Good morning, everybody, and welcome to the FY25 Full-Year Results Call. I'm Paddy Gregg, the CEO at Austal, and I'm joined by our CFO, Christian Johnstone. This morning, we'll be presenting in the same format as usual, with me giving business overview and context, while Christian focuses on the financial details. As always, we plan to present for no more than 30 minutes to make sure there's plenty of time for questions. For me, this really has been a transformational year for the company. We've seen important inflection points on earnings performance, the balance sheet repositioned for major expansion in manufacturing capacity in the U.S., further growth potential in our near-record order book following the signing of the Strategic Shipbuilding Agreement yesterday. Much of this has been achieved this year. We have added a slide in the published investor pack to try and summarize everything that has happened.
We've had board and leadership changes. We've turned around areas of poor performance. We continue to deliver on contracts and hand over ships. I think this has really been recognized by our loyal investors with the re-rate and the share price. In my mind, the outlook is fantastic in both the U.S. and Australia. I'm going to talk through where the business is today and then finish by giving you some more detail on where I see the outlook going. In the pack, we've got a couple of slides covering key facts. It's really just a summary overview of the business for anyone who doesn't know Austal. We operate five shipyards in four countries. We have eight service centers. At the minute, we've got 49 ships under construction or scheduled, with 73 ships under sustainment contracts.
Importantly, we've continued to add to the order book as it stands at a near-record high. This year, we received orders for seven ships and also delivered seven this year. Headcount is growing globally. We're standing at nearly 4,500 people. Just a reminder, the vast majority of the work that we do is in the defense sector, and that will continue to grow relative to commercial shipbuilding going forward. If I jump straight into the financial highlights, we focused on delivering earnings expectations and increased guidance twice this year, which has been very pleasing. We're building sustainable growth as seen through the order book. That was predominantly in the U.S. and now to be followed in Australia with the signing of the Strategic Shipbuilding Agreement contract. This is all about us creating long-term value for shareholders, as we've spoken about in previous years.
When I look at the results, I see greens right across the key financial measures, demonstrating strong business performance with year-on-year improvement and the foundation laid for growth. EBIT even doubled from FY24 to AUD 113.4 million this year, and that loss we saw in Australasia last year not only reversed, but the segment returned to profitable. Revenue is growing in line with forecast as new programs move from design phases into construction, with a 24% year-on-year increase. This is encouraging as legacy programs tail off, with the delivery of the last LCS vessel earlier this year. The order book at AUD 13 billion secures revenue for years. It's also set to grow following the Strategic Shipbuilding Agreement and the award of the Landing Craft Medium and Landing Craft Heavy contracts, which will follow this year.
Options that were previously announced are being converted to orders as we forecast, like OPC that we announced a few weeks ago. There's also growth in the submarine module production, and the commercial yards have signed order books on future potential for growth, particularly in the low emissions space, demonstrated by the Gotland contract that we signed earlier this year. Both the submarine module manufacturing facility, or MMF3 as we call it, and the final assembly sheds for large steel ships, final assembly two, are funded and in construction to support future growth. In the investor pack, you can see progress photos of MMF3. We delivered an excellent cash performance with net cash of AUD 453 million this year, which was underpinned by operational performance. We also had the equity raise and debt refinance, both of which were oversubscribed.
General purpose frigate Diane Select, ahead of the anticipated schedule in December, I see as a real positive for us. I'm very excited about working with Mitsubishi on the Mogami class on what will be a strategically important program for both nations in terms of Japan's first defense export and the capability that it will bring to Australia. Let's not forget about the additional ABF, Australian Border Force Cape Class vessels that were outlined in the Strategic Defense Review, providing additional opportunity for growth on top of what we've talked about in the Strategic Shipbuilding Agreement. Thinking longer term, we've also talked about AUKUS and how Australia can benefit from Pillar 1 with the submarine modules we're already building and the growth that will come there. Pillar 2 is all about technology, and both the U.S.
and Australia are pleased to see that Austal's technology business, including the Advanced Manufacturing Center of Excellence in the U.S., has started contributing to performance this year, and I anticipate that will continue to grow. For those of you that are looking at the pack, FY2025, the year that was, with so much happening this financial year, I've included a slide in the pack to remind you of all that we have achieved. It's hard to pick favorites, but many of these achievements have been exceptional and in the making for some years. This reflects the hard work of all Austal employees globally and what they have achieved. As I often say, sheds don't build ships, and I'm very proud of the commitment of the workforce, their drive, and their performance this year. Our people are undoubtedly our greatest asset looking at the order book.
