Summary of Nuix Shareholder / Analyst Call 13/11/24

1. Here are the 10 key points from the Nuix Shareholder / Analyst Call 13/11/24:
   1. Meeting Overview: The meeting was led by Nuix’s Chairman, Robert Mactier, who opened by acknowledging traditional land custodians and outlined the meeting agenda. The meeting was conducted in a hybrid format, allowing both in-person and online participation.
   2. Financial Performance (FY ’24): Nuix experienced substantial growth, including a 14% increase in Annualized Contract Value (ACV) to $211.5 million and a 20.9% rise in statutory revenue to $220.6 million. EBITDA showed significant growth, with underlying EBITDA up by 38.7% and statutory EBITDA up by 60.2%.
   3. Launch of Nuix Neo Platform: A major strategic highlight was the successful launch of the new AI-powered unified platform, Nuix Neo. This platform integrates solutions for data privacy, forensic investigations, and legal use cases, contributing $12.1 million to ACV growth in its first year.
   4. Operational Achievements: Nuix exceeded its financial and strategic objectives, achieving strong operational leverage by growing revenue faster than costs. The company reported positive cash flow, with a notable turnaround from a negative position in the previous year.
   5. U.S. Market Focus: Over half of Nuix’s revenue comes from the U.S. market. The Chairman’s visit to U.S. operations emphasized its strategic importance, with further expansion anticipated in the region.
   6. Leadership Changes: Chad Barton, the former COO and CFO, stepped down in August. Peter McClelland has been appointed as the new CFO, bringing extensive financial experience to the leadership team.
   7. AI Integration and Strategy: Nuix Neo leverages AI and machine learning, especially in natural language processing, to enhance data analysis capabilities. The company’s deep learning framework is positioned to capitalize on opportunities in generative AI.
   8. Shareholder Engagement: During the Q&A, shareholders expressed interest in the impact of Nuix Neo on financial performance, the company’s AI strategy, and the influence of U.S. political changes on business. The company reiterated its commitment to transparency and shareholder value.
   9. Macquarie Group’s Stake: Macquarie remains a key shareholder with a 29% stake in Nuix, valued at $758 million. The company confirmed that Macquarie is also a significant customer but receives no special treatment compared to other shareholders.
   10. Future Outlook for FY ’25: The company set ambitious targets for FY ’25, including 15% ACV growth, continued rollout of Nuix Neo, and maintaining positive cash flow. The focus will remain on operational efficiency and expanding AI capabilities.

Summary of Titomic 2024 Earnings Call 02/09/24

Here’s a summary of the ten most relevant points from the Titomic 2024 Earnings Call 02/09/24:

1. Technological Advancements: Titomic’s cold spray technology is proving transformative, offering significant advantages over traditional casting and forging, particularly for titanium, Inconel, and Invar components. This includes faster time-to-market, cost reductions, and enhanced sustainability through repair and recycling capabilities.
2. Industry Applications: The technology is making strong inroads in aerospace, defense, oil and gas, and railways. Notable projects include partnerships with Airbus for sustainable repair solutions and collaborations with companies like Woodside in oil and gas.
3. Revenue Streams: Titomic is generating revenue through machinery sales, powder sales, services, and consultancy. For example, Airbus has invested in equipment for aircraft repair, and the company has multiple streams in place for future growth.
4. Market Expansion Plans: The company plans to expand operations into the U.S. and Netherlands to meet growing demand, particularly in aerospace and defense. Strategic hiring in the U.S., including experts with Boeing and Raytheon experience, is expected to bolster market penetration.
5. Financial Highlights: Titomic reported $11.5 million in orders over 14 months, including $8 million in a recent six-month period. While FY2024 posted a loss of $11 million, strong sales growth and cost control measures have set the stage for improved financial performance in FY2025.
6. Competitor Landscape: Cold spray technology positions Titomic against traditional manufacturing methods like casting and welding, rather than other additive manufacturing players. The company believes it is two years ahead in expertise.
7. Sustainability and Efficiency: The cold spray process significantly reduces waste compared to traditional methods, saving up to 95% of material in some cases. Repair solutions for oil rigs and railways highlight the technology’s environmental benefits and cost efficiencies.
8. Strategic Partnerships and Customer Trust: Collaborations with high-profile clients like Airbus, Boeing, and KLM showcase trust in Titomic’s technology. Qualification processes for repair and manufacturing applications are underway, aiming for global rollouts.
9. Supply Chain and Geopolitical Considerations: The company sources titanium powders from non-restricted regions, including collaborations with U.S. suppliers, ensuring geopolitical compliance and reliability.
10. Outlook and Funding: The company is fully funded for FY2025 and expects continued growth in orders, partnerships, and global presence. Long-term plans include expanding production capacity and accelerating market penetration.

Otherwise, click HERE for a 10 point summary.

Here’s a summary of the ten most relevant points from the Neuren Pharmaceuticals Special Call 22/10/24:

1. Neuren’s Mission: Neuren Pharmaceuticals focuses on treating neurodevelopmental disorders caused by genetic abnormalities that severely impact basic functions such as walking, talking, and eating. The goal is to address syndromes holistically by improving brain connectivity rather than targeting individual symptoms.
2. Two-Drug Approach: Neuren has two drugs in its portfolio:
   • Trofinetide (DAYBUE): Approved for Rett syndrome and marketed in the U.S. by Acadia Pharmaceuticals.
   • NNZ-2591: Completed Phase II trials for three syndromes (Phelan-McDermid, Pitt Hopkins, and Angelman), showing significant promise.
3. Orphan Drug Benefits: Neuren targets orphan drug indications with favorable pricing, regulatory pathways, and exclusivity periods (7.5 years in the U.S., 12 years in Europe, 10 in Japan), offering strong commercial protection.
4. Financial Strength: Neuren achieved a maiden profit of $157 million in 2023, with more than $200 million in cash reserves. Revenues are underpinned by royalties and milestones from DAYBUE sales, providing a solid foundation.
5. U.S. Market Success: DAYBUE became the first approved treatment for Rett syndrome, generating USD 177 million in sales within nine months of its U.S. launch. 2024 sales are projected to reach USD 340-370 million.
6. Global Expansion: DAYBUE was recently approved in Canada, and Acadia is preparing regulatory filings in Europe and Japan. Neuren is also exploring markets like Australia and other countries with established frameworks for rare diseases.
7. NNZ-2591’s Potential: The second drug targets multiple syndromes and has already shown positive Phase II results. The patient pool for these syndromes is four times larger than Rett syndrome, representing a significant market opportunity.
8. Positive Clinical Outcomes: In Phase II trials, over 80% of patients showed improvements in critical areas like communication, behavior, and motor skills. These results align closely with feedback from both caregivers and clinicians.
9. Strategic Advantages of Orphan Drugs: Neuren’s focus on orphan drugs enables it to dominate markets with limited competition, shorter and cheaper clinical trials, and robust protections against generics.
10. Outlook and Growth: Key upcoming milestones include Phase III trials for NNZ-2591, further global approvals and launches for DAYBUE, and ongoing development of additional indications for its drugs. Neuren’s strategy combines financial stability with significant growth potential.

Jonathan Pilcher

Great. Thanks very much, Ian, and good morning, everyone. Thanks for spending the time to listen to the Neuren story. Really appreciate it. Before I start, I would have to remind you that there are some forward-looking statements in the slides and in my comments subject to risks that could lead to different outcomes.

So let me start by giving you a summary of what it is Neuren is trying to achieve, and that’s to have a real positive impact on neurodevelopmental disorders. So these are serious neurological disorders. They emerge in early childhood, caused by genetic abnormalities and just have a severe aspect on just about — severe impact on just about every aspect of life, so walking, talking, breathing, sleeping, eating, just about everything is impacted.

They’re called syndromes, so the names of the syndromes are across the top of the slide there, Rett syndrome being the first one on the left. And underneath that is the name of the gene that causes these things, so the abnormality in that particular gene. So you can see, they’re all completely different, and yet, kids look very similar. So that horrible range of problems is common across all of them.

And that’s because there’s a feature that is common to all of these things, which is that the connections between the brain cells don’t form properly when the brain is developing, and therefore, signaling is not happening properly. And that covers just about every aspect of your body, and that’s why you get this wide range of impacts.

There’s never been an approved treatment for any of them until last year when our drug for Rett syndrome was approved, which I’ll come onto in a minute. So there’s a massive unmet need here. This is a huge lifelong burden on the patients and their families, and that’s what Neuren’s trying to do something about. We’re trying to treat the syndrome. So we’re trying to improve that connectivity and the signaling, therefore treat the syndrome, not treat one particular symptom.

