Austal Signs Contract for Royal Australian Navy Patrol Boats & Announces New Defence Division

Austal has confirmed that it will design and build the Royal Australian Navy's new Armidale Class patrol boats following the signing of contracts today between the Australian Government, Defence Maritime Services (DMS) and Austal Ships valued at approximately $553 million.

Austal will build the fleet of 12 aluminium 56 metre patrol boats at its Henderson yard in Western Australia. DMS, a joint venture between Serco and P&O Maritime Services, will provide through life maintenance and support for the 15 year life of the boats.

Austal's share of the total contract value is approaching $300 million, which boosts the Group's order book across its four shipyards to 35 vessels at a value of approximately $760 million. Austal will begin construction of the Armidale Class patrol boats in early 2004, with the first vessel scheduled to enter service in mid 2005. The remaining vessels will be delivered to the Royal Australian Navy (RAN) over a 42-month period.

Austal Limited Executive Chairman, Mr John Rothwell said the RAN contract will provide Austal with a steady base load of work for three and a half years.

"At the same time, we have the production capacity to simultaneously meet existing orders for ferries and other vessels, including the ground breaking 126 metre trimaran for Fred Olsen S.A. which is currently under construction and due for launch in late 2004," he said.

Mr Rothwell said the RAN patrol boat contract highlighted the Company's strengthening position as a leading designer and builder of defence, military and law enforcement vessels for both Australian and international markets.

"Austal's success in winning the RAN contract is a powerful endorsement by Navy, Defence and Government of Austal’s pre-eminent position in ship design and construction technology," he said.

"The RAN is recognised throughout the world as a discriminating buyer of quality assets. Its selection of Austal to design and build the replacement fleet of patrol boats is recognition of Austal's ability to deliver premium products at commercially competitive prices."

Austal has established its reputation in the patrol boat market in recent years through a series of domestic and international contracts. The delivery of seven 16 metre and two 22 metre vessels to the New South Wales Water Police and eight 38 metre Bay Class patrol boats for the Australian Customs Service will be followed by the imminent delivery of three 22 metre coast guard vessels to the Government of Kuwait and ten 37.5 metre patrol boats for another Middle Eastern country in 2004/05.

Mr Rothwell view the RAN contract as a solid platform from which to aggressively grow Austal’s share of the defence, military and law enforcement markets.

In addition to patrol boats, Austal is increasingly active in other defence sectors. Austal's 101 metre high-speed ferry 'Westpac Express' is on charter to the US Marines in Okinawa operating as a theatre support vessel and the US military is expected to acquire a number of similar vessels in the next three to five years.

Austal is also a major partner in the General Dynamics team that is contracted to design a coastal warship for the US Navy. The team's proposal is based on Austal's trimaran design, a commercial variant of which is already under construction. The US Navy ultimately plans to acquire up to 60 coastal warships from one or more of the three competing design teams.

The breadth of Austal's existing capabilities in the defence sector, ranging from patrol boats and theatre support vessels to coastal warships, has led to the creation of a new division, Austal Defence, which is focussed on exploiting the significant opportunities in the naval, enforcement and military markets.

"Whilst Austal has already had great success in the defence sector, Austal Defence will allow us to focus our resources to generate even greater rewards in future," Mr Rothwell said.

ENDS