supervision and performance of the Group’s audit. We remain solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to
bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with the directors, we determine those matters that were of most significance in the
audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in
our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of such
communication.
124 Austal Limited | Independent audit report
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 23 to 46 of the Directors’ Report for the year ended 30
June 2023.
In our opinion, the Remuneration Report of Austal Limited, for the year ended 30 June 2023, complies with section
300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in
accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
DELOITTE TOUCHE TOHMATSU
David Newman
Partner
Chartered Accountants
Perth, 31 August 2023
Austal Limited | Independent audit report 125
Shareholder information
The following information was extracted from the Company’s share register at 30 June 2023:
Distribution of shares
Individual shareholding
1 - 1000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Total
Twenty largest shareholders
Number of
% of Total
shares
issued capital
Number of
holders
1,928,158
11,542,932
11,538,455
37,508,733
299,923,597
0.53%
3.19%
3.18%
10.35%
82.75%
3,666
5,161
1,824
1,863
105
362,441,875
100.00%
12,619
Rank
Shareholder
Number of
shares
% of Total
issued capital
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
Austro Pty Ltd
J P Morgan Nominees Australia Pty Limited
National Nominees Pty Ltd
BNP Paribas Nominees Pty Ltd
Onyx (WA) Pty Ltd
UBS Nominees Pty Ltd
Pacific Custodians Pty Limited
Ace Property Holdings Pty Ltd
Mr Gary Heys & Mrs Dorothy Heys
Mr Graham Wallace Ray
Mossisberg Pty Ltd
Mr Brenton Anthony Cook
Mr William Robert Chambers
Mr David Singleton
Lavinia Shipping Limited
Warbont Nominees Pty Ltd
Kenny Nominees (NT) Pty Ltd
Sandhurst Trustees Ltd
Total
Substantial shareholders
Rank
Shareholder
1
2
Tattarang Ventures Pty Ltd
Austro Pty Ltd
Total
Voting rights
132,274,496
41,755,834
32,761,692
28,284,935
14,162,874
11,661,734
5,600,000
3,108,029
2,486,808
2,460,000
2,044,670
1,616,704
1,518,100
1,031,000
1,000,000
970,000
841,061
827,144
777,881
560,142
36.50%
11.52%
9.04%
7.80%
3.91%
3.22%
1.55%
0.86%
0.69%
0.68%
0.56%
0.45%
0.42%
0.28%
0.28%
0.27%
0.23%
0.23%
0.22%
0.16%
285,743,104
78.84%
Number of
shares
% of Total
issued capital
71,073,651
32,761,692
19.61%
9.04%
103,835,343
28.65%
All ordinary shares issued by Austal Limited carry one vote per share without restriction.
126 Austal Limited | Shareholder information
Corporate governance statement and ESG report
The Company has elected to post its Corporate Governance Statement on its website in accordance with ASX Listing
Rule 4.10.3 along with its Environmental, Social and Governance Report (ESG Report).
The Corporate Governance Statement and ESG Report can be found at the following URL:
http://www.austal.com/corporategovernance
Corporate directory
Directors
Non-Executive Directors
Mr John Rothwell
Mrs Sarah Adam-Gedge
Mr Chris Indermaur
Mr Mick McCormack
Mr Lee Goddard
Executive Directors
Mr Paddy Gregg
Auditor
Deloitte Touche Tohmatsu
Brookfield Place, Tower 2
123 St Georges Terrace
Perth 6000
Australia
Company Secretary
Mr Adrian Strang
Registered office
100 Clarence Beach Road
Henderson 6166
Australia
Telephone: +61 8 9410 1111
Share registry
Link Market Services Limited
QV1 Building, Level 12
250 St Georges Terrace
Perth 6000
Australia
Telephone: +61 1300 554 474
ABN
73 009 250 266
Austal Limited | Corporate governance 127
Email: info@austal.com
Tel: +61 8 9410 1111
AUSTAL.COM
xxix
Austal Limited | Annual Report 2023