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 Johnstone.

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

And as always, we plan to present for no more than 30 minutes, so we'll have plenty of time for questions. So FY '26 has been a year of significant strategic achievements for Austal, both in Australia and the U.S.

In Australia, the execution of the strategic shipbuilding agreement has delivered a record-breaking Australasian order book with $5-plus billion, 12-year build program for the Landing Craft Medium and Landing Craft Heavy, plus the General Purpose Frigate is 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. And while our request for accelerated contractual relief was not agreed by the U.S.

Department of War at this stage, notwithstanding prior constructive engagement, we have proactively commenced a longer, formal process to recover value on these contracts and our position is supported by documented factual and contractual records that give us confidence in that outcome. And 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, nonbinding and conditional proposal from Hanwha Defense USA to acquire Austal USA was a major development this year. Austal is 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. And the outlook in Australasia is truly exciting.

The combination of a profitable and high-growth Austal Australasia and potential proceeds from the sale of Austal USA will be carefully assessed as to whether that outcome provides the best value for shareholders, but it's certainly looking very interesting. For those of you who are looking at the presentation that we've uploaded, Austal at a Glance.

We've got a couple of slides covering key facts to 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 you know, we operate our shipyards in 4 countries, 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 that order book look like in ships? So we have about 75 ships under construction or scheduled with approximately 64 (sic) [ 78 ] 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. And 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 continue to build the order book in Australia, which now stands at a record high, a testament to the confidence our government partners place on Austal's capabilities. We've ordered for some 32 ships in Australia and delivered 6 this year.

Employee headcount globally is growing to make sure we service these contracts like the subs modules in the U.S. 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 U.S.

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 over $2 billion is an 11% increase year-on-year. And as I said, it's just the second time that we've surpassed that $2 billion mark, really driven by successful ramp-up of shipbuilding programs, both in the U.S.

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.

And as previously advised, the FY '26 result was largely driven by a onetime accounting adjustment on the U.S. programs relating to contracts like T-ATS, AFDM 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 U.S. 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. So this year's EBIT is 137% higher than the prior year and a partial 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 and 8 Landing Craft Heavy vessels at $4 billion. We also signed 4 Evolved Capes this year.

The signing of multiple capes is big news, and I think it's just got lost in size and scale of the landing craft, but excellent, we see the aluminum program continuing for Australian Border Force. I was also in Japan a few weeks ago with the Commonwealth, commenced the contract discussions with Mitsubishi Heavy Industries on Mogami, the General Purpose Frigate for Australia.

And as you know, that will see the first 3 vessels built in Japan with 8 here in Henderson. And last week, it's fantastic to host the Deputy Prime Minister following the 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 U.S.

is expanding with MMF 3 coming online and the commercial yachts have got a solid order book and future potential for growth, particularly in the low emission space. Cash is 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 of MMF 3 in the investor pack and achieving Stage 1 opening in May ahead of schedule was a really fantastic achievement for our team in the U.S.

We started using this facility almost immediately with modules being moved in and starting construction in July. And the full facility should be completed by the end of the calendar year, and it's going to support over 1,000 jobs.

And we've already got about 500 people trained and working on subs 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 in the signing of the Strategic Shipbuilding Agreement.

We really wanted to highlight the capabilities we have, how strong the performance improvement over recent years has been, 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. So 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 11.2% with revenue exceeding $2 billion.

While ongoing discussions with our key U.S. 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 enables the delivery of ships, submarine modules, sustainment activities and additive manufacturing solutions to an expanding customer base around the world.

Our balance sheet remains robust and continues to support significant investment in U.S. 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. U.S.

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. U.S.

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 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 space. Turning to EBIT performance.

FY '26 reflects both the strength of our operating businesses and the impact of unresolved contract matters within the U.S. shipbuilding segment.

The standout performance was 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 U.S. shipbuilding, revenue growth continued during the year.

However, the delay in finalizing contract restructuring arrangements impacted reported earnings for the segment. The U.S.

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 balance sheet reflects the strategic investment made to support long-term growth, particularly within our U.S. 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 U.S. 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. And so strategic outlook from me before we open for questions.

So 2027 for us is all about our commitment to return the business to profitability. We've got some contractual positions we need to work through in the U.S.

But as Christian outlined, all other areas in the United States are performing really well and both the U.S. and Australia supported by a 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 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.

And Austal is really well positioned to capitalize on these dynamics with 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 U.S.A. focus is absolutely on return to profitability in the shipbuilding contracts, and we're actively seeking to resolve those contractual matters.

But as previously announced, the Austal Board and its advisers have carefully assessed the Hanwha conditional nonbinding indicative proposal to acquire Austal USA and have determined that it absolutely merits further evaluation, and 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 U.S.

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.

And as I said, fantastic to have the Deputy Prime Minister here last week making those announcements. So 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.

So thank you for listening, and we will now open up for questions.

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?