For those of you who like to model bottom up, we've included two slides in the pack on the defense contracts to try and help you. We haven't included the commercial vessels, but relatively fewer of these and our ASX announcements. I'm sure you've got the information that you need to create your models. It's really pleasing to see these commercial orders have returned following the challenging post-COVID period, and we're seeing those yards really start to ramp up in the future. No drag from those facilities and great contribution coming. With that, I'll hand over to Christian to talk through some of the financial highlights.
Thank you, Paddy. It's my pleasure to present Austal's FY25 performance highlights and it's green across the board with all financial metrics improving. On slide nine, you can see those results. Before we get into the details, the key message is that we had at least double-digit growth across all key financial performance metrics, revenue, earnings, and impact, which represents the results of the focused efforts of our employees across the group to construct and deliver ships, submarine modules, sustainment services, and additive manufacturing to our growing customer base. We strengthened our balance sheet, had strong operating cash flow, and have a robust cash balance, which positions us for sustained growth based on our backlog and pipeline. Turning to slide 10, shows our revenue range. Group revenue increased 24.1%, which was solid across the group.
U.S. shipbuilding increased 28% based on increased revenue from the OPC , CAS, and submarine contracts, which more than offset the near completion of the LCS and EPF programs. U.S. support revenue contracted by 9% due to the change in forward deployment of the LCS vessels, which reduced top line revenue. Australasia shipbuilding had a 60% growth with two key drivers being the deployment of Austal as the Commonwealth of Australia's sovereign shipbuilder and the work performed on the first two key contracts under this umbrella for the Australian Army. In addition, the work completed from an Asian shipbuilding yard was a strong contributor to this performance. The Australasia support business improved by 27% due to the increase in servicing work driven by an expansion of the fleet sustainment activities. On slide 11, it shows our group EBIT movement.
As previously mentioned, earnings more than doubled to AUD 113 million for FY25. The standard year-on-year earnings growth was Australasia shipbuilding, which benefited from the work performed on the two Landing Craft programs and the commercial shipbuilding activities progressed by our Philippine and Vietnamese yards. The U.S. support business was a gap, which again delivered a strong improvement in earnings in financial year 2025, benefiting from the contribution from the Advanced Manufacturing Center of Excellence facility in Danville. The Australasia support business had a concerted focus on shortening the invoice cycle, which led to a significant 24% increase in earnings. There was a contraction in earnings from U.S.
shipbuilding, primarily driven by the margin compression as a result of the wind-down of the LCS and EMF programs, the earlier stages of the wind-up of the OPC and T-AGOS programs, and from two owners' contracts that we substantially progressed in financial year 2025. On slide 12 shows our segment breakdown. The year-on-year movement across the business segments were all green, with an improvement in EBIT margins by 180 basis points across the group. The customer split is dominated by defense, which makes up 97% of our revenue. When analyzing the geographical split between the U.S. and Australasia, it shows a significant improvement of our Australasian business, which contributed to the overall group margin improvement. On slide 15 shows the balance sheet.
The group balance sheet strengthened by over 30% to AUD 1.3 billion, which was driven by the receipts under the submarine capacity expansion contract with General Dynamics Electric Boat, the proceeds from the capital raising, the repayment of the short-term debt facility, and the improvement generated from the doubling of earnings. The group has a significant cash balance of AUD 583 million, which positions us to deliver on our capital and operational growth projects. On slide 14 shows our group cash movement. We have prudently focused our group cash resources to invest in our business, to expand our capacity, to deliver expanded production, to deliver the order book. The key highlights are the significant cash flow generated from operations of over AUD 400 million, which enabled the repayment of AUD 40 million of debt and the investment of AUD 146 million in enhancing capital expenditure.