And we do it with two drugs. So we have two drugs both trying to do the same thing, and they are delivered, both of them, as an oral liquid medication. So it’s twice a day drink, which is a great dose form for the kids.

So this is where our product portfolio stands today. So at the top, you’ve got the first drug, trofinetide. It’s on the market, as I said, for Rett syndrome, marketed as DAYBUE. And that’s through our exclusive licensee, Acadia Pharmaceuticals, which is a Nasdaq-listed company. And NNZ-2591 is the second drug. We’ve had positive Phase II trial results across 3 different syndromes, and Neuren owns that outright.

One thing you have to understand about all of these syndromes is that they are so-called orphan drug indications. And that means, technically, we’re dealing with rare disease here but, very importantly, it’s not ultra-rare. So there are thousands of patients in each of these syndromes, not hundreds as you get in ultrarare diseases. Orphan designation gives you a few advantages: one, much more favorable pricing than mass market drugs; secondly, a more favorable negotiation with the regulators, which historically has led to greater probability of the drug getting to market, getting through all the development hurdles.

And then the third thing is once you get to market, the regulators give you exclusivity periods on top of your patents. So they will give you periods where they won’t approve a generic. It’s 7.5 years in the U.S., 12 in Europe, 10 in Japan. So that’s fantastic commercial protection. So Neuren’s whole business is, a, neurodevelopmental disorders; and b, orphan drugs. And we think that’s a really attractive space to be in for a relatively small company in Australia.

So for investors, really, the Neuren story is fairly simple despite the complex science. There are three things that drive our value that you need to understand. The first one is we get our share of trofinetide or DAYBUE in the U.S. for Rett syndrome through our deal with Acadia. The second element is that same drug outside the U.S., so that’s a separate deal with Acadia with different economics, and I’ll go through both of those in a minute. And then the third thing to understand is the big value upside from the second drug represents. And so I’ve always felt this is a very attractive combination to have.

So you’ve got the certainty of recurring commercial cash flows from the first drug, like you would get with a pharmaceutical company. And those cash flows gave us a maiden profit last year of $157 million, and we have more than $200 million in the bank so we don’t need to raise capital. So that gives us an incredibly strong financial foundation. But then you have the big potential value upside of the second drug that you would normally get with a biotech company. So I think the good thing here is that sometimes with biotech investments, you’re betting everything on one binary outcome.

You’re not here because your downside is protected. You’ve got this great financial foundation and these recurring cash flows coming from the first drug. So that’s why I feel it’s a great investment proposition.

So I’m going to just briefly go through each of these three things, touch on the main points. So the first one is DAYBUE in the U.S. for Rett syndrome. So it’s approved in March last year, first ever drug approved for Rett syndrome, first drug for neurodevelopmental disorder. So really proud moment for us after a long and winding journey to get there. Acadia launched in April and got a fantastic outcome April to December last year, so less than 9 months USD 177 million of sales. We’re guiding for this year between USD 340 million and USD 370 million of sales. And just to point, everything I talk about is the calendar year, so Neuren’s financial is the calendar year.

So on the right-hand side you can see the impact on us financially. So last year, we owned $27 million of royalties. That should grow to between $55 million and $61 million this year. But we’ll also receive a sales milestone payment. So that will take our revenue to between $132 million and $138 million for the year.

Just to mention, before I leave this slide, so approved in the U.S. This slide is actually out of date because Canada was approved late last week. So that was fantastic news, approved on time. And then Acadia is preparing to file the full marketing application in Europe in the first quarter of next year, and they’re also negotiating with the Japanese regulator at the moment for the requirements there.

So let me quickly explain the economics that we get here and how we get this huge cash flow. So left-hand side, north America, the original deal; the right-hand side, outside of North America. So that was a deal done after approval in the U.S. So the left-hand side was done after Phase II. The right-hand side was done after approval. Important to understand that, and I’ll point out a couple of things about that in a minute.

So North America first. We’ve already received USD 60 million of milestone payments. But down the bottom of the slide, you see the future — the current and future revenues. So we’re receiving between 10% and 15%. Currently, it’s between 10% and 12% on every sale. And then on the right-hand side — the right-hand side or the left-hand side, there are the sales milestone payments, one-off payments as sales hit particular triggers for an annual year of sales.

So you can see the one I talked about, we’ll earn this year is USD 50 million. For the first year, it’s USD 250 million. So fantastic economics from there. But then if you move to the right-hand side, it’s even better because we got USD 100 million upfront for that deal, USD 100 million upfront last year. There, again, very lucrative milestone payments. But then if you look at the royalties, at this time, it’s mid-teens to low 20%. So much higher royalties.

So it actually means that even if the sales will stay lower in Europe and Japan than they are in the U.S., we could actually get it the same because we’re going to get a bigger share of it. So really powerful economics. And the other important thing to understand is we have no cost attached here. We’re not paying anything on to anyone else here. This is — this revenue comes to us some in really, very straight pretax profit. So that’s why it’s had such a massive financial impact on us.

A quick word about the U.S. launch. So in this chart, the blue bars are DAYBUE quarter by quarter since launch. The gray bar is an orphan drug that was launched about the same time and very comparable. It’s the same sort of size market, similar pricing. So we think a very good comparator. And you can see that DAYBUE has beaten it every quarter but has quite a different shape there. We had a massive surge in demand in Q3 and Q4 last year and we had fall in Q1, and then it’s back on the growth trajectory now but slower growth beyond that massive surge that we got initially.

We actually got heavily punished in the market for that, when that Q4 to Q1 fall happened. But we think there’s a great opportunity here in the future. About less than 30% of the currently diagnosed patients, which is about 5,000 patients, have so far tried the therapy. So there’s another 70% for Acadia to access. We also believe that the real number of patients out there is between 6,000 and 9,000. So again, growing that diagnosis should lead to growth.

And the great thing here is now Acadia has now been able to collect a year’s worth of real world evidence of the positive impact this is having for patients. And that’s really powerful from a marketing point of view. That’s a much better than clinical trial data, which tends to be scores and end points, which are quite difficult for you to understand what they mean. Now they’ve got real world evidence to use in their marketing efforts.

So that’s the first two elements of our value. And back to the third element, which is this big potential increase in value from the second drug, NNZ-2591. I’ve always had very high conviction this can be worth multiples of the first drug notwithstanding what they’ve done for us. And that’s because we’re going after multiple syndromes in parallel. And so we’ve had positive Phase II results across three syndromes: Phelan-McDermid, Pitt Hopkins, Angelman. The number of patients across those three is about 4x Rett. So even if it’s only those three, it’s a way bigger opportunity. But we’re actually working on other indications in the background and we think we could have an impact on them. We’ll talk about those in due course.

We just had a meeting with the FDA, end of Phase II meeting on the Phelan-McDermid syndrome. And we’ve got alignment on the next trial being a Phase III trial, so the last trial before registration. Very similar to the Rett syndrome Phase III program and very similar to our Phase II trials. So the same population, the same length of treatment, the same dose. So we’ve really got to repeat Phase II to get a positive outcome.

There’s one thing we still have to nail down with them, which is the way you analyze the efficacy measures, We’re working on that at the moment. And in the meantime, we’re getting ready to start the trial, so identifying sites, appointing the service providers and making the drug. We’re about halfway through making the drug for Phase III. So a really exciting time for this drug. And that Phase III is where you get a massive value uplift.

I take you back to those 2 deals I’ve showed you in the economics. Even on that example, you can see the difference in economics if you can take it to a successful Phase III outcome and way more companies then become interested. And we think we can get a much, much bigger outcome there than you can get at the first two. So that’s the huge opportunity for the future.

Just quickly on the 3 Phase II trials that I said were positive. There’s too many numbers on this slide, but I’m just going to pick out the message, which is that from a physician’s point of view, more than 80% of the kids improved during the treatment. And from the caregiver’s point of view, between 2/3 and 83% of the kids improved, which was a great outcome. And the things that improve: communication behavior, cognitive ability, and social interaction, all — and motor skills, all critical things that might be some of the most important things across these syndromes.

This chart, and I just want to hone in on there, because people don’t see we’re going to start a Phase III very soon. This is a really important. This is just a snapshot of some of the results in that particular trial of Phelan-McDermid syndrome Phase II trial. Left-hand side is the clinicians’ view of kids. The right-hand side is the caregivers’ view of the kids. Each bar is an individual child. You can see sort of a white horizontal line across each chart. That’s no change. So on the left-hand side, you can see 16 out of 18 kids are above that. 16 out of 18 improved. And we got 2 which had the best possible score of 1, very much improved. And on the right-hand side, you see a very similar picture from a caregivers’ point of view.

