Good morning everybody and welcome to the 2026 full-year results call. I'm Paddy Gregg, the CEO at Austal, and I'm joined by our CFO, Christian Johnston.

We'll be presenting the same format as usual. I'll give the business overview and context while Christian focuses on the financial details and then I'll finish with the outlook as as I see it.

As always, we've planned to present for no more than 30 minutes to allow plenty of time for questions. FY '26 has been a year of significant strategic achievements for Austal, both in Australia and the US.

In Australia, the execution of the Strategic Shipbuilding Agreement has delivered a record-breaking Australasian order book with $5+ billion 12-year build program for the Landing Craft Medium and Landing Craft Heavy. Plus the general purpose frigate is a very real, valuable, and compelling future opportunity.

Our Australian operations have delivered a record result with EBIT more than doubling to $85 million, demonstrating the strength of our defense and commercial programs. As we announced 2 weeks ago, the group EBIT result was shaped by an accounting adjustment at Austal USA.

While our request for accelerated contractual relief was not agreed by the US Department of War at this stage, notwithstanding prior constructive engagement, we have proactively commenced the longer formal process to recover value on these contracts. Our position is supported by documented factual and contractual records that give us confidence in that outcome.

We took this change of approach to ensure maximum transparency and to actively facilitate Hanwha's due diligence on Austal USA. The receipt of an indicative, non-binding, and conditional proposal from Hanwha Defense USA to acquire Austal USA was a major development this year.

Austal has determined that it merits further evaluation, and we've approved Hanwha to undertake some due diligence to strengthen the certainty of any proposal. We're really pleased to see the revenue and employee numbers in both businesses are growing in line with the order book as programs come online.

The outlook in Australasia is truly exciting. A combination of a profitable and high-growth Austal Australasia, potential proceeds from the sale of Austal USA, will be carefully assessed as to whether that outcome provides the best value for shareholders.

It's certainly looking very interesting. For those of you who are who are looking at the presentation that we've uploaded, Austal at a glance.

We've got a couple of slides covering key facts. Just a summary overview of the business for anyone who doesn't know Austal.

Revenue has grown beyond $2 billion for only the second time in the company's history, a milestone that reflects the accelerating momentum across our operations. As many of we operate 5 shipyards in 4 countries, about 8 service centers, giving us the opportunity to design, build, and service ships and submarine modules.

We also operate the United States Navy's Additive Manufacturing Center of Excellence in Danville. What does our order book look like in ships?

We have about 75 ships under construction or scheduled, with approximately 64 under sustainment contracts. We can build in steel, we can build in aluminum, we can build ships, we can build submarine modules for both defense and commercial customers.

Our major customers include the United States Navy, the United States Coast Guard, Royal Australian Navy, Australian Border Force, and many commercial passenger ferry operators around the world. Importantly, we've continued to build the order book in Australia, which now stands at a record high.

A testament to the confidence our government partners place in Austal's capabilities. We have orders for some 32 ships in Australia and delivered 6 this year.

Employee headcount globally is is growing daily to make sure we service these contracts like the sub modules in the US with the opening of the Module Manufacturing Facility, and then the Strategic Shipbuilding Agreement in Australia for the Landing Craft Medium and Landing Craft Heavy contracts. The vast majority of our work is in the defense sector, and that will continue to grow relative to commercial.

We'll also see more balance between the US and Australian operations as the Australian shipbuilding revenue will more than double over the next 5 years. If we look at the FY '26 overview, turning to the financial highlights, I'm pleased to report these are presented with no qualification from our auditors that we had at half-year.

I talked about the record revenue of of over $2 billion is an 11% increase year-on-year. As I said, it's just the second time that we've surpassed that $2 billion mark.

Really driven by a successful ramp-up of the shipbuilding programs both in the US and Australasia, including meaningful progress on new defense contracts awarded under the Strategic Shipbuilding Agreement here in Australia. EBIT was finalized at a loss of $125 million as part of Austal USA's year-end closing adjustments, resolving the half-year audit qualification in the process.

As previously advised, the FY '26 result was largely driven by a one-time accounting adjustment on the US programs relating to contracts like T-ATS, AFDM, and and LCU. The adjustment reflects a conservative and prudent accounting approach to contractual claims, and Austal is actively advancing its formal recovery process with the US Department of War.

This EBIT position was partly counterbalanced by a record EBIT of $85 million in Australasia, up 49% on the prior year. It's important to touch on that figure.