The net proceeds from our successful and oversubscribed capital raising of AUD 250 million positions us to deploy significant infrastructure expansions to underpin increasing production of submarine modules and to deliver large shipbuilding programs to our key U.S. customers of U.S. Navy and U.S. Coast Guard. I will now hand back to Paddy.
Thanks very much, Christian. Just before I conclude with my strategic outlook, let me touch on the Strategic Shipbuilding Agreement. I often get asked exactly what it is. For those of you who have not read in detail our ASX releases, let me give you a short summary. It really is a defining moment for Austal. It establishes Austal Defense Australia as the Commonwealth of Australia's strategic shipbuilder for surface combatant vessels to be built at Henderson here in Western Australia. It contributes to the Commonwealth's strategic objective of continuous naval shipbuilding capability in Western Australia and the development of Australian sovereign shipbuilding capability. Austal Defense Australia becomes the prime contractor for the build and delivery of the Landing Craft Medium and Landing Craft Heavy programs.
In return, Austal is provided a sovereign share, which provides the Commonwealth with a call option over Austal Defense Australia if the Strategic Shipbuilding Agreement is terminated or a relevant event like change of control occurs. I'm sure we'll be talking about this for a long time to come. Strategic outlook, in summary, our key growth pillars and increased defense expenditure are set to drive positive momentum in the medium term. We have revenue and earnings growth with underlying business performance ahead of expectations with near record AUD 113 million of EBIT in FY2025. The order book of AUD 113 billion has grown at 25% CAGR from FY2025 with continued growth expected in Australia, specifically through the Shipbuilding Agreement, as I have discussed. This will also deliver greater contract diversity, lowering the overall risk profile of the business.
We're making significant CapEx investment facilities for growth, particularly in the United States in Mobile. I see additional opportunities for growth through the AUKUS agreement within both submarine modules and technological capabilities. We're capitalizing on defense spend trend that's anticipated in the United States and Australia and globally. That is all in the face of growing global conflicts. It is a good time to be in the defense sector. The business is performing and executing the strategy we set out five years ago. This really has been a transformational year for Austal. With that, I'm happy to open up to questions. Thank you.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you are on a speakerphone, please pick up the handset to ask your question. Today's first question comes from Mitchell Sonogan with Macquarie . Please go ahead.
Good morning, Paddy and Christian. Thanks for taking the questions. Can you hear me?
Yes, loud and clear.
Yep, thanks guys. Paddy, just a quick one. I guess it's like looking at into 2026. I know you're going to provide an update at the AGM and expect some revenue and earnings growth there. Do you mind just providing any color you can, particularly in the US segment about how we should think about margins there, particularly in shipbuilding? Obviously, a little bit volatile, half on half. Do you mind just giving us a little bit of color of how we should think about margins moving through ships, but also support given the high margin in the second half there? Just talk to any factors there, whether incentive payments, etc. Thanks.
Yeah, sure. In U.S. shipbuilding, we have a little bit of a drag with some of the contracts remaining onerous around T-ATS and AFDM. We're pushing very hard to resolve T-ATS in the near future. You know, we've talked about this on calls, but that's been something we've been working with the U.S. Navy on. It's got to be a feature of this half. Taking away that drag, we think we're at the end of AFDM and have full understanding of exactly where that's going to land. As we get through those programs, we should see the revenue increase and we should see the profitability alongside it increase. We're coming through that transition phase. We delivered the last LCS , so there'll be very little or no revenue from that going forward.
We're transitioning very nicely, with actually the T-ATS program providing significant revenue contribution and really in full swing now. We've got the LCU program in full swing. We've got the OPC right into production. You saw that we had the order for the second one, so those options being called off. I'm confident about the U.S. business and growth in both revenue and profit going forward.
