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T: +61 2 9956 8906E: accounts@aimex.asn.au

www.aimex.asn.au www.superyachtaustralia.com

www.commercialmarine.com.auABN: 94 082 384 030

Submission SummaryThe Opportunity: Develop 2-4 floating superyacht berths, leveraging existing marine infrastructure in Darwin to allow superyachts to berth comfortably, provision, undertake in water maintenance and allow their crew downtime in Darwin and more broadly in the Northern Territory.

Creating Jobs: The initiative has the potential to support between 540 and 750 jobs annually ($72 million to $96 million in wages)

Attracting Investment: Captains and owners visit where the vessels are berthed and so the installation of this infrastructure presents a unique opportunity to open up the awareness of Darwin and the Northern Territory to overseas investors and ultra high net worth individuals that would otherwise never visit and subsequently invest in Darwin.

Structural & Regulatory Reform: Foreign vessels can now charter in Australian waters, which is the leading edge of significant growth in the superyacht sector for foreign vessels. No regulatory reform is required from the Northern Territory government to support this growth opportunity.

Building on the Territory’s Strategic Advantage: The Territory has a unique brand, existing international port (air and marine) infrastructure and a social structure and tourism offering well aligned to the captains and crew of the superyacht sector. The initiative will also leverage the Territory’s existing and highly skilled marine maintenance sector.

Strengthening Ties with Investors & Trade Partners: The Territory is within close proximity of the fastest growing number of high net worth individuals globally, the fastest growing population globally and the fastest growing sector of superyachts globally for ownership and cruising.

The Outcome: An investment of approximately $6 million to construct and install the infrastructure would be required to catalyse a commercially viable superyacht berth facility in Darwin. This investment would result in (at a minimum) the development of 2-4 floating berths and potentially 6-8 berths, allowing Darwin to establish itself as a home berth for one to two vessels that service Asian markets as well as generating at least weekly (i.e. 50+ vessels per year).

Based on 52 vessels visiting annually, the nature of the opportunity in Darwin could see between $200 million to $235 million in direct expenditure into the Territory economy delivering: 220-300 direct jobs (540 and 750 including flow on) $30 million to $40 million in GTP ($80 million to $105 million including flow on) $18 million to $22 million in wages paid ($72 million to $96 million including flow on).

Australian International Marine Export Group Ltd | Superyacht Australia | Australian Commercial Marine Group

Superyachts – An OverviewA superyacht is a luxury vessel with capacity for 12 guests or fewer (excluding Captain and crew), 24 metres in length and above in Australia.

Superyachts charter for between $120,000 and $250,000 per week for between 5-10 passengers on average.

When a vessel is in port, they have expenditures on, at a minimum, light maintenance and significant provisioning and bunkering as well as recreation and travel for crew downtime. Having been working (at sea) when vessels come into a port or marina, they support their staff in taking leave and recreation. Superyacht staff are well paid and are of a young demographic, well suited to the nature of Darwin’s tourism and nightlife offering.

A superyacht will spend on average approximately 10% of its capital value on maintenance each year. This varies between years, the port the vessel is in and the nature and quality of the service offering in that port/ marina.

A typical vessel will have a value of $1.0 to $2.0 million per linear meter, and with an average length of vessels in Australia and Asia being over 45 meters this presents an annual average spend per vessel on maintenance of approximately $6.75 million. Where a vessel has access to skilled and trusted trades people, they will invest in deep maintenance which may be in the order of 15%-20% of the vessel value, which could be between $10 million to $14 million per vessel injected into the Darwin economy for vessels visiting to undergo deep maintenance.

Darwin has existing and highly skilled marine maintenance sector (as well as supporting industries), which employed approximately 160 full-time employees in 2016 (ABS Census of Population and Housing, 2016). Darwin’s existing marine sector can capitalise on the operational and maintenance opportunities provided by the superyacht sector.

Superyachts in Australia in 2016, contributed $590 million to the Australian economy directly, stimulating a further $1.38 billion in flow on and household consumption effects, delivering total GDP of $1.97 billion and jobs annually of 14,500. Australia enjoyed an increase in foreign superyacht visitation of 60% year on year last in 2019.

The Current Situation - DarwinSuperyachts are already coming to Darwin. However, with 8-meter tides and fixed commercial wharves/ berths, the workload for crew and risk for damage to the vessel is high er and captains, as a result, minimise their time – and subsequently their spend – in Darwin.

Vessels that have visited Darwin over the past few years include:

M/Y Octopus S/Y Matau S/Y Path M/Y Formosa M/Y Antipodean.

The Current Situation – A Growing Market on Darwin’s DoorstepIn the global superyacht sector, the South East Asian and Australasian markets have experienced the strongest growth over the past four years globally. This has been driven demand for ‘experiential’ luxury goods and the growing population of ultra-high net worth individuals (UHNWIs), who have anchored a superyacht fleet valued at approximately $15 billion in the waters surrounding Australasia.

The Northern Territory’s proximity to South East Asia ideally positions it to capture the significant demand from this emerging market and establish the Port of Darwin as Asia’s gateway to Australia and a core service hub.

