MYECO GROUP LTD - AGM Information 2015

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TO: COMPANY ANNOUNCEMENTS OFFICE ASX LIMITED DATE: 16 October 2015

NOTICE OF ANNUAL GENERAL MEETING

The Notice of the Annual General Meeting of SECOS Group Limited to be held on Tuesday 17 November 2015 together with the accompanying documents will be dispatched to shareholders today. At the same time the 2015 Annual Report will be sent to shareholders who requested it.

The Notice and accompanying documents are attached.

Rekha Bhambhani Company Secretary

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SECOS GROUP LIMITED

(ACN 064 755 237)

NOTICE OF ANNUAL GENERAL MEETING

INCLUDING

PROXY FORM

AND

EXPLANATORY MEMORANDUM

Date of Meeting Tuesday, 17 November 2015

Time of Meeting 10.30 am (AEDST)

Place of Meeting

Suite 6, Level 2, 205-211 Forster Road, Mount Waverley, VIC 3149

SECOS GROUP LIMITED

(ACN 064 755 237)

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT THE ANNUAL GENERAL MEETING (“ AGM ”) OF SHAREHOLDERS OF SECOS GROUP LIMITED (ACN 064 755 237) (“ SECOS” OR“THE COMPANY ”) WILL BE HELD AT SUITE 6, LEVEL 2, 205211 FORSTER ROAD, MOUNT WAVERLEY 3149 ON TUESDAY 17 NOVEMBER 2015 AT 10.30AM (AEDST) FOR THE PURPOSES OF TRANSACTING THE FOLLOWING BUSINESS.

The Explanatory Memorandum and Proxy Form accompanying this Notice of Annual General Meeting are hereby incorporated in and comprise part of this Notice of Annual General Meeting.

BUSINESS

2015 Annual Financial Report

To receive and consider the Annual Report of the Company for the year ended 30 June 2015, comprising the Financial Report, the Directors’ Report, and the Independent Auditor’s Report.

NON-BINDING RESOLUTION

To consider, and if thought fit, to pass, with or without amendment, the following non-binding resolution:

Resolution 1: Adoption of Remuneration Report

“That, for the purposes of section 250R (2) of the Corporations Act 2001(Cth) and for all other purposes, the 2015 Remuneration Report ( required by section 300A of the Corporations Act) as included in the Directors’ Report of the Annual Report of the Company for the year ended 30 June 2015 be adopted.”

Further details in respect of Resolution 1 are set out in the Explanatory Memorandum accompanying this Notice of Annual General Meeting.

Voting Exclusion Statement

The Company will disregard any votes cast on Resolution 1 by:

(a) a member of the key management personnel for the Company or its subsidiaries whose remuneration details are included in the Remuneration Report (or a closely related party of that person), unless that person does so as a proxy appointed by writing that specifies how the proxy is to vote on Resolution 1 and the vote is not cast on behalf of a member of the Key management personnel of the Company or its subsidiaries whose remuneration details are included in the Remuneration Report (or a closely related party of that person); and
(b) a member of the key management personnel for the Company or its subsidiaries whose remuneration details are not included in the Remuneration Report (or a closely related party of that person) that is appointed as a proxy where the proxy appointment does not specify the way the proxy is to vote on Resolution 1,unless the proxy is the Chairman of the meeting at which Resolution 1 is voted on and the proxy appointment expressly authorises the Chairman to exercise the proxy even if Resolution 1 is connected directly or indirectly with the remuneration of a member of the key management personnel for the Company or its subsidiaries.

ORDINARY RESOLUTIONS

To consider, and if thought fit, to pass, with or without amendment, the following ordinary resolutions:

Resolution 2: Re-election of Director- Dr. Frank Glatz

“That Dr. Frank Glatz, a director retiring by rotation in accordance with ASX Listing Rule 14.5 and Clause 4.3 of the Company’s Constitution and being eligible, is re-elected as a director of the Company”.

Further details in respect of Resolution 2 are set out in the Explanatory Memorandum accompanying this Notice of Annual General Meeting.