So lots of things important here: the rate, the magnitude of improvement, very important; the consistency of improvement across the kids; and very important, the consistency between what the clinicians saw and what the caregivers saw. So these are fantastic results. We were blown away by this.

Okay. I’m just going to close by looking at the milestones for the past and future. So we’ve had another massive year so far. A lot has happened. We’ve had positive Phase II results in 3 different syndromes, as I said, Phelan-McDermid, Pitt Hopkins, Angelman. We’ve had that great meeting with the FDA about the way forward. Acadia had more than USD 160 million of sales in the first half. And you’ve seen the guidance again for the full year. So we had $24 million of royalties in that first half.

The next point, as I said, they’ve got approval in Canada, which is fantastic to see on time. And they’ve also gone through the first element of the European regulatory process. So that’s a great year so far, but there’s a lot coming up. So as I said, we’ve got to confirm that final thing with FDA on the Phase III trial. We’re going to then commence the Phase III program. It should be a massive event for the company. We’re looking at those other indications. As I said, we’ll talk more about them in due course. Potential royalties and sales milestones at $130 million to $138 million for the year. No longer a potential approval in Canada, but actually launched trofinetide in Canada. And then that submission in Europe in the first quarter next year.

So huge amount coming up. It’s been a massive 2 years for us, a transformational 2 years, but a huge amount still to come. So thank you very much. I will stop there and happy to take questions.

Unknown Attendee

Great story, Jon. Thank you for the presentation. We do have a number of questions coming through. Just for the sake of completeness, I’ll ask a couple of which I think you might have answered almost completely. But you mentioned U.S. and outside the U.S. The first question was, where outside U.S., I think you said Canada, Europe and Japan. The question then went on, what’s happening in Australia?

Jonathan Pilcher

Yes, right. So Canada, Europe and Japan are the first, the top priority, and part is because they’ve got very well-established orphan drug rare disease regulatory frameworks and business long standing. So that’s why they’re the first target. But there’s many other countries that are hoping we’ll get to, and Australia is one of them. I can’t tell you anything specifically until Acadia does, but I certainly hope it will come to Australia in due course.

Unknown Attendee

Also a couple of questions here around performance. And again, to the extent that you can, tell us about what may mean for the future with revenues down flowing to perhaps share price. Again, I know you’re an ASX-listed company. What can you tell us about how the future may look?

Jonathan Pilcher

Yes. Look, I mean, I’m disappointed here since revenue is down. I mean, with 10% of sales and that fall from quarter 1, which then became growth again in quarter 2. I mean, the impact on us is minimal in terms of royalties. So we’re still very optimistic about the future and said that cash all flows to the bottom line. So I think it’s hugely attractive still. So I think it’s way overdone, the reaction from everyone to that. Acadia is going to — as I mentioned, Acadia going to report their next quarter, Q3, I think it’s the 7th of November Australia time. So that will be important to see that in the next quarter. But all the metrics are pointing in the right direction. So we feel good about it.

But as I said, the main game from a value point of view now is the second drug and the huge uplift we can get if we can execute that given the first 2 results we’ve had.

Unknown Attendee

A little bit about the competitive landscape in the United States, world’s biggest market for just about everything. Who are your competitors and how do you stack up against them?

Jonathan Pilcher

Yes. So one very attractive thing about working in these sort of conditions is that compared to mass market drugs, there’s very little competition. And in fact, Phelan-McDermid and Pitt Hopkins, we’re leading the way very comfortably. So we can be the first to market. Rett, currently, there are no competitors. DAYBUE is the only product on the market. The long-term competitors potentially is gene therapy. So all of these syndromes, there are gene therapy companies in the early stages of development.

In Rett, they’re in the early stages of clinical trials and some of the others that haven’t reached clinical trials yet. So my view on gene therapy, it’s not going to be a cure. The data that’s come out in Angelman syndrome in particular and in Rett is showing improvements, but they’re not that dissimilar to the improvements we see. So completely different approach, can be complementary and probably, time will tell, but probably you get a better outcome in both.

So — but they’ve got a long way to go yet from a clinical and regulatory point of view.

Unknown Attendee

And one quick one, Jon, just to finish. Why Rett disease and orphan drugs? You’ve seem to have answered part of that in your last response.

Jonathan Pilcher

Sorry, sorry…

Unknown Attendee

Why…

Jonathan Pilcher

Yes. Well, as I said, I think they’re brilliant because you can be first to market, set the price without competition, dominate the market as Acadia has done, and you get that protection against generics. So — and the trials you have to do is shorter. They are much cheaper because you need much less people because of what the regulators will allow you to do. If you go after mass markets, it sounds very attractive. But you’re probably doing trials with thousands of patients that will take many years, cost a fortune, and then you’re just assuming you’re going to take market share from big companies, which is not always the case.

So I’ve always thought this is a fantastic place for particularly for a small company to appear in.

Unknown Attendee

Okay. That’s great. We’re right on time, Jon. Thank you so much for your time today and being part of ASX CI Connect.

Jonathan Pilcher

Thanks, Ian, and thanks very much, everyone, for listening to us.

Here’s a summary of the ten most relevant points from the Austal Shareholder / Analyst Call 01/11/24:

1. Leadership Transition: John Rothwell, founder and former chair of Austal, stepped down after 37 years. Richard Spencer, former U.S. Secretary of the Navy, was introduced as the new chair.
2. Historical Achievements: Austal’s journey began in 1987, evolving from building ferries to designing and constructing high-speed naval vessels and submarine modules for defense clients like the U.S. Navy and Australian Border Force.
3. Financial Recovery: Austal reported a turnaround from a $14 million net loss in FY23 to a $14.9 million net profit in FY24, driven by efficiency improvements and strategic growth.
4. U.S. Operations Expansion: A $450 million investment supports the development of a submarine module manufacturing facility in Mobile, Alabama, highlighting Austal’s role in the U.S. defense industrial base.
5. Strategic Partnerships: Austal aims to transition from being a shipbuilder to becoming a strategic partner for defense clients, focusing on collaboration, innovation, and sustained vessel support.
6. Long-term Contracts: The company secured an order book valued at $12.7 billion, excluding potential Australian projects. This includes commitments spanning up to 20 years, ensuring business stability and growth.
7. Technological Innovations: Austal is advancing in additive manufacturing, robotics, and autonomous capabilities, crucial for next-generation defense and commercial maritime needs.
8. Australian Defense Role: Austal was designated as a strategic shipbuilder for Tier 2 vessels in Australia, positioning it for continuous naval shipbuilding projects over the next two decades.
9. Shareholder Concerns: Questions were raised about cash flow issues related to an onerous U.S. Navy contract (T-ATS program) and the need for better corporate communications and transparency in market announcements.
10. Future Growth: Austal is poised for growth with investments in advanced shipyards, diversification into new defense sectors, and opportunities arising from the AUKUS agreement’s technological and defense collaboration.

John Rothwell

Good afternoon, ladies and gentlemen. They’re probably not all that many people that don’t know me, but my name is John Rothwell, and I’m the founder and the past Chair, I said correctly. So we have — I would like to welcome you all to the 2024 Annual General Meeting at — of Austal. And my role today isn’t — in some ways, it’s fortunate. I’ve been doing this for 25-odd years and I’ve been the head of the company for 37.

So — but we have a new chair, and my role today is to introduce that new Chair. And I will do that in a moment, but I would probably just like to spend a couple of minutes, and that’s about all. We’ve got some pictures of the past 37 years since we started Austal, and it’s been a fun ride. The day is too short for me to start telling too many stories, but it’s been phenomenal.

So 37 years ago, I invited some young guys that had worked with me or for me to listen to my vision of what we could do with Austal. They joined me, and we kicked off back in — set up in ’87, started ship construction in ’88. Now again, most of you know the road that we’ve traveled and started off with ferries for China, then decided that maybe we needed a broader spectrum of work and started to build some patrol boats for the Australian Coast Guard customs-type people. And I guess and some of these, of course, the bigger ferries that you’re seeing now, but we grew through that.

And the highlight for me was, of course, what we finally achieved in the United States back in, let me just try and get this right, about ’97, I was invited to Washington to attend a workshop for — by U.S. Navy to try and determine how they could use high-speed ships for U.S. Navy and the workshop didn’t achieve too much.