Previously, our record EBIT in Australasia was $36 million, set last year. This year's EBIT is 137% higher than the prior year and a powerful signal of the extraordinary growth trajectory ahead for the Australian business.

We had an outstanding year for orders in Australia: the 18 Landing Craft Medium vessels at $1 billion, the 8 Landing Craft Heavy vessels at $4 billion. We also signed 4 Evolved Capes this year.

The signing of multiple Capes used to be big news, and I think it's just got lost in the size and scale of the landing craft, but excellent to see the aluminum program continuing for Australian Border Force. I was also in Japan a few weeks ago with the Commonwealth to commence the contract discussions with Mitsubishi Heavy Industries on Mogami, the general purpose frigate for Australia.

As that will see the first 3 vessels built in Japan with 8 here in Henderson. Last week, it was fantastic to host the Deputy Prime Minister following his announcement on the defense precinct and see that coming to life in line with the requirements for Landing Craft Heavy and then moving on into Mogami.

This is all about creating long-term value for shareholders. The order book at $16.5 billion secures revenue for years to come.

It's grown significantly in Australia following the signing of the Strategic Shipbuilding Agreement and the award of Landing Craft Medium and Landing Craft Heavy. The subs module production in the US is expanding with MMF3 coming online, and the commercial yards have got a solid order book and future potential for growth, particularly in the low-emissions space.

Cash was always projected to be lower than the half-year due to the value-creating capital investments to increase capability and capacity for future growth. Both the submarine Module Manufacturing Facility and the final assembly sheds for large steel ships are fully funded and in construction to support future growth.

You can see a progress photo of MMF3 in the investor pack, and achieving stage 1 opening in May ahead of schedule was really a fantastic achievement for our team in the US. We started using this facility almost immediately, with modules being moved in and starting construction in there in July.

The full facility should be completed by the end of the calendar year and is going to support over 1,000 jobs. We've already got about 500 people trained and and working on sub modules today.

We put a new slide in the pack this year around the Australasia business, really based on the significant growth that we're seeing, the signing of the Strategic Shipbuilding Agreement. We we really wanted to highlight the capabilities we have, how strong the performance improvement over recent years has been, and and there's a very exciting growth trajectory based on orders that we have placed, and the EBIT that's going to come with it.

I really look at years of revenue and EBIT growth coming on those contracts, which is incredibly exciting for the Australian business. With that, I'll hand over to Christian and he will talk a little bit more in detail about the financial highlights of this year's results.

Thank you, Paddy. It's my pleasure to present Austal's FY '26 performance highlights.

As Paddy mentioned, FY '26 has been a significant year for the group, marked by strong revenue growth, substantial strategic progress, and outstanding performance across our Australasian operations. Before I move into the details, the key message is that Austal delivered double-digit revenue growth of 11.3% with revenue exceeding $2 billion.

While ongoing discussions with our key US customers regarding contract alignment and recovery of additional scope have impacted reported earnings for the period, the underlying operational performance of the business, particularly within Australasia, has been exceptionally strong. Delivery performance remains at the core of Austal's success and reflects the dedication and expertise of our employees across the group.

Their commitment enabled the delivery of ships, submarine modules, sustainment activities, and additive additive manufacturing solutions to an expanding customer base around the world. Our balance sheet remains robust and continues to support significant investment in US shipbuilding infrastructure.

Importantly, we have maintained a strong cash position, providing the financial flexibility to execute on our substantial backlog and capture future growth opportunities. Turning to slide 8, group revenue increased 11.3% to over $2 billion, reflecting strong growth across the majority of our business segments and continued execution of our strategic priorities.

US Shipbuilding revenue increased 3.9%, driven by higher activity on the OPC, T-ATS, and submarine programs, more than offsetting the completion of the LCS and EPF programs. US Support revenue decreased 16.5%, reflecting changes in the operational deployment profile of the LCS fleet.

Despite the lower revenue contribution, the business remained focused on supporting customer requirements and maintaining strong operational performance. Australasia Shipbuilding delivered another outstanding year, with revenue increasing almost 80%.

This growth was driven by Austal's appointment as Western Australia's strategic sovereign shipbuilder, progress on the Landing Craft Medium and Landing Craft Heavy programs, completion of the Guardian-class program, ongoing work on the Cape program, and strong contributions from our shipbuilding operations in the Philippines and Vietnam. Australasia Support continued its positive growth trajectory, increasing revenue by 7.3%, supported by an expanding sustainment footprint and increased servicing requirements across a growing fleet base.

