Austal Limited: Governance and Ethical Outlook

Running Head: ACCT20080 Ethics & Governance 1
ACCT20080 Ethics & Governance
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Institution
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ACCT20080 Ethics & Governance 2
Executive Summary
The report aimed at determining governance and ethical outlook of Austal Limited through
means of researching and making interpretations of voluntary disclosures of the company.
Voluntary disclosures help to clarify whether the company’s practices are generally acceptable or
not in the view of the interests of the society. As such, a company that is able to implement
practices that are acceptable to the society is able to flourish in its undertakings due to attraction
of potential customers and increased sales. Corporate governance at Austal Limited has been
through establishment of stakeholders, executive and non executive directors who form part of
its board responsible to ensuring that set objectives are achieved. Most importantly,
remunerations in form of total remuneration packages and total fixed remunerations are
advanced to the director and executives respectively as a compensation for their efforts towards
achievement of set goals of Austal Limited. Additionally, shareholder-agency and shareholder-
stewardship are the two orientation approaches that are being used at Austal to orient its board as
a way of achieving set objectives. Agency theory is appropriate for giving relevant explanations
to the above board orientation strategies at Austal Limited. Austal has also utilized annual
reports and websites as approaches for voluntarily disclosing information about its projects to the
society with a view of creating a legitimate perception among the society towards its activities.
Introduction
The purpose of this report to determine governance as well as ethical outlook of Austal Limited
Company through conducting research and interpreting its voluntary disclosures. Research
indicates that ethical outlook of a company is basically formulated by stakeholder who determine
what elements are generally acceptable and which elements are not acceptable at a company.

ACCT20080 Ethics & Governance 3
Voluntary disclosures help the company to directly communicate with the stakeholders like
investors, analysts, consultants and auditors in regards to its conduct in the society. On the
contrary, a firm which is focused on how the society views its undertakings in relation to the
environment will voluntarily disclose appropriate information to the society. Agency theory,
Stewardship theory and Legitimacy theory are the three theories that will be applied to determine
the governance and ethical outlook of Austal Limited Company. Also, elimination of information
gap about the governance and ethical practices that Austal Limited Company utilizes to ensure
that sound relationships with stakeholders and the society are maintained is the most essential
outcome.
Report
1. Introduction and summary of the company
Austal Limited was established in 1998 with its headquarters found in Perth, Australia. It is a
worldwide ship building entity and a prime contractor mainly specializing in designing,
constructing and supporting of commercial and defense vessels. Some of the products produced
by Austal Limited Company include; patrol boats, warships, passenger ferries, vehicle ferries,
Crew transfer ships, offshore wind-farm ships as well as naval ships. Austal Limited Company's
products are used by a multiple of countries across the world. Currently, Austal Limited
Company has three facilities that are engaging in building of ships for specialized purposes.
Vessels for defense are constructed and designed in Henderson, Australia as well as Mobile,
Alabama. Vessels that are used for commercial purposes are manufactured in Balamban,
Philippines (Globalsecurity.org, 2019). There are a variety of materials which are used in
building of ships and they include; ferrous metals, wood, plastics, fiber glass as well as non

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ferrous metals. The above materials are strong, durable and have high corrosion resistance in that
they cannot easily rust. In addition, ship supports are offered through centers for services that are
found in Darwin, San Diego, Muscat, Balamban and Henderson cities. As such, Austal Limited
has subsidiaries in United States, Oman and Philippines. Also, the key persons at Austal Limited
include; John Rothwell and David Singleton who work as Chairman and Chief Executive Officer
respectively.
Austal Limited Company falls under the industry of defense and Ship Building of
Australia. The industry has over ten companies that are engaging in ship building projects and
thus making it competitive. Some of the other companies which are engaging in ship building
projects include; BSC Marine Group, Incat, Mort's Dock, Oceanfast, Williamstown Dockyard
among others. Such a factor means that Austal Limited is not a monopolist in the defense and
ship building industry of Australia. Australian Submarine Company based in Adelaide was 50%
owned by the government and BAE systems which were a British company was based in
Melbourne (Globalsecurity.org, 2019). These two entities were the only two major ship builders
in Australia by the end of 2010. However there existed smaller naval ship yards in Western
Australia particularly in Henderson city which contributed to navy contracts. Over the past years,
Western Australia has been able to attract a huge volume of investments ion ship building which
has given rise to big companies like Austal Limited. As part of recent history of Austal, the
company had constructed and designed more than 260 ships for a multiple of defense forces as
well as commercial operators by 2017. It has been in position to attract clients across the world
and they include; U.S Navy, Condor ferries, Royal Navy of Oman as well as Royal Australian
Navy. As of 2016, Austal Limited had close to 5,500 employees. The company had an operating
income of A$29 million, Revenue of A$1.309 billion and net income of A$15 million in 2017