But what it did do it convinced me and I was able to convince the other shareholders that we should be in U.S. That, of course, culminated in — we were not security cleared. We had to be a subcontractor to General Dynamics. And we did that in the end, that was when we got our own security clearance, they disappeared and they became a subcontractor to us quite frankly. But that’s the U.S. front.

And in Australia, we continue to build high-speed ferries such as you’re seeing, we opened a shipyard in Cebu and one in Vietnam and continued on with trying to win more defense contracts. And you will have all read recently in the last 12 months or so, where Paddy, our CEO, largely drove the relationship with Strain Defense, and we’re now in a very good position to build war ships, invest in Australia that are going to be built here.

So for me, personally, the highlight was very much the USS Canberra sailing into Sydney. So just think about this we were tasked or we started again. We put our hand up to bid for future little combat ships. And I think that came about largely after the attack on the USS Coal in Yemen, where maybe started to think about agility in literal areas.

And we then had a Trimaran, which you’ve seen some of here, the yellow boats that you saw as a commercial vessel. We then locked about 60 young Australian naval architects up in a secure area for a period of time, and they spent to us for years developing that warship.

So it was to see to think about a total concept by Austal, of which your shareholders or many of you are shareholders to think that, that could turn around and have become — we’ve built something like about 18, 19 of these ships right now. To think that one of them would one day be called USS Canberra and be escorted in through the Sydney head by the HMAS Canberra, it was a phenomenal moment for me. And all our people would have been very, very proud. It was absolutely done by Australians, although built in the United States.

So I’ve gone on long enough. I promised you I would introduce our Chair and many you will have seen Richard Spencer’s name. Richard has a lengthy career in both Navy. Of course, he was the Secretary of Navy in the U.S. the highest position that you can have in maybe in the U.S., to my knowledge. I think that’s right. And so he knows the customer real well, that is our majority customer.

Richard then also spent a lot of time working in finance area, and it was very fortunate that we came across Richard, and he agreed to Chair the Board. From my own perspective, it was something I’ve been thinking about for a couple of years, I turn 80 early this year. And only a few goes on too long, I keep saying, and I certainly didn’t want to be in that space. But I deliberated on what would be the most suitable future tier successor for me.

And again, very fortunate to have come across Richard. So what I’ll do, I’ll vacate this space. I think before I go, just to say that I think Austal’s in a great position, and I don’t want to pat myself on the chest and show, I did all that because it’s a whole bunch of people that did that. And I was fortunately part of it. But Austal’s in a great position when you’ll hear much more about what we’re doing in the U.S. You’ll hear about we’ve come through the aluminum or ships such as that and also a fast freight called EPF. And we’re now, of course, doing steel ships. We’re also doing components or modules for the submarines, the Virginia class submarines and maybe Columbia ones as well later on.

But Austal’s in a great position. I think it will do very well with a new chair. I think we’ve got an excellent team — business team — sorry, the business leaders at Austal under Paddy. And I just feel that it’s set for a great future. I’d like to think that when I do step off the bustle together out of the Board, I would like to be able to sit back there and continue to see Austal prosper and I feel confident that it will.

So there’s one more thing I wanted to do before I move on. Chris Indermaur has been our director for the past 6-plus years. Chris has added a lot of value, and I wanted to personally thank you, Chris, for what you’ve been able to do. So let me shut up and let me put someone far more capable of talking in front of these microphones. Thank you.

Richard Spencer

Thank you, John. You’re not going to get away that easy. But before I say a couple of words on my own folks, let me address some formalities of this meeting, if I could. This is a shareholders meeting and only shareholders, their proxies, attorneys and authorized representatives are entitled to speak at this meeting.

This is a meeting being webcast to shareholders, who are unable to attend in person. As it is a webcast, virtual participants will be able to listen to the meeting live and view the presentation materials, but they will not be able to ask questions, make comments nor vote through the webcast facilities.

I’d like to introduce my nonexecutive directors, who you can see are here before you Sarah Adam-Gedge, who serves as our Deputy Chair and also Chair of the Audit and Risk Committee; Chris Indermaur, who is the Chair of the Board’s Nomination and Remuneration Committee. Chris was up for reelection at this meeting, but has decided not to put himself forward for reelection. His term will, therefore, come to an end at the conclusion of this meeting. I would like to personally thank Chris for his 6 years of service since 2018. Your contributions have been invaluable.

Lee Goddard, who has been on the board since January of 2023. Kath Toohey, who joined us February of this year; Brent Cubis, who joined us in October of this year, and of course, Paddy Gregg, our Chief Executive Officer. Each of our Board members presents — is able to assist in answering your questions as we go forward today.

We also have a representative from the company’s auditors, and external legal advisers present. John, it’s an absolute privilege and honor for me to accept the transfer of reigns from you as Chairman to oversee this great company. Austal’s accomplishments here in Australia and overseas have been absolutely remarkable, and it’s due in no small part to your amazing presence foresight, drive, determination and strategic approach to the Austal business. And this, ladies and gentlemen, I think we give John a good round of applause for what he has done.

Much has been made of Austal’s transition from building aluminum cray boats to the present, occupying a crucial position in the U.S. defense industrial base as the designer and/or builder of warships and nuclear submarine modules for the U.S. Navy and the U.S. Coast Guard.

The company started with just one build program in the U.S., as John referenced, the joint high-speed vessel for the Navy Military Sealift Command. Now it has 12 programs in the United States. And with the expansion of additive manufacturing, which Paddy will get into, it will provide us even a more secure place within the defense industrial base and ultimately provide you the shareholder greater value.

This staggering expansion has been a 36-year journey for Austal with one constant, John Rothwell. I needed to do very little due diligence when I was approached to take the Chairman’s role. I had already had a significant interaction with the company going back to 2017, when I was Secretary of the Navy. I was impressed with its pragmatic approach, its desire to grow and provide solutions to its customers, such as the U.S. Navy, the Royal Australian Navy, U.S. Coast Guard and Australian Border Force.

And I was also taken by the amazing commitment of Austal employees to their respectful — for their respective national security. On the latter point, one thing that struck me when I first visited Austal’s headquarters down in Henderson last July and that was the honor board in the Austal office. And in particular, the staff who had worked at Austal for 10, 20 and 30 years.

The list is incredibly long, ladies and gentlemen. John himself has 30 years, as you well know, another 30 staff members have clocked up 25 years. Another 36 members have clocked 20 years. I see a similar set of boards in Mobile, Alabama. And I note some of the original disciples that came over from Australia have remained there since the doors opened 20 years ago back in 1999.

The longevity of workforce is a testament to the culture of an organization. The number of people who remain with Austal is a testament to Austal itself. Since becoming Chairman, I’ve held initial discussions with some of Austal’s most important stakeholders, whether they are employees, customers, suppliers or shareholders.

The 3 things have stuck with me. First, the can do DNA that permeates the enterprise, whether in Australia or the U.S. and the acknowledgment of that DNA by those stakeholders, particularly our customers. Two, the understanding of continual advancement of modular assembly and industrial flow as it pertains to our business, we are like no other in the defense ecosystem. For those who don’t have the same understanding of industrial flow charts, that translates to the continuing build of ships more efficiently.

Three, the endorsement and appreciation of intellectual curiosity, which can be seen in our center of excellence for additive manufacturing, robotics, advanced materials and the application of evolving technologies. These provide the foundations of our business. And those foundations will support the company’s growth and again, ultimately provide value to you, our shareholders.

I’m not going to spend a lot of time on the financials for the year that just ended because I was appointed post June 30 and can lay no claim to having any influence on the quick turnaround. The quick turnaround $4.8 million earnings before interest and tax loss in fiscal year ’23 to a $56.5 million positive EBIT in 2024. A $28 million turnaround in profit from a loss of $14 million in ’23 to a net profit after tax of $14.9 million in fiscal year ’24.

However, what those figures tell me is that as Austal enters the next chapter of its life, it will with an excellent financial and operational base to support further growth. And our growth strategy for the next phase is very simple, but groundbreaking at the same time. Let me explain why.

Our goal at its core is to be the strategic partner for the Australian and U.S. Navy’s Border Force and Coast Guard. When it comes to maritime products, we will be first of mind. That is our goal. We want to move away from other companies to simply take orders and build ships. We want to be there to solve problems, a disciplined strategic partner.

What do I mean by that? I believe a partnership is where we work together collaboratively with our customer to improve designs to reduce build times, to make the build process more efficient, a partnership where we ultimately understand their drivers and provide solutions to their problems, a partnership where we provide support to their vessels over many years and then put what we learn from sustaining those ships back into future designs, so we continually improve.

