Ethical Standards and Performance

The Board acknowledges the need for continued maintenance of the highest standards of Corporate Governance Practice and ethical conduct by all Directors and employees of the Austal Group. A Code of Conduct has been adopted under which the Directors and senior management employees are expected to:

• act honestly and in good faith
• exercise due care and diligence in fulfilling the functions of office
• use their powers to act in the best interests of the Company as a whole
• avoid conflicts and make full disclosure of any possible conflict of interest
• comply with the law
• directors are obliged to be independent in judgement and ensure all reasonable steps are taken to be satisfied as to the soundness of Board decisions
• encourage the reporting and investigating of unlawful and unethical behaviour
• comply with the share trading rules outlined in their respective Codes of Conduct.

A Director shall comply with the Company's share trading rules and like rules, which may from time to time be added thereto or substituted therefore by the Directors. The current rules are:

1. notwithstanding the requirements of the legislation concerning insider trading, Directors were obliged to restrict their trading in securities of Austal Limited shares to a period of four months following the release by Austal Limited of half yearly and preliminary final reports. Directors are also restricted from trading in Austal Limited shares for 24 hours following any announcement by the Company to the Australian Stock Exchange
    
2. any Director intending to buy or sell shares in the Company or any company in which the Company has an interest, is required to notify the Chairman of his/her intentions before proceeding with the transaction
    
3. directors, managers and staff are not permitted to deal in the Company's securities if they are in possession of material information which is not available to the share market, but if it were, may impact the value at which the securities are traded. In April 2004 procedures were put in place to monitor trading of the Company's securities by Directors, managers and staff.