Resolution 3: Re-election of Director- Mr. Stephen Walters

“That Mr. Stephen Walters, a director retiring in accordance with ASX Listing Rule 14.4 and Clause 4.2 of the Company’s Constitution and being eligible, is re-elected as a director of the Company”.

Further details in respect of Resolution 3 are set out in the Explanatory Memorandum accompanying this Notice of Annual General Meeting.

Resolution 4: Re-election of Director- Mr. Trevor Haines

“That Mr. Trevor Haines, a director retiring in accordance with ASX Listing Rule 14.4 and Clause 4.2 of the Company’s Constitution and being eligible, is re-elected as a director of the Company”.

Further details in respect of Resolution 4 are set out in the Explanatory Memorandum accompanying this Notice of Annual General Meeting.

Resolution 5: Ratification of Issue of Shares to Sophisticated and Professional Investors

“That for the purpose of ASX Listing Rule 7.4 and for all other purposes, the prior allotment and issue of 4,713,016 fully paid ordinary shares under the placement announced on 26 June 2015 and on the terms and conditions set out in the Explanatory Memorandum accompanying this Notice, be ratified.”

Voting Exclusion Statement

The Company will disregard any votes cast on the Resolution 5 by:

a person or persons who participated in the issue and an associate of that person (or those persons).

However, the Company need not disregard a vote cast on Resolution 5 if it is cast by:

a) a person as proxy for a person who is entitled to vote, if the vote is cast in accordance with the directions on the proxy form; or
b) the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction of the proxy form to vote as the proxy decides.

Resolution 6: Issue of Shares to Director- Mr Richard Tegoni in lieu of Director Remuneration

“That, for the purpose of ASX Listing Rule 10.14 and in accordance with a resolution of the Board of Directors, Mr Richard Tegoni (or his nominee) be issued fully ordinary shares in the capital of the Company, under Loan Share Plan, up to the value of $50,000 in satisfaction of his part cash remuneration for the 12 months period to September 2016 ,on the terms and conditions set out in the Explanatory Memorandum accompanying this Notice and with such shares to be free from restriction and freely tradeable with effect from the date of issue.”

Voting Exclusion Statement :

The Company will disregard any votes cast on the Resolution by a director of the Company and any associate of that person. .

However, the Company will not disregard a vote if it is cast:

a) by any such person and any of his associates as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or
b) by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form.

In addition pursuant to the Corporations Act, the Company’s KMP or closely related person are not permitted to cast a vote as a Proxy for a person permitted to vote, unless the Proxy form either:

expressly authorises and directs the way the proxy is to vote on Resolution 6 or
expressly authorises the Chairman of the Meeting to exercise the undirected proxy vote.

Resolution 7: Issue of Shares to Director- Mr Stephen Walters in lieu of Director Remuneration

“ That, for the purpose of ASX Listing Rule 10.14 and in accordance with a resolution of the Board of Directors, Mr Stephen Walters (or his nominee) be issued fully ordinary shares in the capital of the Company, under Loan Share Plan, up to the value of $100,000 in satisfaction of his part cash remuneration for the 12 months period to September 2016 ,on the terms and conditions set out in the Explanatory Memorandum accompanying this Notice and with such shares to be free from restriction and freely tradeable with effect from the date of issue.”

Voting Exclusion Statement:

The Company will disregard any votes cast on the Resolution by a director of the Company and any associate of that person. .

However, the Company will not disregard a vote if it is cast:

a) by any such person and any of his associates as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or
b) by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form.

In addition pursuant to the Corporations Act, the Company’s KMP or closely related person are not permitted to cast a vote as a Proxy for a person permitted to vote, unless the Proxy form either:

expressly authorises and directs the way the proxy is to vote on Resolution 7 or
expressly authorises the Chairman of the Meeting to exercise the undirected proxy vote.

Resolution 8: Issue of Shares to Director- Dr Frank Glatz in lieu of Director Remuneration

“That, for the purpose of ASX Listing Rule 10.14 and in accordance with a resolution of the Board of Directors, Dr Frank Glatz (or his nominee) be issued fully ordinary shares in the capital of the Company, under Loan Share Plan, up to the value of $100,000 in satisfaction of his part cash remuneration for the 12 months period to September 2016 ,on the terms and conditions set out in the Explanatory Memorandum accompanying this Notice and with such shares to be free from restriction and freely tradeable with effect from the date of issue.”