It sounds simple, yet no other companies are doing it. So the playing field is wide open for Austal. And we will own this space and entrench ourselves with our customers. Our expansions in the submarine modules and additive manufacturing is an example of this, but it is just the beginning. We have continually invested in Mobile, Alabama, and we probably have the most modern shipyard in the U.S., coupled that with a technology like robotic welding and there’s no one who can touch us.

Expect more from robotics and what we call Industry 4.0 as we build out our submarine module facility in Mobile. This investment helps us improve efficiency, provide cost-effectiveness solutions for our customers, as I addressed earlier.

In the U.S., the planned growth of our campus in Mobile will be a key component of our strategy. And there are some really important points about the planned expansion of Mobile that I’d like to highlight. Firstly, many companies take a considerable build it and hope they will come. This risk is usually undertaken with capital expansion similar to those that we are about to embark on. Austal does not take that risk, because we already have the construction contracts in place to underpin that expansion.

So provided we can efficiently execute. It does not pose the risk that other capital expansion programs pose. Secondly, in some cases, we’re actually being paid to expand with other groups funding the capital cost because of Austal’s importance to the U.S. military industrial base. As an example, the recent announcement of the funding from the U.S. Navy through a contract from General Electric — I beg your pardon, General Dynamics Electric Boat, where electric boat will pay Austal $670 million to build a submarine manufacturing facility is a testament to how Austal is viewed by those in this industry.

Austal’s market capitalization is about $1 billion. Yet there is one of the biggest companies in America, defense companies in America, paying Austal the equivalent of 2/3 of its market cap not to build submarine modules, but to build the facility that will ultimately build those modules. And while we don’t and will not take it for granted, there is no doubt in my mind that this is an enabler and hopefully, a precursor for the future construction contracts on the U.S. nuclear submarine build program.

Additionally, while I have naturally devoted much of this speech to the United States. Austal’s position in Australia defense industrial base is just as important to our strategy. The strategic shipbuilding agreement heads-up agreement signed with the Commonwealth late last year, should position Austal as the Commonwealth preferred shipbuilder for all Tier 2 vessels, such as landing craft medium, landing craft heavy general person — I beg your pardon, general-purpose frigates and optionally crude vessels. This will establish Austal’s position with the American — with Australian defense and provide us build orders for the next 20 years with a considerable backlog to perform more.

Strategic is an overused word. But in this case, it is perfectly apt. The federal government is taking a very strategic approach to its maritime defense requirements. And importantly, Austal and its shareholders that — Austal and shareholders, that strategic view extends to the vessel construction program needed to meet those requirements. If the submarine modular facility and the submarine build in the U.S. is an enabler and a precursor, then I believe the SSA is a similar enabler and precursor in Australia.

And Austal will have that same position as a strategic partner with the Australian Navy. One thing I haven’t mentioned is AUKUS. There’s another ripe opportunity for us to benefit. We are one of the few Australian businesses with significant operations in the United States, and I am certain there will be future opportunities in this space, both in Pillar 1 with submarines and Pillar 2 with some of the technologies I’ve already referenced, which brings us full circle back to John Rothwell, the company he has built and what has been achieved by many, many — and has achieved many, many great things, including those I’ve just listed. And I hope he continues to receive the accolades that he is due. Austal is poised to build on that foundation in the years to come. And that’s what I’m looking forward to as Chairman of the Board on behalf of you, the Austal shareholders. Thank you.

Patrick Gregg

Good afternoon, everybody. So I’m going to build on what both John and Richard have talked about and help you understand just what an exciting point Austal is at. I’ll refer back to some historical information to help frame where we were 3-or-so years ago. And hopefully, that will you understand just what a great situation we’re in today. And I’ll fast forward a bit and help you understand some of the announcements we’ve made and what that’s going to look like for the future. And then because we built some very cool stuff, we’ll have a lovely video at the end to, again, show products that are actually happening.

So if I think about the situation we’re in at a minute, we’ve cleared or we’re clearing the slipway we’re ready for launch. We’ve had 3 pretty tough years, a lot of issues to deal with. And I think we’ve got through the vast majority of that. And the business is absolutely primed and ready for growth. In the last year, we delivered our EBIT guidance, pretty much bang on the middle of the range that we gave. And today, we’ll be giving more EBIT guidance for this year. Big issue that was overhanging us. We resolved the Department of Justice matter, and that really has freed us up to look towards the future, an issue that happened back in 2015, and we spent 4 years working on, having got that behind us really opens up in the future.

And as both John and Richard have talked about, relationships to the customer are vitally important. The whole team have worked incredibly hard in the United States and in Australia to build that relationship and to become a trusted partner. We are really committed to delivering on our commitments, and I think that’s really been recognized, and we’re in great shape today. So if we look back 3 years, we were probably stood here talking about what does Austal look like after LCS ends? That was the big question. You built 2 programs in the United States. One of them is going to end, what are you going to do? Is this the end? What does it look like? So I can now tell you around 13 programs in the United States. We’re working with Navy. We’re working with Coast Guard. We’re working in aluminum. We’re working in steel. We’re working in ships. We’re working in submarines.

It’s been a phenomenally hard 3 years and the diversity we now have in the business puts us in a really great place for long-term growth. That steel investment happened and we opened the facility back in 2022. It’s really hitting its stride now on some of the technology and the automation and the robotic welding we’ve got in there, this is a world-class shipbuilding absolutely at its best.

Submarine modules and the manufacturing facility. I’m going to show you pictures of that and help you understand what it is. But yes, helping people understand that, that $450 million announcement is to increase our facilities. We will then have those facilities for many, many years of revenue to go through the business. San Diego drydock, it is now in San Diego, and we’re working through this year to commission it. So again, another area of growth, not just shipbuilding, we set a target few years ago to get to $500 million of revenue by FY ’27.

You’ll see in the pictures of that dock and how that is going to enable us to hit those targets and indeed exceed them. And then thinking back here, 3 years ago, we were building the 13th Guardian. We’re now on the 21st or just delivered the 21st Guardian on the 11th Evolved Cape,and we’re now on 18th and appointed as the strategic shipbuilder in Western Australia, something that we could have only ever dreamed of, really.

For years, we’ve talked about the need for continuous naval shipbuilding, the efficiency and the certainty that we’ll put into the business and the employees. Whenever the government came out last November and announced us as a strategic shipbuilder, really put us into a new league and really paved the way for a long bright future. So we’ve put a lot of work into creating long-term value for our shareholders. The strategic growth opportunities, the order book that sits at $12.7 billion today, excluding everything that’s coming in Australia. That is probably the best part of $20-plus billion over 20 years.

So these are numbers we could never talk about. Business diversity and reducing risk. Whenever we had 2 programs, if we had a problem on one program, it just marked its way through the results and made shareholders pretty unhappy. That diversity of workload hopefully, when somebody is having a good day and somebody is having a bad day, we can actually still carry on delivering stable results as a business.

Lots of programs that we’ve won. We are moving from this transition phase and we’re now into the execution phase. So we’ve won the work. That’s arguably the hard bit. Whenever it’s execution, it’s much more in our control. Huge investments coming, whether that’s submarine modules or the land next door. And again, I’ll show you that on pictures. And I still think, even though we’ve had a great run in the share price in the last couple of weeks, whenever you look at how big this business is going to be in years to come, there’s still opportunity for share price growth.

So comparing some of this year’s stats to 3 years ago, some of these will help explain the situation we were entering. Ships ordered one back in 2021. So we were coming off a peak and we were entering a bit of a trough as we transitioned from the old LCS EPF programs into what’s new? This year, 13 ships ordered. So we are growing. There is more coming.

Ships under construction. That order book is there, and we’ve got the runway ahead of us. Ships delivered. Look at that record a year or 3 years ago, 19 ships delivered in a year, only 7 ships delivered this year. That gives me the confidence that we are back on the way up and look at what we have delivered in the past.

We know how to do this. Execution is what we do very well. We are ready for it. Ships under sustainment, recognizing sustainment a great part of our business, having delivered all those ships over the last few years. Lots more work and growth in the sustainment world. Service centers and shipyards very similar to where we were 4 years ago, but investment in those and making them ready for growth is what we focused on.

As the workload dropped off, the employees dropped off, but look at where we have been, we probably need 3,000 employees globally right now, 2,000 in the U.S., 1,000 in Australia as these programs come on board. We’ve run a bigger business. We know how we will do it. It’s not going to be easy, but we need to go out and win those people back and grow the revenue. And then the order book, very, very pleasing figure. Tendering is a difficult thing. Winning is even harder.