Darwin is ideally located within proximity of key South East Asian cities, including Bali (960NM), Shanghai (2,675NM) and Bangkok (1,225NM), which takes only a ‘few days cruising’ to get there.

The Case for InvestmentThe NeedDarwin has 8+ meter tides, with no infrastructure to support the comfortable berthing of superyachts. As a result, Darwin has missed several opportunities to berth superyachts.

The SolutionBased on discussions with key industry stakeholders, Darwin requires, at a minimum 2-4 floating berths and potentially 6-8 berths, to support and capitalise on the existing activity and the significant pending growth in the Australasian superyacht sector.

Where vessels can berth ‘comfortably’, they will significantly increase their expenditure in the Darwin economy on food, accommodation and entertainment for crew, maintenance, provisioning and bunkering.

Superyachts have a real and material contribution to make to growth in local jobs and economic activity.

With the right facilities, it is realistic for 1-2 vessels to base themselves in Darwin, servicing markets in Asia.

The CostLiterature suggests the capital required to develop the necessary infrastructure would cost between $1.0 million and $2.0 million per berth - with 4 berths costing in the order of $6.0 million to construct and install. This level of investment would be sufficient to develop suitable superyacht berth facilities by leveraging existing infrastructure in and around Darwin.

The Expected VisitationBased on growth rates observed in other jurisdictions (e.g. Fiji, New Zealand) following the introduction of infrastructure and policies to support the Superyacht sector of between 3 to 5 times the number of previously visiting vessels, and consideration of the projections developed for the Australian Superyacht Economic Contribution (SYA, 2016), it is realistic to assume, based on the current levels of 10-15 vessel visits annually, that in 5 to 10 years, with supporting infrastructure between 30 and 75 (i.e. at least one per week) should be expected.

The Economic ReturnsThe returns from the investment are realised across three core outcomes for Darwin:

Jobs and Economic Activity, driven through:

o Provisioning: A vessel will consume between $15,000 to $30,000 per day on provisioning when cruising, where they are chartered for 60-90 days of the year, this would equate to between $1.2 million to $1.8 million per vessel if it were home berthed. With one vessel provisioned each week, this would see between $8.5 and $20 million injected into the Darwin economy annually.

o Berthage: when in port a vessel will pay approximately $15-$20 per day per linear meter, before services.

o Maintenance: Delivering between $200,000 and $10.0 million in maintenance and refit per vessel annually into the Darwin marine services sector.

o Crew Off Vessel Spend: the 2016 study identified that a vessel will spend (excluding salaries and consumables when the crew are working, an average of at least $200,000 each year on its crew for accommodation, recreation and travel when they have down time. Given the nature of the opportunities in Darwin and the Northern Territory, it is obvious a significant portion of this would be secured for the Northern Territory.

Branding, Awareness and Reinvestment:

o By developing appropriate berthing, Darwin would be a ready market for berthing of Superyachts and service point for Asia. As a capital city, Darwin has unrivalled infrastructure that can be leveraged, including an international airport, deep water port and exotic provisioning options. High net worth individuals invest in places they like and enjoy.

o Where a vessel regularly visits or has maintenance done, it is commonplace for an owner to come and ‘check out’ the facilities with the Captain. Thereby presenting an opportunity for Darwin and the Northern Territory to uniquely differentiate itself from other areas in Australia, Australasia and the South Pacific.

Commercially Viable: Where the berth infrastructure is well marketed and utilised, it is realistic to assume operating returns similar to other like facilities (i.e. in the order of 8.0% and 15.0% per annum). Therefore, the facility would have the potential to provide a break-even if not positive operating return. However, recovering the initial capital whilst the market builds could be challenging for a commercial operator in the initial years.

A COVID-19 Safe and Self Quarantining Industry Should a vessel be chartering in Asia, considering the average length of charter, of 7-15 days and the 3-4 day journey to Darwin, a vessel could effectively be self-quarantined for easily more than 14 days (from meeting the last of the arriving guests) without materially disrupting standard operations.

Investment RationaleBased on 52 vessels visiting annually, the nature of the opportunity in Darwin and the economic multipliers from other superyacht reports this could see between $200 million to $235 million in direct expenditure into the Territory economy delivering:

220-300 direct jobs (540 and 750 including flow on)

$30 million to $40 million in GTP ($80 million to $105 million including flow on)

$18 million to $22 million in wages paid ($72 million to $96 million including flow on).

Taking just the average annual contribution to direct GTP of $35 million and projecting that over the next 20 years presents a conservative net present value of benefits for the Northern Territory economy in the order of $360 million, highlighting significant returns on the initial $6 million capital invested.

For the modest level of capital required to support the above economic and community benefits and jobs and the likelihood the capital will make a positive financial return following investment, the decision should be simple.

Should you have any questions regarding this submission, or require any further information, please do not hesitate to contact me on the numbers below.

Yours sincerely,

David GoodChief Executive OfficerAIMEX, Superyacht Australia and ACMG