Turning to EBIT performance, FY '26 reflects both the strength of our operating businesses and the impact of unresolved contract matters within the US Shipbuilding segment. The standout performers were our Australasian operations, with Australasia Shipbuilding increasing EBIT by more than 130% and Australasia Support increasing EBIT by over 140% year-on-year.

Australasia Shipbuilding benefited from strong execution on the landing craft programs and increased activity across commercial shipbuilding operations in the Philippines and Vietnam. Australasia Support delivered substantial earnings growth through improved operational efficiency, disciplined project execution, and increased sustainment activity across both patrol boat and commercial fleet contracts.

The year-on-year performance across Australasia was particularly encouraging, with EBIT margins improving by 288 basis points in shipbuilding to 12.4% and 818 basis points in support to 14.7%, demonstrating both scale benefits and strong operational execution. In US Shipbuilding, revenue growth continued during the year.

However, the delay in finalizing contract restructuring arrangements impacted reported earnings for the segment. The US Support business delivered another solid result, generating EBIT of $22.2 million and maintaining a healthy margin of 9.2%.

Looking at the geographical mix of the group, the continued growth of Australasia is evident, with the region now contributing 32% of group revenue, highlighting the increasing diversification and strength of the overall business. The group's balance sheet reflects the strategic investments made to support long-term growth, particularly within our US operations.

During the year, property, plant, and equipment increased by approximately $270 million as we expanded our shipbuilding infrastructure and capability. Importantly, Austal finished the year with a strong balance cash balance of $312 million, providing significant liquidity and positioning the group to continue executing its capital investment program while supporting future operational growth.

FY '26 represented a significant year of investment with more than $320 million deployed into US infrastructure projects that will underpin future capacity and capability. Pleasingly, the group generated positive operating cash flow of $62 million, demonstrating the underlying cash-generating strength of the business.

I'll now hand back to Paddy.

Thanks, Christian. Strategic outlook from me before we open for questions.

So, 2027 for us is all about a commitment to return the business to profitability. We've got some contractual positions we we need to work through in the US, but as Christian's outlined, all other areas in in the United States are performing really well and both the US and Australia supported by really robust order book and outlook.

The Australian business has never been better positioned: long-term order book, a landmark strategic agreement that will provide decades of stability, growth, and value creation. Increasing defense [cough] excuse me, increasing defense expenditure in Austal's primary markets, being driven by heightened global security demand, is generating powerful and sustained tailwinds for Austal's core defense client base.

Austal is really well-positioned to capitalize on these dynamics through its diversified program base, strong order book, and ongoing investment in capability. The impressive order book at $16.5 billion continues to grow with the signing of the Strategic Shipbuilding Agreement and subsequent Landing Craft Medium and Landing Craft Heavy contracts.

This delivers greater contract diversity and deepening the operational base of our business. When I think about revenue and earnings, the Australasia business performance is ahead of expectations with continued growth expected into the medium and long-term outlook based on that order book full of government contracts.

Our USA focus is absolutely on return to profitability in shipbuilding contracts, and we're actively seeking to resolve those contractual matters. As previously announced, the Austal board and its advisers have carefully assessed the Hanwha conditional, non-binding, indicative proposal to acquire Austal USA and have determined that it absolutely merits further evaluation.

We've approved Hanwha to undertake due diligence, which is very proactively happening at the minute as we work with them. We're making significant and targeted capital investment in facilities to drive growth in both the US and Australia, including contractually covered investment in the common user facility here in Henderson for Landing Craft Heavy alongside government investment in the broader Henderson defense precinct.

As I said, fantastic to have the Deputy Prime Minister here last week making those announcements. When I look forward, we possess the order book, the capability, and momentum to significantly grow revenue and earnings for years to come.

Another very exciting time for Austal. Thank you for listening, and we will now open up for questions.

Hi, Paddy. Hi, Christian.

Good morning.

Morning, Sam.

Morning.

Can you please walk us through the timing of Hanwha's approach and the FY '26 onerous contract provisions? Specifically, when was Hanwha first made aware of the issues that led to the write-downs, and were these matters reflected in the information available to Hanwha when it submitted its initial proposal?

Thank you.

Thanks, Sam. Hanwha have been around for quite a long time.

