2021 Annual Report

20

21

Annual Report

LIGHTER STRONGER SMARTER

CORPORATE DIRECTORY

DIRECTORS

Mr P J Hood AO (Chairman)

Mr A P Begley (CEO)

Mr S Cole

Mr C N Duncan

Mr C Sutherland

COMPANY SECRETARY

Mr B W Cocks

Mr P Hardie

HEAD OFFICE

Matrix Composites & Engineering Ltd 150 Quill Way

Henderson WA 6166 Telephone: [phone] Email: [e-mail]

OVERSEAS OFFICE

Matrix Composites & Engineering (US), Inc 2925 Richmond Avenue

Suite 1200 Houston

Texas 77098 U.S.A

Email: [e-mail]

BANKER

ANZ

Level 10, 77 St Georges Terrace

Perth WA 6000

LAWYER

Squire Patton Boggs

Level 21, 200 Murray Street

PERTH WA 6000

AUDITOR

KPMG

235 St Georges Terrace PERTH WA 6000

SHARE REGISTRY

Link Market Services Ltd

Level 4 Central Park

152-158 St Georges Terrace

PERTH WA 6000

ABN 54 009 435 250

CONTENTS

Corporate Directory	inside front cover
Chairperson's Report	2
Directors' Report	4
Auditor's Independence Declaration under Section 307C of the Corporations Act 2001	19
Consolidated Statement of Profit or Loss and Other Comprehensive Income	20
Consolidated Statement of Financial Position	21
Consolidated Statement of Changes in Equity	22
Consolidated Statement of Cash Flows	24
Notes to the Consolidated Financial Statements	25
Directors' Declaration	64
Independent Auditor's Report	65
Additional ASX Information as at 20 October 2021	71

CHAIRPERSON'S REPORT

Dear Shareholders

On behalf of the Board I am pleased to present the 2021 Annual Report for Matrix Composites & Engineering Ltd (Matrix).

During the 2021 financial year Matrix continued to navigate a very challenging period in the oil and gas sector that commenced in the third quarter of the 2020 financial year, following the onset of the COVID-19 pandemic.

However, the Company has emerged from FY21 in a position to capitalise on a positive upward trend of activity in its traditional markets and continues to methodically grow its brownfields project maintenance and sustainment business segment in the Australian LNG and Resources sectors, which is expected to underpin long-term revenue and earnings growth. The Company's move towards building a sustainable revenue base, less exposed to cyclical oil and gas capital expenditure, was a key strategic decision of the Board and supported by an independent strategic review undertaken by Azure Capital early in the financial year.

For the first half of FY21, Matrix recorded revenue of $8.1 million compared to $22.6 million in the prior corresponding period, which reflected the dramatically weak oil price and broader COVID-19 global impacts on the oil and gas sector.

These impacts lingered into the third quarter of the 2021 fiscal year, leading to a full-year revenue result of $17.6 million, compared to $27.4 million in the prior corresponding period, and an underlying EBITDA loss of $4.4 million versus a $3.7 million loss in FY20.

However, Matrix generated $6 million of revenue in the final quarter of FY21 as the COVID-19 situation begun to ameliorate globally and there was subsequent recovery in the oil price, which has persisted into the 2022 financial year.

Matrix prudently maintained its production capability at its world-class Henderson facility to cater to the promising recovery of activity within its traditional oil and gas markets.

This has positioned the Company to capitalise on a growing pipeline of opportunities with buoyancy tenders in excess of $100 million currently in play in the subsea and SURF markets alone.

Crucially, Matrix has also made significant progression in growing the Coatings Technologies business to underpin the strategic pivot towards stable, long-term brownfields project maintenance and sustainment work.

In June 2020, Matrix signed an agreement with Acotec to exclusively distribute its Humidur Coatings products in Australia, New Zealand and Papua New Guinea. During the 2021 financial year Matrix successfully integrated this corrosion technology offering into its broader Coatings Technologies business.

Matrix progressively increased the revenue stream from this business during 2H FY21, with purchase orders to deliver sales of over $3.0 million in coatings, equipment hire and associated services for the final quarter of FY21 alone. Matrix also expects the positive momentum from this business to persist into the 2022 financial year.

As part of the aforementioned strategic pivot, throughout FY21 Matrix demonstrated its capabilities to develop materials science and advanced manufacturing solutions for clients.

This included the contract with Newcrest Mining to develop a composite replacement for steel componentry within block caving operations, a technology development agreement with Woodside, and a contract with the Western Australian State Government to produce two prototypes and up to 10 solar- powered bulk hand sanitiser dispensers (SOLSANTM) for use in public spaces.

At a Board level, we welcomed Mr Chris Sutherland as a new Director in December 2020. His appointment has bolstered the Board adding fresh depth and expertise from more than twenty years executive leadership across the oil and gas, resources, infrastructure and manufacturing sectors.

02 LIGHTER STRONGER SMARTER

On behalf of the Matrix Board, I would like to thank our senior management and employees for their continued commitment and hard work, as COVID-19 and its subsequent impacts lingered through FY21.

We have generated positive momentum across our business heading into the 2022 financial year, including almost $10 million in drilling riser buoyancy awards over a three-month period into September 2022, further work in our Coatings Technologies business and progressing new opportunities for advanced materials and composites solutions in the local resources sector. This all bodes well for strong revenue growth in FY22.

We hope to build on this and reward shareholder loyalty in FY22 and beyond.

Peter Hood AO

Chairperson

Matrix generated $6 million of revenue in the final quarter of FY21 as the COVID-19 situation begun to

ameliorate globally

REPORT CHAIRPERSON'S

MATRIX ANNUAL REPORT 2021	03