Thank you, very clear. Over in Australasia, a much better result here. It sounds like you've got good visibility into growing revenues. Can you maybe just give a little bit more color on the Strategic Shipbuilding Agreement? I guess I'm just keen to understand where the Landing Craft Medium comes in and you really start to see revenue ramping up from that. Likewise, just a broad update of what you can give us now of when we should expect to see the Landing Craft Heavy contract finalized and when you expect that program starts to ramp up as well. Thank you.
Yeah, sure. In terms of what we're at at the minute, we've got Cape Class vessels under construction. We've got the last two Guardian-class patrol boats under construction. We're working with Border Force on trying to turn what was announced in the Strategic Shipbuilding Agreement, sorry, in the Defense Strategic Review, into orders for additional Capes going forward, which would provide a lovely baseload through the Australian business. We're currently working on the Landing Craft Medium program. We've got an early implementation contract there with the Commonwealth of Australia. We need to, in the near future, turn that into a full contract that we'll be able to announce all 18 vessels and the full value of the contract. That is actually in play in the design phase at the moment.
The target for the Heavy Landing Craft , if we can really get going on that, I'd hope to be in contract by the end of this calendar year. Those two programs would probably add the best part of AUD 5 billion to the order book this calendar year and really set us up for years of work with 18 medium landing craft and eight heavy landing craft. Pretty exciting time. Australia really set to follow what we've done in the US.
Yeah, very clear. Just a final quick one. Thanks, Paddy. Obviously, a lot of stuff happening over in the U.S. and the submarine module fabrication and outfitting facility is only just ramping up. I guess medium term over there, do you see opportunities to work with other primes on maybe some of the other big programs you're seeing out there? Obviously, that's on the submarine program, but in the destroyer programs and things, I think it just feels like the U.S. is trying to ramp up as quickly as they can and there's not enough capacity out there. Do you mind just giving a broader update on, I guess, Austal's position in that and your conversations and how your view is on that medium-term growth opportunity in the US? Thanks, guys.
Yeah, that's a great question, Mitch. Probably four or five years ago, we changed the strategy around only being a prime contractor to one where we will be much more flexible and where we have capacity, capability, and we will happily work with partners to keep our yard busy and deliver work. You see that with submarine modules. You saw that with aircraft carrier elevators, little bits of the overload program on the medium-sized autonomous vessels. It's absolutely something that we will do going forward. We see it as a great opportunity to support maybe things like destroyers in the U.S., the submarine modules. We're absolutely doing it and we will continue to do it. We are open to working with others. I think it's a real good way to do it that you don't need to tie up an entire shed to consolidate a ship.
Modules are nice pieces of work we can fit around the programs that we are building in totality and priming. There are quite a few conversations we're having in the U.S. about how we can use our capacity and capability. As you know, we've got space to expand there as well. If we were successful in winning more module work or subcontract work, working with others, we've got the ability to add in both in terms of sheds and capacity and people to recruit as well. It's absolutely a feature of our strategy going forward.
Thank you. Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. Our next question today comes from Sam Teeger at Citi. Please go ahead.
Oh, hi Paddy. Hi, Christian. Firstly, congratulations not only on the result, but more on how you've grown this business more broadly. It feels like yesterday we were just talking about LCC and EPF, and now there's so many different contracts. It's harder for us to keep on top of everything. First question, I just want to dig into Australasia a bit more. The performance was strong, and you called out the benefit of SSA pre-contract work. Is it reasonable for us to assume there'll be more SSA -related EBIT in 2026 relative to 2025 with LCM and LCH ramping up? Do you think these projects take a bit longer to get off the ground? Even when they do, the margin will be quite low for the first boat of each.
Anything you can share with us around Australasia EBIT in FY2026 would be great. Thanks.