We’ve got that order book, and we’re not ready for delivery and execution. And again, revenue falling as the order book dropped off and ready to grow as we recruit people going forward. And what does that look like in pictures, I could have put 3 pictures up there 3 years ago. And here we are with some amazing opportunities.

Nuclear submarines would never have been on there. Nuclear submarine is probably a Navy’s greatest asset and something that will go for a very, very long time. So getting into that program is a tremendous opportunity for us. Top right, you see the Coast Guard also diversifying our customer base, working with the U.S. Coast Guard and the same way we work with the Australian Border Force building ships in steel and aluminum, they attach ship right in the middle, the first deal ship that we’re working through an incredibly big and complex ship.

And then looking forward to the future, whether it’s medium landing craft, heavy landing craft and the general-purpose frigate that the government have all announced great opportunities for Austal to go and get after. And then also really pleasing, 2 tremendous shipyards in the Philippines and Vietnam.

A few years ago, we moved our commercial work to those countries, so we could still be internationally competitive and it was really tough during COVID. People did not want to spend $100 million on a new boat whenever they were unsure as to whether they could get the revenue back on that.

Well, that’s changing. We have won 3 orders, and there are more in the pipeline. So we will see the Philippines and Vietnam continue to grow as we go forward. So pretty much exciting and great opportunities right across the business everywhere I look right now.

So some of the financial highlights. These were the year-end results. So as Richard talked about, last year was a tough year or the year before it was a tough year. We had the onerous contract with T-ATS, and that didn’t do us any favors. But having turned the corner coming back up, delivering $56.5 million of EBIT. We’ll talk about guidance soon. We spent a lot of money investing in the business, which had taken the cash down. We had an onerous contract, which serves our cash. But I’ve put the current cash figures in this presentation. That $450 million we got in the United States is a very front-ended load — front-end loaded cash positive contract, yes.

So right now in the bank account $396 million. We’ve gone from worrying about things are getting tight. We’ve got an onerous contract to our CFO, Christian worrying about what interest rate he can get on the cash we’ve got deposited in the bank.

So a big turnaround for us. It’s taken a bit of pressure off the immediate need for CapEx for final assembly too that we’ve been talking about for the last 18 months or 2 years. But again, we’ve got some good news on that on our way forward. So I’m pleased with where the financials are and where we’re going, and we should have turned that corner and just continue to grow.

What are these ships that we’ve looked at do in terms of bill generations and dates. If you’re a financial analyst and you want to go and build a model, this is absolutely in there to help you put your numbers in the right years. But for me, when I look at this, I look at the top and programs that are going on past 2034. So that longevity, that certainty we’re putting into the business allows us to attract people, train them, retain them with the work that we’ve got and really just continue to grow that business.

So you see what that looks like in the United States, and we’ve done the same thing with the Australian pipeline as well. Some of these things on contract and then down the bottom end of the slide, some of these opportunities. But again, look at the time lines. Historically, we’ve stood here and talked about, we can see 18 months look ahead. And having we done a great job keeping that going for 37 years, but winning some of these progress that put 10 years of certainty in the business is a very, very exciting place to be.

So what does that look like in terms of numbers, investment proposition? Share price has recovered recently, Fantastic. I think that’s where we closed last night. You’ll see from the EBIT, we had the disaster in FY ’23 with the onerous contract. You can see that turning a corner, and you can see that continuing to grow into the future. Order book absolutely stand out and puts the certainty in the business. And then that revenue growth, a representative line in there of how the revenue is going to grow in line with the programs that we’ve already won and what’s been announced to come in Australia.

So I think from an investment perspective, also still a great opportunity. So guidance, whenever we did full year results, we promised we put our guidance at the AGM, and here we are. So we’re guiding to an EBIT of $80 million this year. So you can see an increase again on last year. Consistent as we continue to get into the execution phase of these contracts. We’re optimistic that we’ll continue to grow the EBIT back to where it has been and indeed straight through that and years and years of growth ahead of us.

There’s always some complications in terms of the levers we’re pulling, what we’re wrestling with to try and pin the tail on the donkey and give you an exact number. And we’ve put some of those up there just to help you understand some of the things that we’re dealing with on a daily basis to try and make sure that we can manage the risks and the opportunities and come out and hit our numbers and keep everybody happy.

But I think that’s a number that’s very much in line with analyst estimates. And I think it should be well received today that we’re confident that we can deliver in line with it. So let’s have a bit of a run through some of the things that are going on in the business. I’m not going to go through every project, but I want to talk about things that are strategically important.

Yes. So in Australia, we are very committed to partnering with the Commonwealth with Navy, with Border Force. We’ve had an amazing track record of what we’ve delivered in the last few years, even during COVID, we kept the shipyard open. We continued delivering ships, and you look at the number of ships that are out there, there was very much a theme of Austal deliveries on time and on budget we can be relied upon by our customers. So really amazing delivery schedule from the guys here in Australia and also working with a whole lot of Australian partners in the supply chain.

Us winning a prime contract is great for a lot of people outside Austal. If we look at what’s happening in the U.S., so there have been a lot of announcements recently, and I wanted to put this in here just to try and help you understand exactly what’s happening. So if I use the pointer, this is kind of the existing shipyard as it is today. That’s the steel facility that we built a couple of years ago. So we cut metal here and we run down a production line, where modules, big sections of ship come out. They go to the completion sheds, final assembly sheds where the modules are joined together, turned into ships and we launch them out the front into the river, take them around to the vessel completion yard where we commission them and take them out into the Gulf of Mexico on sea trials.

So 2 announcements recently. We have been talking about final assembly 2. So this is all fine for aluminum ships, which are considerably lighter than steel. Steel obviously being 3x as dense as aluminum, it all weighs a lot more. And you’ll notice that the interstate disappears. Well, actually, it goes through a tunnel here under the river. And the tunnel can’t take the load of the major modules that we want to bring in. So we need a new vessel completion site for steel ships. We need heavier floor loading. We need bigger cranage.

And we actually want to build a ship lift out the front. So we can either launch ships or if we want to do maintenance on ships, we’ve got the ability to bring them up and do work on the ships. These are the 3 sheds that we want to build. And those are big enough for everything we foresee in the future. So not just the work we’ve won today, like the offshore patrol cutter or the T-AGOS surveillance vessel. Those will be big enough for frigate if they want to go for a second source or some of the bigger logistics ships that we see coming in the future.

So tremendous opportunity for us and a very exciting time that we’ve received a letter of support from an Australian government financing agency and for up to 50% of that $300 million, that should help us underpin the rest of the lending syndicate to allow us to come out in the near future and finalize exactly how we’re going to fund the building of that facility. So the other announcements that came a couple of weeks ago, again, very exciting. 2 module — 2 announcements back to back. One of them was the USD 450 million. So a piece of land that we bought a year ago, 2 years ago, in preparation for this.

This has been an awful lot of work in progress for our teams to try and secure this but a big purpose-built module facility that could build up to 20 submarine modules at any time. We will probably have 1,000 people working in that building, and you guys can do the calculations on revenue versus people, but that will be in the hundreds of millions of dollars of revenue that we add to the business going forward.

And that has been backed up with commitment from Electric Boat to put the work to us. And then the second announcement was around the submarine industrial based investment in the Alabama shipyard that was next door to us. The Navy have invested through us into a fund that has bought that shipyard with a view that they would like to develop it and it provides a great opportunity for future expansion and growth. Again, we’re not going to win or lose on that through the financial system, but it gives us first run of refusal on opportunities for the future. So Navy really backing us again to say, hey, we think you’re going places when you run out of space in a few years’ time, we’ve already secured the facility that you’re going to grow into.

So a very, very exciting opportunity. And I hope that helps to explain what the site’s going to look like in Mobile, Alabama in the next couple of years. Support business, I talked about. You can see the trend graph that we’re on track to hit our $500 million, maybe slightly ahead of it. Real focus to get the floating dock, which is a huge dock that we had built and delivered to San Diego. We’re now working with the various agencies, environmental agencies to make sure we can commission that dock and really take a big step forward in terms of the revenue we can generate in San Diego.

But recognizing we do this in other places as well, whether it’s supporting the U.S. Navy out of Singapore, whether it’s supporting Trinidad for the Capes and ferry that we delivered a few years ago or whether it’s here in Australia with the yards in Brisbane cans and Darwin, and that growing number of patrol boats being delivered, that will be stationed out in Cairns in the future, support is very much a great part of our business and one that has opportunity for growth as well.