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

We've had discussions with them probably some years ago that were public around an overall company transaction. But 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 clearing the market on all contractual positions and their intentions was just trying to be as transparent as possible. So yes, in short, Hanwha is well aware of all our contractual positions and has been talking through those in the U.S.

Right. Just checking, they were across everything prior to them putting in the bid?

Correct.

Maybe just over in the U.S. first.

Just on the onerous contracts, I think everyone is 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 the Coast Guard and maybe comparison versus involvement with the Department of War.

Just any color you can give on that program and how you see that being rectified would be great.

Yes, sure. So Coast Guard slightly different position.

They've had some challenges with previous shipyards, and they've been in contract for OPCs for many years and not taking delivery of any. So 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.

So 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 vessels for them.

Yes. And just looking at the Australasian segment, obviously, if a bid formalizes, then that's clearly going to be 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 risk profile of that program? Is it any different given that the design is 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, Mitch. Yes, great question.

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

And as part of that contract, they're happy to support us with people as well. So people who have 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.

So Damen, a great company. We've worked with them a lot over the years, built some of their designs.

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.

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

Yes. Good question.

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

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

So they're throwing resources at this. That costs money.

It feels like there is support in the U.S. from senior people in the Department of War based on what we're reading and the fact that this is public.

They're a very credible shipbuilder. So they're very different to a private equity approach.

They know exactly what they're looking at. And they see our very modern facilities with a big order book and perhaps some of the efficiencies they can bring as a win for Austal's shareholders, a win for war fighters in the U.S., a win for the United States.

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

Great. Okay.

I'm on the basis that I think this deal will go ahead. So 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 little bit further out, if you are successful in participating in the GPFs and the LOSVs, how do you think about how you could potentially fund the infrastructure required to get those contracts and those programs running?

Yes, it is really interesting, and that's a good line of thinking. If the sale of the U.S.

business did go through and we had access to significant cash funds, investing that in our own shipyard and own facilities with the very long-dated order book may be something that's incredibly attractive to us. So yes, having those funds available at a time whenever there's significant growth in Australasia would be very helpful indeed.

I might add too, but this is part of the previous question. Given that you talk about a signing of the GPFs, 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...

Well, we have to commence reasonably quickly to build the facilities. That would take some time.

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

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

We consider other opportunities for growth. We weigh working capital needs and then we consider potential for tax efficient ways to make returns to shareholders.

In the directors' report on Page 3, you made the comment or comment by the Chairman that if the deal doesn't go ahead that with the onerous contract on the business, you have to be very carefully managed -- you have to carefully manage negotiations. First of all, what do you mean by carefully managed?

And secondly, is there possibility of further deterioration in those amounts?

Yes. So I'll take the second question first.

We've provided our best estimate of everything that we'll see these contracts through to completion as we're required to by the accounting standards. So we're not anticipating any further deterioration.

And I think careful negotiation in so much as it's a somewhat unusual situation that we have some contractual challenges at the same time as -- and we are trying to do the due diligence. So I think what Richard means is it's not quite as straightforward as if everything is rosy in the contract, it would be much easier to evaluate positions.

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

Okay. And are there any other contracts which may be subject to the same set of problems?

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

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

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

Okay. That's clear.

And then 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?

Yes, good question. So we see it as a growth trajectory really.

So we had the ramping down of the Guardian Class for 12 months, and then we see the Landing Craft Medium contract ramping up. Landing Craft Medium is probably less complex than the Guardians that the team we're building.

So I don't anticipate a huge challenge there. The Cape Class boats continue.

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

It's a very mature design. And that sort of gives us time as the Landing Craft Heavy ramps up.

But again, Landing Craft Heavy is a big ship, but not necessarily hugely complex. It doesn't come with weapon systems or combat systems that are the trickier bits of these ships to build and commission.

So we see it progressing over the next 4 or 5 years. And the way the programs were bid and worked with the government is around steady growth rather than a big step growth.

So we will need to recruit people over 3 years rather than we need 1,000 people tomorrow. So we've tried to be as sensible as possible whenever we work with the customer to align these programs in terms of programs coming off and programs coming on to make sure that there's a steady growth of people and capability of the business.

Right. And then as these programs ramp up in Australia, what do you see as the biggest risk to maintaining margins?

Is it labor productivity, procurement, inflation, the terms of the programs or something else?

Yes. No, probably a little bit of all of that.

But certainly getting the people and making sure they are all trained up will be a challenge. We will do it the same way we have always done it in so much as we're big believers in bringing people in the bottom, training them up, whether that's graduates, apprentices, then we know that they're specifically trained in shipbuilding.

They come with our culture from day 1 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. And whereas in the past, we've been successful in winning work every year or two to make sure that there is continuity of employment.

We can genuinely look there today and say we see 20 or 25 years of continuous work in front of us. So bringing people in with that employment proposition is -- we've never had a better employment proposition.

So 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.

So how many people are you at now? And how many will you be at or you need to have in 3 years?

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

I'd just like to thank everybody for their participation today. We've uploaded all the material online.

So you can have access to it. Thanks for listening, and thanks for the questions.