Voting Exclusion Statement:

The Company will disregard any votes cast on the Resolution by a director of the Company and any associate of that person. .

However, the Company will not disregard a vote if it is cast:

a) by any such person and any of his associates as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or
b) by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form.

In addition pursuant to the Corporations Act, the Company’s KMP or closely related person are not permitted to cast a vote as a Proxy for a person permitted to vote, unless the Proxy form either:

expressly authorises and directs the way the proxy is to vote on Resolution 8 or
expressly authorises the Chairman of the Meeting to exercise the undirected proxy vote.

Resolution 9: Issue of Shares to Director- Mr Trevor Haines in lieu of Director Remuneration

“That, for the purpose of ASX Listing Rule 10.14 and in accordance with a resolution of the Board of Directors, Mr Trevor Haines (or his nominee) be issued fully ordinary shares in the capital of the Company, under Loan Share Plan, up to the value of $90,000 in satisfaction of his part cash remuneration for the 12 months period to September 2016, on the terms and conditions set out in the Explanatory Memorandum accompanying this Notice and with such shares to be free from restriction and freely tradeable with effect from the date of issue.”

Voting Exclusion Statement:

The Company will disregard any votes cast on the Resolution by a director of the Company and any associate of that person.

However, the Company will not disregard a vote if it is cast:

a) by any such person and any of his associates as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or
b) by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form.

In addition pursuant to the Corporations Act, the Company’s KMP or closely related person are not permitted to cast a vote as a Proxy for a person permitted to vote, unless the Proxy form either:

expressly authorises and directs the way the proxy is to vote on Resolution 9 or
expressly authorises the Chairman of the Meeting to exercise the undirected proxy vote.

Resolution 10: Issue of Shares to Managing Director- Dr Frank Glatz as short term incentive

“That, for the purpose of ASX Listing Rule 10.14 and in accordance with a resolution of the Board of Directors, Dr Frank Glatz (or his nominee) be issued fully ordinary shares in the capital of the Company, under Loan Share Plan, up to the value of $125,000 as short term incentive, on the terms and conditions set out in the Explanatory Memorandum accompanying this Notice and such shares to be free from restriction and freely tradeable with effect from the date of issue.”

Voting Exclusion Statement:

The Company will disregard any votes cast on the Resolution by a director of the Company and any associate of that person.

However, the Company will not disregard a vote if it is cast:
a) by any such person and any of his associates as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or
b) by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form.

In addition pursuant to the Corporations Act, the Company’s KMP or closely related person are not permitted to cast a vote as a Proxy for a person permitted to vote, unless the Proxy form either:

expressly authorises and directs the way the proxy is to vote on Resolution 10 or
expressly authorises the Chairman of the Meeting to exercise the undirected proxy vote.

SPECIAL RESOLUTION

To consider, and if thought fit, to pass, with or without amendment, the following special resolution:

Resolution 11: Approval of 10% placement facility

“That, pursuant to and in accordance with Listing Rule 7.1A and for all other purposes, Shareholders approve the issue of Equity Securities up to 10% of the issued capital of the Company (at the time of the issue) calculated in accordance with the formula prescribed in Listing Rule 7.1A.2 and on the terms and conditions in the Explanatory Memorandum.”

Voting Exclusion Statement

The Company will disregard any votes cast on this Resolution by a person (and any associates of such a person) who may participate in the 10% Placement Facility and a person who might obtain a benefit, except a benefit solely in the capacity of a holder of Shares, if this Resolution is passed.

However, the Company will not disregard a vote if:

(a) it is cast by the person as proxy for a person who is entitled to vote, in accordance with directions on the Proxy Form; or
(b) it is cast by the Chairman as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

PROXIES

Appointing a proxy

Members are entitled to appoint up to two proxies to act generally at the Annual General Meeting on their behalf, and to vote in accordance with their directions on the Proxy Form. A proxy need not be a Member. A personalised Proxy Form is attached to this Notice of Annual General Meeting.