So a few years ago, we talked about submarine modules and people kind of scratched their heads and said, what’s that? What can that be for the business? We spent the last 2 years working very hard on that. And hopefully now, we’ve been able to communicate just how lucrative that’s going to be and what a great deal that is for Austal.

Well, in the United States, we’ve been funded to set up an additive manufacturing center of excellence that Richard talked about in his speech. That is really going to support the U.S. Navy and their desire to get parts that are a traditionally forged a cast, built in a much more modern, much more reliable, much quicker fashion. And Austal’s right at the center of it. So we manage that facility.

We understand the IP. Arguably, we’re learning the recipes of multiple materials that are cold spread or additive manufactured or laser cut, their properties and the heat treatment. And every day, we’re delivering more and more components. We’ve delivered over 100 components — now 100 different components as part of this program to start delivering for the United States Navy.

Richard talked about AUKUS and Pillar 2 of AUKUS, which is more focused on the technology and things like that. I think this is a prime example of AUKUS in action. We’ve been funded by the United States Navy. We’re doing the development work. We’re proving the products. That is very easy for us to replicate that capability here in Australia. And imagine if the United States Navy needed a part for a U.S. submarine that is under maintenance here in Paris as per Richard Marles’ announcement last week and the submarine maintenance coming.

While someone in Austal can receive an order in the United States, press a button, send the recipe down the tube that pops out on a 3D printing machine right here, and we can walk out the door and deliver the part to the United States Navy. So just a bit of a teaser to get you excited about what the future looks like and where we’re going, but another great opportunity that I wanted to talk about. And I’ll link that with things autonomy. So in the U.S., we’ve still delivered the largest autonomous ship in the U.S. Navy, the EPF 13. And here in Australia, we took the patrol boat autonomous or sentinel, as we call it, the old Armadale that we bought, converted, it was able to drive itself to Geraldton and being controlled right out of the Henderson office. And we’ll have a little look at a video on that later on.

But that’s got to be a good opportunity for the future. And this is Austal demonstrating whether it’s United States or whether it’s Australia. We are autonomous capable. We understand the technology and we can absolutely do it. So I think we’re doing a good job at focusing on what we’ve got to deliver today and execute the contracts we’ve got.

And we’ve got half an eye in the future about where all the growth is going to come from. So if I talk about — just to summarize things as I see it, as we’ve gone through, the record order book in the U.S. and what’s coming in Australia puts us in a great place. Positive momentum with the announcement on the Henderson precinct. I’m pretty pleased that the government while it was frustrating for a while, we did a defense strategic review, and that took a bit longer and then we weren’t certain on the output and then we did a fleet review.

Well, to be fair, and they said, this is what we’re going to do. And every announcement is consistent with they said they’re going to do. So in my mind, they are delivering on their commitments and long may it continue because we’ve had many years of uncertainty, and this is putting a whole lot of certainty into the system very, very exciting time. And our underlying business is performing pretty well. You can see that from the numbers, the growth in the EBIT. Still a couple of challenges out there.

We want to finalize the funding for the facilities in the U.S. that we’re going to invest in. We’ve still got the T-ATS program that we talked about last year. We need to resolve that with Navy. Great conversations happening. And I think based on how supportive they’ve been of Austal generally, it’s hard to imagine they’re going to stiff us on T-ATS issue.

So we’ll continue to work with that and do everything we can to get that resolved this year. The growth in Australasia, very exciting with the strategic shipbuilding agreement, the commercial orders that we’ve looked at. Support business going really well towards its targets and the floating dock there. The CapEx that’s happening, whether it’s funded by U.S. Navy, whether it’s funded by Austal, but we are setting that yard up to be probably the most modern, the best equipped shipyard in the United States, really, really exciting time.

We’re in that transition and the growth of people is going to be pretty exciting. It’s great that we’ll be able to grow both in the U.S. and here and provide longevity of jobs and revenue for the company. Still more opportunities. We talked about AUKUS, I’ve given you some examples through additive manufacturing, through autonomy. I think we’re only scratching the surface of AUKUS at the minute. The focus is still very much on the submarines and how they’re going to get those.

But the whole Pillar 2 side of AUKUS, I think Austal’s really well placed to try and grab that. Relationships are critically important. Whether it’s through tendering processes, whether it’s with customers that we’re building boats for, whether it’s boats in service, we are working very hard to build that relationship and be a reliable partner for the very long time.

And I think my summary is we have come through the last 3 years of transition, and we’re into the execution and growth phase. So very, very exciting time from my perspective. and I will leave you with a video showing you the autonomous patrol boat.

[Presentation]

Richard Spencer

Thank you, Paddy, for your comments. Truly is amazing. And I think what you’re witnessing here is just the tip of the iceberg. I now welcome any questions from the shareholders present relating to Paddy’s presentation, and so that everyone may hear you, could you please stand and we’ll deliver you microphone, state your name and ask your question.

Unknown Shareholder

I’ve got some queries and I really feel as if I’m — I’ll introduce myself. My name is Ann Pryor, and I’m a very long-term shareholder. I feel as if I’m going to stand here and rein on Paddy’s parade. There were some items in the financial statements that I really didn’t like and are red flags. So I’m going to put them out there. And through you, Mr. Chairman, ask somebody in finance to respond.

First of all, you were cash flow negative from operating activities, which is always a big red flag for me. Secondly, your trade and other payables were up by 88%, which could be explained. However, I’ll leave that to Mr. Greg. And I noticed that there’s a revolving credit facility that’s crept on to the balance sheet of nearly $40 million. And when I look to the further down, the trade and other receivables are up, and I think that nearly double from the previous year. The loss allowance is up by a factor of about 6x. I know it’s only a relatively small amount, but the trend is not a good look. That leads me to wonder if there’s a cash squeeze.

Richard Spencer

That’s very astute analysis. Paddy, would you like to address?

Patrick Gregg

Sure, sure. Thanks, guys. I’ll give it a go. And if I get it wrong, Christian will correct me. But I think they’re all really related to the same problem, and that’s the onerous contract on T-ATS. So we disclosed that to the market. While that contract remains onerous, it eats a lot of cash. So yes, a lot of the other programs generating great cash. But while our estimates are complete or in excess of the contract value, then we’re unable to claim that cash back from the United States Navy. And that’s all part of that request for accrual adjustment process that we are working with them at the minute to recover.

So that has a knock on to cash flow and how we’re paying our suppliers. So whereas we might have been very, very prompt in paying suppliers whenever we had a lot of cash. When we don’t have a lot of cash, we go and manage it appropriately. And I don’t mean we don’t pay people. I mean we might take the full length of time to pay them that we possibly can. And that gets compounded by the growing business.

So you see that the trade creditors and debtors, those things grow as the business is growing. So there is a relationship there that you can add those 2 things together and come up with an answer that says we have a cash problem. The only cash problem is the fact that we are funding the build of the T-ATS program in the United States at the minute. And that will change. I’m confident we will with fix that with the United States Navy.

And then if you want to consider the $450 million that we were awarded for the module manufacturing facility. It’s very convenient that, that is very front-end loaded in cash. And you saw the cash balance today as $396 million. So there absolutely is no cash issue in the business. We do need to resolve T-ATS. I think if you looked at the position with the supply chain at the minute, it is significantly improved on where it was at half year because we wanted to bring those supplier payments back in line with how we’ve done it traditionally rather than take it to the maximum we can.

And we put that focus on the smaller suppliers rather than the bigger suppliers because we know cash flow turnover is harder for those guys. So there’s a huge amount of work that goes on behind the scenes to make sure we manage cash in the business appropriately. But I’m not sat here with a concern that we’ve got a cash issue as a business.

Unknown Shareholder

My name is Neil. I actually have a request for the Board. Can you consider engaging the corporate communications specialist to take over communication for Austal. The reason for asking for that is, if you look at things like your website, it’s not a good look. It’s not professional. The presentation that we’ve just been through, if you look at that, it’s not a great presentation. There’s just lots and lots of words. People sitting here can’t read it. When you do announcements to the market, you are inconsistent in when you use price-sensitive announcements. So there’s been some discussion today about the fact that you’ve had issues with forward order books, particularly when the Asian expansion was underway.

And you think that when the announcements were made to the market, if you have been awarded a contract, you’d make it price sensitive. You don’t always do that. As you build the order book, you think you would be using that market announcement to say, “Hey, this is a contract we’ve got. But this is what it looks like now in Vietnam. And I’m just not seeing it. And I think you’re over burdening Paddy with too much to do, and you need was actually good at corporate communications to present the company more effectively in the marketplace. I think what’s happening at the moments hurting shareholders.