We've had discussions with them probably some years ago that were were public around an overall company transaction. Getting to your point, we have been working very closely with them and, we have shared information with them, and part of that announcement about us cleansing the market on all contractual positions and their intentions was just trying to be as transparent as possible.

In short, Hanwha are well aware of all our contractual positions and and have been taken through those in the US.

Right, but just checking, they were across everything prior to them putting in the bid?

Correct.

Thank you.

Good morning, Paddy and Christian. Thanks for taking the questions.

Paddy, maybe just over in in the US first, just on the onerous contracts, I think everyone's pretty aware of the issues across the T-ATS program and the REA process that went through there, but do you mind just providing a little bit more color on the OPC, maybe any discussions that you've been having with Coast Guard, and maybe comparison versus involvement with the Department of War? Just any color you can give on that program and and how you see that being rectified will be great.

Thank you.

Sure. Coast Guard's slightly different position.

They've had some challenges with previous shipyards and, they've been in contract for OPCs for many years and and not taken delivery of any. Our conversations and negotiations with Coast Guard are really around putting certainty into that program and how do we accelerate the delivery of OPC vessels.

Maybe not an REA process, but maybe a sort of contract restructure as we work with them to put some certainty into that program and try and accelerate the delivery of of vessels for them.

Thank you. Just looking at the Australasia segment, obviously if if a bid formalizes, then that's clearly going to be the the key focus of growth.

Just in terms of the Landing Craft Heavy, it's obviously the most material part of the order book. Can you just talk to maybe the the risk profile of that of that program?

Is there any difference given that the design's actually already a proven design from Damen? Just trying to understand how that plays out and how investors should think about the risk profile of that going forward.

Thanks, guys.

Thanks, Mitch. Great question.

I I think there's less risk rather than more risk on that program because it is an existing design and the vessel has been built. We've worked very closely with Damen around support for that design, as-built drawings, jigs and fixtures, think things that we would normally have to go and develop have already been developed.

As part of that contract, they're happy to support us with people as well. People who've actually been through the design, the build, the commissioning.

At the relevant points in that program, we will be able to second them into Austal. Damen, great company.

We've worked with them a lot over the years, built some of their designs. There's a really there's a really good relationship there and I see reduced risk based on the fact it's a complete design and we've got a great working relationship with them.

Morning, gents. Can you hear me okay?

Loud and clear, David.

Morning, Paddy. Morning, Christian.

Look,

we've touched on Hanwha a couple of times. Your your gut feel on, I guess, how certain this deal will proceed?

Huh. A good good question.

I'll have to speculate, but let me talk you through what what I know. Hanwha have been interested for a very long time and and not gone away.

They are absolutely in due diligence and taking things very seriously. They have assembled a an A-team with relevant consultants from from each area.

They're throwing resources at this. That that costs money.

It it feels like there is support in the US from senior people in the Department of of War based on, what what we're reading and and the fact that this is public. They're a very credible shipbuilder.

They're very different to a private equity approach. They know exactly what they're looking at and, that they see our very modern facilities with a with a big order book and perhaps some of the efficiencies they can bring as a as a win for Austal shareholders, a win for warfighters in the US, a win for the United States.

We take it very seriously as we've opened up for due diligence and we've all gone public on this. There's there's great momentum behind it and a desire to do to do the right deal for everybody.

Right, okay. I'm on the basis that I think this deal will go ahead.

You're you're going to be an Australasian-focused business. Clearly, you've got a great order book.

The infrastructure effectively is going to be funded by the feds for the medium and heavies. Looking a wee bit further out, if you are successful in participating in the GPS and the LOSVs, how do you think about how you could potentially to fund the infrastructure required to get those contracts and those programs running?

It it is really interesting, and that's a that's a good line of thinking. If the sale of the US business did go through and and we had access to significant cash funds, investing that in our own shipyard and own facilities with the very long-dated order book maybe something that's incredibly attractive to us.

Having those funds available at a time whenever there's significant growth in Australasia would would be very helpful indeed.

I know I'm only allowed two, but this is part of that previous question. Given that you talk about a signing of the GPS in I think it's 2029, you've got a lot of cash potentially sitting on your balance sheet for a long time.

How are you going to think about that? Give it back in the [meantime as a dividend?]

or what?

We'd have we'd have to commence reasonably quickly to build the facilities. That that would take some time.