Where two proxies are appointed, each proxy can be appointed to represent a specified proportion or number of the votes of the member. If no number or proportion of votes is specified, each proxy may exercise half of the member’s votes. Neither proxy is entitled to vote on a show of hands if more than one proxy attends the Annual General Meeting.

If you appoint a proxy, the Company encourages you to direct your proxy how to vote on each resolution by marking the appropriate boxes on the Proxy Form.

Completed Proxy Forms (together with any authority under which the Proxy Form was signed, or a certified copy of the authority) must be returned by 10.30 am on 15[th] November 2015.

by mail to Share Registry – Advanced Share Registry,PO Box 1156, Nedlands, Western Australia -6909
personally to Share Registry-Advanced Share Registry,110 Stirling Highway, Nedlands, Western Australia- 6009
by facsimile to + 61 (08) 9262 3723

Further instructions are on the reverse of the Proxy Form.

Undirected Proxies and Voting Restrictions

Where permitted, the Chairman of the Annual General Meeting will vote undirected proxies in favour of all the resolutions (including Resolution 1, 6,7,8,9 & 10) .This will be on the basis that the Proxy Form expressly authorises the Chairman to vote undirected proxies even if the resolution is connected directly or indirectly with the remuneration of the Company’s Key Management Personnel.

If you appoint a Director (other than the Chairman of the meeting),or any of the Company’s other key management personnel or a closely related party of that person ,as your proxy and do not direct your proxy how to vote on Resolutions 1,6,7,8,9 &10 the proxy will not be permitted to vote as your proxy on those resolutions. Accordingly, if you want your vote to be counted on those resolutions, you should direct your proxy how to vote in respect of those resolutions.

Corporate representation

A corporation which is a member, or which has been appointed a proxy, may appoint an individual to act as a representative to vote at the Annual General Meeting. The appointment must comply with section 250D of the Corporation Act. The representative should bring to the Annual General Meeting evidence of his or her appointment unless it has previously been provided to the Share Registry.

VOTING EXCLUSION

Where a voting exclusion applies, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote in accordance with the directions on the Proxy Form or it is cast by the person chairing the Annual General Meeting as proxy for a person who is entitled to vote in accordance with a direction on the Proxy Form to vote as the proxy decides.

ENTITLEMENT TO ATTEND AND VOTE AT THE ANNUAL GENERAL MEETING

All members may attend the Annual General Meeting. The Directors have determined that for the purposes of voting at the meeting, shares will be taken to be held by the persons who are registered as the holders of those shares as at 7 pm (AEDST) on 15[th] November 2015.

By Order of the Board of SECOS Group Limited

Rekha Bhambhani

Company Secretary Dated: 15 October 2015

The accompanying Explanatory Memorandum and Proxy Form including Voting instructions form part of this Notice of Annual General Meeting

EXPLANATORY MEMORANDUM TO NOTICE OF ANNUAL GENERAL MEETING

This Explanatory Memorandum accompanies and forms part of the SECOS Group Limited (“SECOS” or “the Company”) Notice of Annual General Meeting to be held on 17 November 2015 at 10.30 am (AEDST).The Notice of Annual General Meeting should be read together with this explanatory memorandum.

BUSINESS

2015 ANNUAL REPORT

To receive and consider the Annual Financial Report of the Company for the year ended 30 June 2015, comprising the Financial Report, the Directors’ Report and the Auditor’s Report.

Under the Corporations Act 2001, the directors of a public company that is required to hold an Annual General Meeting must table the financial statements and reports of the Company for the previous year for discussion by the members at that annual general meeting.

Shareholders have been provided with all relevant information concerning the Company’s financial statements for the year ended 30 June 2015 in the Annual Report.

A Copy of the Annual Report is enclosed with this Notice for those shareholders who have requested it.

Shareholders should note that the sole purpose of tabling the Annual Report of the Company at the Annual General Meeting is to provide the shareholders with the opportunity to ask questions or discuss matters arising there from at the meeting. At the meeting, a representative of the Company’s auditors, William Buck will be available to answer any questions of the members.

It is not the purpose of the meeting that the financial statements be approved, rejected or modified in any way. Further as it is not required by the Corporations Act, no resolution to adopt, receive or consider the statements will be put to the meeting.