Patrick Gregg

Duly noted. Duly noted. We will take it for consideration.

John Campbell

Chairman, John Campbell. I’m representing the Australian Shareholders Association. I’ve got a question for you. As Chairman of Austal, you’re an American, presumably without a great deal of background in Australian corporate law. You’re located in the U.S. And I don’t know whether you’re located in Mobile, but quite probably not. And I just wonder how you managed to keep on top of things here at Henderson and around the globe? And also whether you’re briefed and requirements of corporate management in Australia?

Richard Spencer

Certainly. I spent 19 years on Wall Street as a banker, dealing with corporate law with great regularity. I’ve sat on 3 public boards, 1 New York Stock Exchange listed board. The fundamentals of law between Australia and the U.S. on the corporate basis are not that terribly different. When it comes to the regulations on the exchanges, I have my corporate attorney — my council here who was giving me tutelage on ASX regulations with the regularity after this meeting, so I feel fairly comfortable that I truly understand what is going on in the regulatory side over here.

John Campbell

Can I ask another one? The settlement you’ve done with the Department of Justice and the Securities and Exchange Commission was to set up a fund, I think, for shareholders to make claims with respect to losses that were incurred because of the misreporting back in the 2013, ’15 period, whatever it was. Do you know how Australian shareholders are going to be able to access that? Is there a mechanism in place whereby they can line up to make a claim?

Richard Spencer

That’s a very timely question. We believe this has been done before. So it is under construction as we speak. Out of our control, but that’s going to be the SEC DOJ probably in concert with the regulatory — regulators here.

If there are no further questions, we’ll move on. I now move to the next item on the agenda, which is the directors’ report and the financial statements of the company. The annual financial statements of the company for the year ended 30 June 2024, together with the director’s report and the auditor’s report in respect of those documents were released on the ASX on 30 August 2024 and were sent to shareholders who so requested. We also have copies of these at the meeting, should any shareholder require a copy. There is no voting on this item of business. Instead, shareholders have the opportunity to ask questions about these reports. Are there any questions from the floor, from the shareholders? There being no question, we’ll proceed — sorry.

Unknown Shareholder

Sorry. Just in relation to your sustainability report, we noticed it comes out some weeks after the annual report. We prefer representing retailers to shareholders. And we have the opportunity to review that at the same time as we review the annual report because the two things are linked in, in terms of investors’ perceptions about their investment and continuing with it. So we’d ask if it’s possible that the publication of the two documents is synonymous at the same time.

Richard Spencer

Duly noted, and I think you’ll see corrections next year. Any further questions? All resolutions will be put to a poll. However, there will be an opportunity to ask questions relating to each of the resolutions I’m going to go through before the poll is taken. Resolution #1 is for the adoption of the remuneration report. The resolution is set out on the screen next to me, and I’ll give you a moment to read it. I note that a vote on this resolution is not binding on the company. The proxies shown on the slide beside me have been received in respect of the resolution. Although I’m personally excluded from voting on this resolution, I will vote the undirected proxies I hold in favor of the resolution.

Are there any questions relating to this resolution? Thank you. As mentioned, we’ll proceed to a poll on all resolutions. I will ask a representative from the company’s share registry to conduct the poll at the end of the meeting after all resolutions have been considered.

We will now move to Resolution 2. Resolution 2 concerns the election of Kathryn Toohey as a director. The resolution is set out on the screen next to me, and I’ll give you a chance to read it. I and the rest of the Board recommend Kathryn’s election as a Director of Austal. I will vote the undirected proxies in favor of this resolution. Are there any questions on the resolution? Thank you.

Resolution #3 concerns my own election, and therefore, I’ll hand it over to Paddy Gregg to chair the meeting for this item.

Patrick Gregg

The resolution is set out on the screen next to me, and I’ll give you a chance to read it. I and rest of the Board recommend Richard’s election as a director of Austal. I will vote the undirected proxies in favor of the resolution. Are there any questions relating to the resolution? Thank you. I will hand back to Richard as we now move to Resolution 4.

Richard Spencer

Thank you, Paddy. Resolution 4 concerns the election of Brent Cubis as a director. The resolution is set out on the screen next to me. I and the rest of the Board recommend Brent’s reelection as a Director of Austal. I will vote the undirected proxies in favor of the resolution. Are there any questions related to this resolution? Thank you.

We’ll now move to Resolution 5. Resolutions 5, 6, 7 and 8 deal with the issue of share rights to some of the nonexecutive directors of Austal. At the last 4 annual general meetings, shareholders approved the grants of share rights to nonexecutive directors so that participating directors will be remunerated through a combination of 75% cash and 25% share rights. Resolutions 5, 6, 7 and 8 seeks shareholder approvals to continue the grant of share rights for 12 months following this Annual General Meeting.

Resolution 5 concerns the approval of the issue of shares to Lee Goddard. I and the rest of the Board recommend the approval of the share rights. I will vote the undirected proxies in favor of the resolution. Are there any questions relating to this resolution? Thank you.

Now we’ll move to Resolution 6. Six concerns the approval of the issue of share rights to Kathryn Toohey. I and the rest of the Board recommend the approval of issues of share rights to Kath. I will vote the undirected proxies in favor of the resolution. Are there any questions? Thank you.

We’ll now move to Resolution #7. Resolution 7 concerns the approval of the issue of share rights to Brent Cubis. I and the rest of the Board recommend the approval of the issues of share rights to Brent. I will vote the undirected proxies in favor of the resolution. Are there any questions related to this resolution? Thank you.

We’ll now move to Resolution 8. Resolution 8 concerns the approval of share — issue of share rights to Sarah Adam-Gedge. I and the rest of the Board recommend the approval of the issue of share rights to Sarah. I will vote the undirected proxies in favor of the resolution. Are there any questions as it relates to this resolution? Thank you.

We’ll now move to resolution 9. Resolution 9 concerns the approval to issue LTI rights Mr. Patrick Gregg. The resolution is set out on the screen next to me. I and the rest of the Board recommend voting in favor of the resolution. I will vote the undirected proxies in favor of the resolution. Are there any questions relating to this resolution? Thank you.

We’ll now move to Resolution 10. Resolution 10 concerns the approval to issue STI rights to Mr. Patrick Gregg. The resolution is set out on the screen next to me. I and the rest of the Board recommend voting in favor of the resolution. I will vote the undirected proxies in favor of the resolution. Are there any questions relating to this resolution? Thank you.

I now direct that the poll will be held in relation to each of the resolutions. Lindell Weston from Link Market Services Limited, Austal’s share registry provider, will conduct the poll. I retain the right to make all final decisions on who may vote. The votes cast and the declaration of the results of the poll. I ask Lindell to come forward to announce the directions in relation to the conduct of the poll procedure.

Unknown Attendee

Thank you. The persons entitled to vote on this poll are all shareholders, representatives and attorneys of shareholders and proxy holders who hold yellow voting cards. If you are here in more than one of those capacities, you will have been issued with as many yellow voting cards as you have separate capacities. On this card, you will find a series of boxes for voting. Please indicate on your card how you wish to vote by ticking or marking the appropriate square for all resolutions 1 through 10. You must mark either for or against for your vote to count. If you wish to cast some of your votes for the resolution and some of your votes against the resolution, write the amount of shares in each box.

The sum of votes cast for or against the resolution must not exceed your voting entitlement. If you are a proxy holder, a summary of the votes to which you are entitled has been provided with the yellow voting card. If you only have directed votes, you need to do nothing other than submit the voting card. Votes at your discretion are open votes as shown in the column titled Votes Open on your proxy summary and can be cast at your discretion by marking either the for or against box. Once you’ve finished marking your card, please place it in one of the ballot boxes circulating the room. If there are any aspects regarding the voting on which you are uncertain, please do not hesitate to ask the Link staff who will be circulating the room. Have — sorry, I got that Paddy. I’ll hand back to you.

[Voting]

Richard Spencer

I believe that those persons who wish to vote in the poll have now done so. If there’s anyone present who has not yet had their completed paper or ballot collected by Link, please raise your hand. If all persons have now voted, I declare the poll closed. I do not intend to keep the meeting open while the poll results are collected. The results of the poll will be announced to the ASX as required. There being no further business, I now declare the meeting closed, and thank you for your attendance. I’d also like to invite you all to join us for tea and refreshments in the back here, and also been advised that we must vacate the presence of the property by 5:00 p.m. Thank you all very much for participating.