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Chairman’s Report

ASC Chairman, Bruce Carter
ASC Chairman, Bruce Carter

On behalf of the Board of ASC Pty Ltd, I am pleased to present the company’s 2019 Annual Report.

Throughout the year, ASC continued its strong operational performance, again exceeding the RAN’s maintenance performance targets on the CCSM program, and successful delivery of its shipbuilding programs.

Whilst we sought to establish new partnerships and lines of revenue, ASC continued to work closely and collaboratively with our Customers, CASG, the Department of Defence (DoD) and the RAN, and with our Submarine Enterprise, AWD Alliance and OPV Program partners. ASC remains committed to further strengthening our existing relationships and growing new ones to strengthen our support of Australia’s national maritime and defence strategies.

During the year, ASC commenced two major CCSM dockings – a Mid-Cycle Docking (MCD) and a Full-Cycle Docking (FCD) – while also delivering shorter maintenance activities and supporting Australia’s operational submarines.

The 2018/19 financial year saw the completion of ASC’s structural separation, with ASC Shipbuilding transitioning to a subsidiary of BAE Systems Australia and ASC now engages an ASC Shipbuilding workforce under contract, to successfully deliver its shipbuilding programs.

Significant milestones were again achieved on ASC’s OPV and AWD shipbuilding programs. ASC celebrated the official Keel Laying ceremony of the lead Arafura Class OPV in May 2019, while the AWD program saw the commissioning of the second destroyer, HMAS Brisbane, into service with the RAN in October 2018 and the third and final destroyer, working towards its Provisional Acceptance in early 2020.

Notwithstanding ASC’s positive results and the Program achievement that our team made throughout the period, the strength of our people again displayed an unwavering commitment to safety, quality and innovation, in pursuit of excellent operational performance.

ASC recorded profit after tax of $30.3 million (2017/18: $32.0 million) and annual revenue and other income of $743.0 million (2017/18: $765.1 million).

Collins Class Submarine Program

In 2018/19, ASC again exceeded the RAN maintenance performance targets for the CCSM, completing the second year of Performance Period Three of the In-Service Support Contract (ISSC) and continuing to work closely with our Submarine Enterprise partners to achieve beyond benchmark performance.

At the close of the 2018/19 financial year, ASC is mid-way through its FCD of a CCSM, with HMAS Waller, and mid-way through the MCD of HMAS Rankin – the second submarine to undergo a 12-month docking of this nature in Western Australia, and I am pleased to report that the team continue to rise to the challenge of an accelerated timeframe and additional capability insertions.

ASC is consistently redesigning the limits of the CCSM fleet, integrating innovations and extending capability beyond the original CCSM design.

ASC’s CCSM sustainment activities continue to overcome asset management challenges that create increased load on all CCSM platform systems, affecting both sustainment and operations. ASC’s Asset Management strategy for delivering our Platform Systems Integration role has delivered assessment and ongoing management of impacts and changes to the submarine design such as a 46 percent increase in crew size from the original design, coupled with a fourfold increase in usage over the last decade.

Notwithstanding an ageing fleet, ASC’s sustainment activities allow increased crewing and operational readiness; while performing at or above the Performance Benchmarks defined by the Coles Review.

Following further development of its supply chain capability, in September 2018 ASC became the first Australian defence organisation to achieve certification against global standards with Chartered Institute of Procurement and Supply (CIPS) Standard Certification.

In 2018/19 ASC worked with the RAN for the provision of CCSM training services, successfully delivering submarine training and ensuring our Submariners and Defence personnel are equipped with world-class submarine skills for the future.

ASC’s submarine capability development work continued across the period, leveraging its operational performance on the CCSM program to support capability retention within ASC and the strategic build-up of Australia’s sovereign submarine industry in support of the Future Submarine
(FSM) program. In addition to leveraging its submarine design and shipbuilding capability and expertise, ASC is collaborating with a number of national and international maritime businesses, securing new lines of revenue to support Life of Type Extension (LoTE), FSM and other international programs and capability retention.

Offshore Patrol Vessel and Air Warfare Destroyer Shipbuilding Programs

In 2018/19, ASC’s former shipbuilding business, ASC Shipbuilding, continued its operational performance improvement and together with its AWD Alliance partners, celebrated several significant milestones on the AWD program.

Both the lead and second AWDs, HMAS Hobart and HMAS Brisbane have been commissioned into service, with the third ship future destroyer Sydney, due for Provisional Acceptance in early 2020, which will include additional scope implemented to support the MH-60R Romeo helicopter, completed by ASC as the AWD shipbuilder.

Construction of the lead and second OPVs progressed well and in line with baselined targets. The lead OPV celebrated its official Keel Laying Ceremony in May 2019, with construction of the second vessel commencing in June 2019.

In conjunction with its beyond benchmark submarine sustainment, ASC’s successful delivery of the Hobart Class AWDs and construction of the Arafura Class OPVs reinforces its role as a critical and trusted partner to Defence, in delivery of its current programs and in winning future work.

Structural Separation of ASC Shipbuilding

On 29 June 2018, the Federal Government announced that ASC Shipbuilding would become a subsidiary of BAE Systems for the build of the Hunter Class Frigate Program.

Structural separation was successfully completed in December 2018 and ASC Shipbuilding successfully transitioned to become a subsidiary of BAE Systems Australia.

ASC Shipbuilding is now working under contracts to ASC to successfully deliver its shipbuilding programs.

Full-Cycle Docking Transition

ASC remains agile in providing support to the DoD in their investigation into the ongoing sustainment and LoTE of the CCSM fleet, including the possibility of transition of CCSM FCDs and the Submarine Enterprise‘s evolving industrial base options.

Conclusion

On behalf of the Board, I would like to congratulate all ASC staff on their commitment to safety, quality, innovation and ongoing improvement to ensure ASC’s position as a critical part of Australia’s naval submarine and shipbuilding strategy.

ASC’s workforce makes up Australia’s sovereign industrial defence capability and their continued determination and resilience is a testament to ASC’s position as an enduring part of Australia’s national security.

Our workforce is the foundation upon which our ongoing success is built, and I am very proud of the work they do every day. As a business, ASC remains committed to attracting, retaining and growing our uniquely skilled people and their fundamental role as part of Australia’s submarine and shipbuilding capability.

Bruce Carter Signature
Bruce Carter,
Chairman