Thanks, Sam. Yeah, I think at a high level, there's been exceptional performance this year to double EBIT from last year. I don't think any of you would be surprised if I said don't expect us to double it again. That's not a trick that is possible. With the stability we see going through the commercial yards and with the stability in the Australian yards through the Strategic Shipbuilding Agreement, I don't think there's much risk of us going backwards. We recognize profit in line with revenue, and the Landing Craft Medium ships are relatively low risk in terms of their complexity. I would hope that we will be reasonably consistent in terms of how we trade profits. As we see the revenue grow, we should see the profit in the business grow.
I would hope we're not going backwards and we've got the opportunity just to keep a nice steady growth over the next few years as these programs all come online.
Okay, great. Support had a great result and that AUD 500 million target, which initially seemed like a big stretch, now seems probably too conservative. I'm conscious though that support EBIT has been lumpy over the years. Is there anything that could surprise us with support in FY2026, or should we expect ongoing growth in support EBIT from the AUD 88.7 million from here?
Yeah, I think we were slightly ahead of that AUD 500 million target last year, and you saw not quite as big an increase this year. There are a few things that are happening in the business. In Australia, as we deliver more ships, there's more opportunity to win work. Things like the early Guardian-class ships that we delivered are now starting to come into five-yearly maintenance periods, which brings increased revenue. We're having a good look at what we can do with our Cairns facility and potential for investment to capture as much of that opportunity as possible. The last LCS just being delivered, we're still delivering EPF vessels. We're very much looking in the U.S. about where those LCS are being deployed and where we should target our maintenance facilities and people to capture as much work there as possible.
We're still working to get the floating dock operational in San Diego, and the team over there have made some great progress this year. That should be operational mid this financial year, which again gives us another opportunity for increase. Yes, you're right, Sam. You've been on the journey long enough that you recognize that sometimes there is a slight lag between the revenue that we generate from shipbuilding and when we can actually recognize the profit. Based on sometimes you've got a lot of information to provide post the physical work, which does see some disconnect between profit and revenue. We worked very hard to address that. There was a lot of focus on that in Australasia this year. Longer term, we do see support work as lower risk. We're not designing, building for the first time, commissioning, and proving that we've met the design requirements.
A lot of maintenance work is remove and replace. It's still a segment that we want to try and drive because we think with that less risk, there is an opportunity for more profitability in that sector, and we'll continue to push that.
Great, thanks. Last question. On slide 17 of your presentation, it's the map of Mobile and what you have on the land there. In the middle, you have this submarine industrial base. Just confirming, this is not owned by Austal, and is this something you'd like to acquire? What's the reference to the AUD 152 million?
We announced that, I think, back in December, September last year. That was really the U.S. Navy purchasing what was formerly the Alabama shipyard, now known as the Mobile Naval Yard. They have a great desire to increase shipbuilding capability and capacity in the Mobile area. We think we've got access to land, as is seen there. We think we've got access to people and a real opportunity to try and increase defense and Navy capacity that you read about in the press every day. That is, I don't think we want to own it, but that is absolutely an opportunity for us to expand. That's exactly why that site has been secured by Navy to make sure that no other industry goes in there.
It's a future-free option, the way I look at it, that if we see sufficient work out there, there's land available that we can invest in. It's just a great insurance policy for the future.
Right, just last one. Just given the amount of work that you are winning, can you just talk and compare Henderson versus Mobile in terms of how many people you have now, how many people you need to be able to deliver on all this work, and which region is easier and which one's harder to get all the people? Thanks.
Yeah, good question. Interestingly, there's a lot of similarities between our strategy for increasing both in Mobile and here in Henderson. Both facilities probably need the best part of 1,000 people over the next few years, driven by submarine modules predominantly in the U.S. and Mobile. Here it will be when Landing Craft Medium and then Heavy start really coming online in the next couple of years. Our recruitment strategy has been around making the best use of our shipbuilding capability, our 37 years of history, our 360 ships, that real strong shipbuilding core that we've got. We're big believers in bringing people in at the bottom, training them up, both in terms of shipbuilding skills and capability, in terms of culture, in terms of expectations from the customer, really getting those people in and getting them shaped the way we want them to shape, and then promoting from within.