NON-BINDING RESOLUTION

1. Resolution 1: Adoption of Remuneration Report

1.1 Background

Pursuant to section 250R(2) of the Corporations Act, at the Annual General Meeting, the Company must propose a resolution that the Remuneration Report be adopted.

The Remuneration Report is contained within the 2015 Annual Report. You may access the Annual Report by visiting the Company’s website www.cardiabioplastics.com or you may order a hard copy of the Annual Report by phoning +61 (0) 3 85666800.The Remuneration Report :

explains the Board’s policy for determining the nature and amount of remuneration of executive Directors and senior management of the Company;
explains the relationship between the Board’s remuneration policy and the Company’s performance;
sets out remuneration details for each Director and the most highly remunerated senior management of the Company; and
details and explains any performance conditions applicable to the remuneration of executive Directors and senior management of the Company.

The purpose of Resolution 1 is to lay before the shareholders the Company’s Remuneration Report so that shareholders may ask questions about or make comments on the management of the Company in accordance with the requirements of the Corporations Act and vote on a non-binding resolution to adopt the Remuneration Report for the year ended 30 June 2015.

The Chairman will allow a reasonable opportunity for Shareholders as a whole to ask about, or make comments on the Remuneration Report.

Section 250R (3) of the Corporations Act provides that Resolution 1 is advisory only and does not bind the Directors of the Company of itself, a failure of Shareholders to pass Resolution 1 will not require the Directors to alter any of the arrangements in the Remuneration Report.

However, the Corporations Act has been amended by the Corporations Amendment (Improving Accountability on Director of the Company and Executive Remuneration) Act 2011 (Director and Executive Remuneration Act) which received the Royal Assent on 27 June 2011 and came into effect on 1 July 2011.

The Director and Executive Remuneration Act introduced new sections 250U and 250Y, amongst others, into the Corporations Act, giving Shareholders the opportunity to remove the Board if the Remuneration Report receives a ‘no’ vote of 25% or more at two consecutive annual general meetings (Two Strikes Rule).

Under the Two Strikes Rule, where a resolution on the Remuneration Report receives a ’no’ vote of 25% or more at two consecutive annual general meetings, the Company will be required to put to shareholders at the second annual general meeting a further resolution (the ‘spill resolution”) on whether another meeting (known as “spill meeting”)should be held (within 90 days) at which all Directors (other than the Managing director and any directors appointed since the applicable Directors’ Report was approved by the Board ) who were in office at the date of approval of the applicable Directors’ Report must stand for re-election.

If the spill resolution is approved at the annual general meeting by a simple majority of 50% or more of the eligible votes cast, the spill meeting must be held within 90 days of that second annual general to consider the composition of the Board.

The Company’s 2013 and 2014 Remuneration Reports did not receive a “no” vote of 25% or more when they were tabled at the respective Annual General Meetings.

Shareholders will be given a reasonable opportunity at the Meeting to ask questions about, and make comments on, the Remuneration Report and the Company’s remuneration arrangements.

Where permitted, the Chairman intends to exercise all undirected proxies in favour of Resolution 1.

1.2 Voting exclusion statement

For the purposes of the voting exclusion statement:

(a) the “key management personnel” for the Company and its subsidiaries are those persons having authority and responsibility for planning, directing and controlling the activities of the Company and its subsidiaries either directly or indirectly. The Key management personnel for the Company and its subsidiaries during the year ended 30 June 2015 are listed in the Annual Financial Report of the Company; and
(b) a ‘closely related party’ of a member of the key management personnel for the Company and its subsidiaries means:
(i) a spouse or child of the member;
(ii) a child of the member’s spouse;
(iii) a dependant of the member or of the member’s spouse;
(iv) anyone else who is one of the member’s family and may be expected to influence the member, or be influenced by the member, in the member’s dealings with the entity; or
(v) a company the member controls.

The Company will also apply these voting exclusions to persons appointed as attorney by a member to attend and vote at the meeting under a power of attorney- on the basis that references to persons attending and voting are read as references to persons attending and voting and references to an instrument under which the proxy is appointed are read as references to the power of attorney under which the attorney is appointed.