We're we're talking about hundreds of millions of dollars of investment to create the shipyard of the future that's that's ready for Mogami. I don't think there'd be a a huge pool of funds that just sit there doing nothing.

We'd want to try and deploy that as soon as possible if we were able to into into shipbuilding. If it's it's not facilities, we'd do what we normally do.

We'd we'd consider other opportunities for for growth, we'd consider working capital needs, and then we'd consider the potential for tax-efficient ways to make returns to shareholders.

Great. Thanks, guys.

Good morning. In the director's report on page 3, you make the comment, or the comment is made by the Chairman, that if the deal doesn't go ahead that with the onerous contracts on the business, you'll have to be very carefully managed.

You'll have to carefully manage the negotiations. What does he mean by carefully manage, and secondly, is the possibility of a further deterioration in those amounts?

Thank you.

I'll I'll take the second question first. We we've provided our best estimate of everything that will see these contracts through to completion, as we're required to by the the accounting standard.

We're not anticipating any further deterioration. I and I think careful negotiation in so much as, it's a it's a somewhat unusual situation that, we have some contractual challenges at the same time as Hanwha are trying to do the due diligence.

It's I think I think what Richard means is it's not quite as straightforward as if everything was rosy on the contracts. It would be much easier to to evaluate positions.

I, I think that's what he what he means in his remarks.

Thank you. Is there Are there any other contracts which may be subject to the same set of problems?

Not to our knowledge. We'd have to declare those if if we saw any problems.

Thank you for that then. Thank you very much.

Thanks.

Hi, again. There there's some talk that Hanwha is a done deal, but what would be the strategic arguments for saying no and retaining the US business?

I I think it would be shareholder value is is the, primary view that the board would take on any binding offer that Hanwha make. We'll we'll work with them and give them access to all the information they need to to make a firm proposal, and we'll assess that in the interest of shareholders.

That's clear. Then the Australian order book has grown from $0.7 billion to $5.6 billion in a year, and historically, shipbuilders often struggle when backlog growth exceeds organizational growth.

What evidence can you point to that suggests the organizational capability has expanded as quickly as the backlog here?

A good question. We we see it as a as a growth trajectory, really.

We had the ramping down of the Guardian-class patrol boats, and then we see the Landing Craft Medium contract ramping up. Landing Craft Medium is probably less complex than the Guardians that that the team were building.

I don't anticipate a a huge challenge there. The Cape-class boats continue.

We've we've built a lot of those, and and we know them very well. It's our design.

It's a very mature design, and that sort of gives us time as as the Landing Craft Heavy ramps up. Again, Landing Craft Heavy is a big ship, but not not necessarily hugely complex.

It doesn't come with weapons systems or combat systems that that are the the trickier bits of these ships to to build and commission. We we see it progressing over the next 4 or 5 years.

The way the programs were were bid and and worked with the government, it was around steady growth rather than a big step growth. We will need to recruit people over 3 years rather than we need 1,000 people tomorrow.

We've tried to be as sensible as possible whenever we've worked with the customer to align these programs in terms of programs coming off and and programs coming on to make sure that there's a a steady growth of people and capability in the business.

Right, and and then as these programs ramp up in Australia, what do you see is the biggest risk to maintaining margins? Is it labor, productivity, procurement, inflation, the the terms of the programs, or or something else?

No, probably a little bit of all of that, but, cer- certainly getting the people and making sure they are all trained up will be a challenge. We we will do it the same way we have always done it in so much as we're big believers in bringing people in at the bottom, training them up, whether that's graduates, apprentices.

Then then we know that they're specifically trained in in shipbuilding, they come with our culture from day one, and then promoting from within gives people an opportunity to advance their careers. I think the other key feature is, the government have done a fantastic job with continuous naval shipbuilding, and for the first time we can kind of offer people a career.

Whereas in the past, we've been successful in winning work every year or two to make sure that that there is continuity of employment. We we can genuinely look there today and say, we see 20 or 25 years of continuous work in front of us.

Bringing people in with that employment proposition is, we've never had a better employment proposition. That's why I think we'll be able to attract the people, retain them, train them, and give them some really exciting work opportunities.

How many people are you at now, and how many will you be at or need to have in 3 years?

We're just over 900 now, and, I think we'll need another 1,000 people over the next 3 or 4 years.

Excellent. Thank you.

I'd just like to thank everybody for their participation today. We've uploaded all the material online, you can have access to it.

Thanks for listening and thanks for the questions.