Giving our employees a career, giving them the opportunity to progress at Austal without the need to go away, try other things. The fact that we're bringing people in at the bottom and promoting from within helps prevent major wage growth. I think if you're bringing people in sideways, everybody wants a back to move, so you can very quickly create your own internal inflation. That is the strategy we will adopt both in Mobile and here in Henderson. In both the yards, we've been slightly higher in terms of overall numbers than we are today. It looks like there are people that are available and becoming available as they leave school as youngsters or indeed people who want to come back and enjoy a slightly different quality of life than the likes of the mining sector gives here with the fly-in, fly-out lifestyle.
I'm not saying it's going to be easy. We know what we want to do. We know how we're going to try and do it. We just now need to go and get after it and make it happen.
Thanks.
Thank you. Our next question today comes from David Fraser at MST Financial. Please go ahead.
Morning, James. Can you hear me okay?
Yeah, thanks, David.
Okay, Christian. Three or four questions if that's okay. Obviously, with the Landing Craft Heavy and Medium, where are you going to build them at Henderson? The CapEx associated with that, I think I was led to believe that it was going to be funded by the government. Is that still the case?
Yeah, so Landing Craft Medium fits very nicely in our existing facility, 100 tons beach road down in Henderson. That may require a handful of millions just around specifics for that steel fabrication and those landing crafts. Nothing that gets us particularly stressed. We're working with the Commonwealth now on what the right build strategy for the Landing Craft Heavy is. They are probably too big for our existing facilities. As you remember, Richard Marles, the Deputy Prime Minister and Defense Minister, announced a AUD 127 million study that is underway around the defense precinct, what that looks like, and where vessels like the Landing Craft Heavy will be built. We are working with them. It's our understanding that they'd like to create a defense precinct in the same way they did on Osborne. That is something that they would like to own and therefore fund.
I don't think there will be a huge need for our capital. At the same time, if the opportunity arose for us to be masters of our own destiny, find the right site, invest in it backed by these government contracts, and we could get the return on it, it's certainly something we would look at, but it's not what we anticipate will happen today.
Okay, thanks. I'll jump to Christian if it's okay. Christian, where are we at with the REAs? I guess first is the provisions. Given that you seem to be progressing on all of those programs, I would have thought the REAs would come relatively quickly.
Yeah, thanks, David. Yeah, we are progressing. We've got three ships that are progressing through the yard under the T-ATS program. We continue to discuss with the U.S. Navy, have not finalized the REA, but have reflected the impact of what we would expect the outcome to be in the financial statements, as we've done in the past. I think when you kind of take a step back and look at the T-ATS program, it has not materially changed the position from FY2024 to FY2025. The probably key thing on the settlement of the REA, what it does do is, you know, we kind of tried to allude to this, that it is an onerous contract. What's happened is there has been an operational cash flow drain from that program.
As soon as the REA is settled, we will have a significant cash investment because of the progress we've made under those ships and to date. That's probably something I would think for the half year we will see an REA settlement, which will tell the market around what the quantum is. It's more the cash injection that will come and effectively to recoup some of the onerous nature of that program. We'll get a significant cash injection when that's finalized.
Are the REA potential REAs bigger than what you provisioned?
It might not, it wouldn't be materially bigger. I think like everything, we have to be as accurate as possible. The current position that we have reflects our ongoing discussions with Navy. It might change, but it's not going to be material. If it was material, we would have had to take that into the position. Yeah.
Okay. I'm jumping now. MMF3, you got obviously 350 million U.S. So you've received the remaining 100 million US already. Is that correct?