1.3 Directors’ Recommendation

The Directors unanimously recommend that members vote in favour of Resolution 1.

ORDINARY RESOLUTIONS

2. Resolution 2: Re-election of Director- Dr. Frank Glatz

2.1 Background

In accordance with ASX Listing Rule 14.5 and Clause 4.3 of the Company’s Constitution, at every Annual General Meeting, one-third of the directors (excluding the Managing Director) must retire from office and are eligible for re-election. The directors to retire are those who

have been longest in office since their appointment or last re-appointment, or, if the directors have been in office for an equal length of time, by agreement.

Dr. Frank Glatz retires in accordance with the Company’s Constitution and being eligible for re-election has consented to be re-elected and presents himself for re-election. He is 51 years of age and was appointed Managing Director on 1 May 2009, have assumed role of Chief Executive Officer effective 21 April 2015.

Information about Dr. Glatz is contained in the 2015 Annual Report.

2.2 Directors’ Recommendation

The Directors (other than Dr. Glatz) recommend that members vote in favour of Resolution 2.

3. Resolution 3: Re-election of Director- Mr. Stephen Walters

3.1 Background

In accordance with ASX Listing Rule 14.4 and Clause 4.2 of the Company’s Constitution, at every Annual General Meeting each director appointed since the last Annual General Meeting must retire from office and is eligible for re-election.

Mr. Stephen Walters retires in accordance with the Company’s Constitution and being eligible for re-election has consented to be reelected and presents himself for re-election. He is 58 years of age and was appointed as the Managing Director on 21 April 2015.

Mr. Walters’ qualifications include Bachelor of Business (Marketing).

Mr. Walters comes with more than 20 years of experience in the plastics and packaging industries, having worked in general management, commercial and sales roles with Borden Chemical, ICI Australia and Orica.

Information about Mr. Walters is also contained in the 2015 Annual Report.

3.2 Directors’ Recommendation

The Directors (other than Mr. Walters recommend that members vote in favour of Resolution 3.

4. Resolution 4: Re-election of Director- Mr. Trevor Haines

4.1 Background

Mr. Trevor Haines retires in accordance with the Company’s Constitution and being eligible for re-election has consented to be re-elected and presents himself for re-election. He is 55 years of age and was appointed as chief financial officer on 21 April 2015.

Mr. Haines’ qualifications include Bachelor of Commerce and FCPA.

Mr. Haines comes with more than 20 years of experience, having worked in senior accounting and financial management roles in various divisions of ICI Australia, AVC and Orica.

Information about Mr. Haines is also contained in the 2015 Annual Report.

4.2 Directors’ Recommendation

The Directors (other than Mr. Haines recommend that members vote in favour of Resolution 4.

5. Resolution 5: Ratification of Issue of Shares to Professional and Sophisticated Investors

5.1 Background

On 26 June 2015, the Company raised $659,822 (before costs) via placement offer to professional and sophisticated investors. A total of 4,713,016 fully paid ordinary shares were issued at 14 cents ($0.14) per share. The shares were placed with existing large shareholders whose application for additional new shares under Top Up Offer component of the Company’s Rights Issue was scaled back.

These shares were issued under the Company’s 15% placement capacity available pursuant to Listing Rule 7.1

Funds raised via placement have been used for general working capital requirements of the Company.

5.2 ASX Listing Rule 7.4

ASX Listing Rule 7.1 provides that without the approval of shareholders the Company must not issue or agree to issue more securities if such issue, when aggregated with the securities issued by the Company during the previous 12 months, would be an amount that would exceed 15% of the issued shares at the commencement of that 12 month period, unless an exception in ASX Listing Rule 7.2 applies.

In addition, ASX Listing Rule 7.1A provides that the Company can place a further 10% of its issued capital where it has prior approval from shareholders.

ASX Listing Rule 7.4 further provides that an issue of securities without approval of shareholders under ASX Listing Rule 7.1 is treated as having been made with approval for the purposes of ASX Listing Rule 7.1 if:

a) the issue of securities did not breach ASX Listing Rule 7.1; and
b) holders of ordinary securities subsequently approve the issue.