No, no, that 100. So the kind of breakdown of the $450 million contract, there's five different milestones that trigger the cash payments. We've met two of them. It means we've received 350 million US dollars. The 100 to come is three different milestones, but they'll be towards the end of construction. It'll be a bit of a delay before we actually get that extra $100 million in. Probably what's more important then is just to do the kind of cash flow profile. Whilst we've had $350 million in from that contract, we've had to pay tax on it. That's probably about 80 million US dollars because we're a large corporate user, a large taxpayer in the U.S. We pay every quarter. The U.S. tax authorities follow the money, not the revenue recognition. We've paid out tax on that already. As Paddy mentioned, you've seen pictures in the park.
We've started expanding and deploying those funds to the construction of the MMSC facility already. What we've put in the presentation on the balance sheet, I'll just get it. It's on, if you can have a look on slide 13, we've tried to give a bit of a flavor of out of the $583 million we have at June 2025, how much of that is represented from that MMSC contract. It's really $200 million. If when you take the $350 million, you take off tax and take off the amount we've already spent on the contract, housed within that cash balance at June is probably equivalent of 200 million US dollars.
Okay. On the accounting, you noted in the accounts that I think it was around about $6 million was in this year.
That's right.
With another 23 next year, 26 for the current year we're in, and $500 million to go over eight and a half years. Once you get that $100 million U.S., once you finish completion at the back end of 2026, I presume that $500 million will step up by another $100 million U.S. here. Is that correct?
No, it doesn't. What that represents is the totality of the $450 million contract. What we've had to do, because of a 10-year contract, we're going to recognize that revenue and earnings, and there's no cost associated with that contract. That will drop down to the earnings part of our income statement.
Yeah.
What we're showing in that particular note is, look, there's a build-up, and there's quite a significant step-up that you'll see. In FY2025, it was only $6.2 million. FY2026, we expect, and it's a bit of a forecast based on what we expect to happen, will be $23.3 million. The balance of the contract has to be unwound over the balance of the 10 years of its remaining. At eight and a half years, there's about $59 million per year on average. You can see it'll be a significant step up once the construction has actually been completed.
Okay, great. Thanks, Christian. Last one, Paddy. There wasn't in the room. No one's actually asked a question about it yet. Where do you think the government is on FERB? I guess the second part of it with the setting up of the structure with the government involved in the golden share, et cetera. Who are your partners or potential partners for the Landing Craft Heavy and Medium? How will they react, work with Hanwha, if Hanwha actually got control?
Yeah, great questions, David. As far as Hanwha is concerned, all quiet at the minute. We saw that the Treasurer made an announcement a few weeks ago at a press conference that he would make a decision on whether they could go to 19.9% in September. He didn't put a date on it, but we await his response and will respect his decision. That's absolutely his decision to make. Once he's made it, we'll see what happens next. In terms of the Strategic Shipbuilding Agreement and the golden share, if you like, that's really to give the Commonwealth certainty that they can deal with any situation. They've got in legislation, they've got 19.9% there for a reason. On one hand, one could expect that they would be allowed to go to 19.9%. Otherwise, what's the point in having that level set? On the other hand, U.S.
nuclear submarine modules just been appointed strategic shipbuilder. It'll be really interesting to see which way he goes. With a long-term partnership with the government here through the Strategic Shipbuilding Agreement, we will work hand in hand with them to get the right answer. I think it's natural to assume that there would be some nervousness from the designers on these programs. So Diamond on the Landing Craft Heavy and Mitsubishi on the general purpose frigate. Again, that's something we will work through with the Commonwealth. Earning 19.9% of the company does not give you access to any sensitive technical information. I think it is a situation that we could absolutely manage, but no doubt it would cause some angst on the way through.
Okay, great. Thanks very much, guys.
Thanks, David.
Thank you. There are no further questions at this time. I'll now hand back to Mr. Gregg for closing remarks.
Yeah, thanks for taking the time to dial in this morning, everybody. As you know, we've been on a pretty big turnaround for the last four or five years, and it's great to see this being such a transformational year for the business. We've got a lot ahead of us and a lot to deliver and a lot of opportunities to keep prosecuting. We'll have the whole team focused on making sure we do that and delivering great results to our loyal shareholders. Thanks for your support and your questions this morning.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.