By Resolution 5, the Company is seeking shareholders’ approval under ASX Listing Rule 7.4 to ratify the prior allotment and issue of 4,713,016 fully paid ordinary shares, so as to refresh the Company’s 15% placement capacity accordingly, pursuant to ASX Listing Rule 7.1.

5.3 Technical information required by ASX Listing Rule 7.5

In compliance with ASX Listing Rule 7.5, the following information is provided:

Number of securities issued or to be pursuant to Resolution 5 4,713,016 Ordinary shares were issued pursuant to ASX Listing Rule 7.1.
Issue price of securities $0.14 per Share
Terms of securities

All Shares were issued as fully paid ordinary shares ranking equally with existing shares.

Names of allottees or the basis on which allottees were determined
The Shares were issued to existing large shareholders, specifically professional and sophisticated investors (within the meaning ascribed to those expressions in section 708 of the Corporation Act 2001) and no related parties were involved.

Intended use of the funds raised

Funds raised have been used for the general working capital requirements of the Company.

Voting Exclusion Statement

A voting exclusion statement is included in the Notice accompanying the Explanatory Memorandum.

5.4 Directors’ Recommendation

The Board recommends that members vote in favour of Resolution 5.

6. Resolutions 6, 7, 8 & 9: Issue of shares to M/s Richard Tegoni, Stephen Walters, Frank Glatz and Trevor Haines under Share Loan Plan in lieu of Director Reumeration.

6.1 Background

The merger between Cardia and Stellar has resulted in the Group having more Executives and consequently increased wage bill for the group.

Directors of the merged group are committed to expand the merged business to the position as a world leader in sustainable packaging but also mindful of delivering this success in an efficient and effective manner so that shareholders’ wealth through their investment in the Company is maximised.

To manage cashflows of the merged business, the Directors are seeking shareholders’ approval to have ability for their part remuneration to be paid by issue of shares rather than in cash, at the election of the Board.

As per the current arrangements:

Mr. Tegoni’s remuneration is $100,000 per annum of which he has agreed to accept up to 50% ($50,000) of remuneration to be paid by issue of shares.
Mr. Walters’ base salary is $195,540 per annum of which he has agreed to accept up to approx. 50% ($100,000) of remuneration to be paid by issue of shares.
Dr. Glatz’s base salary is $198,540 per annum of which he has agreed to accept up to approx. 50% ($100,000) of remuneration to be paid by issue of shares.
Mr. Haines’ base salary is $174,240 per annum of which he has agreed to accept up to approx. 50% ($90,000) of remuneration to be paid by issue of shares.

To the extent that Shareholders do not approve the issue of shares, Directors’ respective share component of remuneration will be paid in cash.

The Company has adopted the loan share plan, with shareholders’ approval at its last annual general meeting and seeking to issue shares to the Directors in lieu of their remuneration under the loan share plan.

6.2 ASX Listing Rule 10.14

Whilst the Board can make offers to issue shares to Directors under Loan Share Plan; allotment is not able to proceed until after Shareholder approval is obtained under ASX Listing Rule 10.14.

ASX Listing Rule 10.14 provides that an entity must not permit a director of that entity to acquire securities under an employee incentive scheme without the approval of the members in general meeting, where the Notice of Meeting complies with the requirements of Listing Rule 10.15.

By Resolution 6, the Company is seeking shareholders’ approval under ASX Listing Rule 10.14 to issue fully paid ordinary shares to Mr. Richard Tegoni, under Loan Share Plan, up to the value of $50,000 by way of salary sacrifice of his part cash remuneration (50%), in accordance with the Resolution of the Board. Shares will be issued at quarterly intervals for the share component of remuneration due for that particular quarter ($12,500 each quarter).

By Resolution 7, the Company is seeking shareholders’ approval under ASX Listing Rule 10.14 fully paid ordinary shares to Mr. Stephen Walters, under Loan Share Plan, up to the value of $100,000, by way of salary sacrifice of his part cash remuneration (approx. 50%), in accordance with the Resolution of the Board. Shares will be issued at quarterly intervals for the share component of remuneration due for that particular quarter ($25,000 each quarter).

By Resolution 8, the Company is seeking shareholders’ approval under ASX Listing Rule 10.14 fully paid ordinary shares to Dr. Frank Glatz, under Loan Share Plan, up to the value of $100,000, by way of salary sacrifice of his part cash remuneration (approx.50%), in accordance with the Resolution of the Board. Shares will be issued at quarterly intervals for the share component of remuneration due for that particular quarter ($25,000 each quarter).

By Resolution 9, the Company is seeking shareholders’ approval under ASX Listing Rule 10.14 fully paid ordinary shares to Mr. Trevor Haines, under Loan Share Plan, up to the value of $90,000, by way of salary sacrifice of his part cash remuneration (approx.50%), in

accordance with the Resolution of the Board. Shares will be issued at quarterly intervals for the share component of remuneration due for that particular quarter ($22,500 each quarter).

6.3 Technical information required by ASX Listing Rule 10.15

Pursuant to Listing Rule 10.15 the following information regarding Resolutions 6, 7, 8 and 9 is provided to members:

(a) Shares may be offered under the Share Loan Plan to M/s Richard Tegoni, Stephen Walters, Frank Glatz and Trevor Haines (the Participating Directors) or their nominees.
(b) The share component of Directors’ fees for the 12 months period ending 30 September 2016 will be as follows:
i) $50,000 to Richard Tegoni (50% of Remuneration)
ii) $100,000 to Stephen Walters (approx.50% of Remuneration)
iii) $100,000 to Frank Glatz (approx.50% of Remuneration)
iv) $ 90,000 to Trevor Haines (approx.50% of Remuneration)
(c) The maximum number of shares which may be issued to the Participating Directors is determined by the directors’ remuneration that the Company has agreed to pay by issue of shares to the Participating Directors for the 12 months period ending on 30 September 2016 ($340,000) divided by the deemed issue price of the shares calculated in accordance with paragraph (d) below. The number of Shares issued each quarter will be a function of the deemed issue price and the proportion of remuneration that the Company decides to satisfy through issue of Shares;
(d) The Shares will be issued for nil cash consideration as they will be issued in satisfaction of part of the directors’ remuneration agreed to be paid by the Company to the Participating Directors at quarterly intervals. The Shares will be deemed to have an issue price of no less than the volume weighted average sale price for each quarter of each year, subject to paragraph (c ) above;
(e) For the 12 months ending 30 September 2016, the maximum number of Shares that may be issued to the Participating Directors assuming a deemed issue price of $0.20 per Share, being the closing share price to 12 October 2015, will be approximately 1,700,000 shares;
(f) The Company had last adopted Loan Share Option Plan in November 2014. The details of shares issued to the Directors under loan share plan are:

Name of Directors	Number of Shares issued (adjusted for 100:1 consolidation effect)
Richard Tegoni	150,000
Gideon Meltzer	40,000
Steven Bendel	40,000

The above shares to the Directors were issued in lieu of their part cash remuneration and issue of shares was approved by the shareholders at the last Annual General Meeting held on 28 November 2014.

(g) The Board may, from time to time at its absolute discretion, declare that any Director, Officer of the Company or a subsidiary of the Company is eligible to be offered to subscribe for Shares under the Loan Share Plan. The Directors in office at the date of preparing this Notice of Meeting are M/s Richard Tegoni, Frank Glatz, Trevor Haines and Stephen Walters who is the Company’s Managing Director.
(h) No loan will be provided in respect of the issue of Shares as they are being issued in consideration for Directors’ remuneration which the Company has agreed to pay the Participating Directors for 12 months period to 30 September 2016.
(i) The Shares will be issued to the Participating Directors within 12 months from the date of Annual General Meeting and will be issued on a quarterly basis according to the share component of Directors’ remuneration owing to each of the Participating Director at that time, except to the extent the Company elects to pay the Directors’ remuneration in cash.

6.4 Related Party Requirements of Chapter 2E of the Corporations Act 2001

Shareholder approval under Chapter 2E of the Corporations Act- Related Parties is not required because the Shares are being issued in satisfaction of Directors’ remuneration owed by the Company to the Participating Directors on a quarterly basis. The issue of Shares constitutes reasonable remuneration in accordance with Section 211 of the Corporations Act that has been calculated on commercial terms, having regard to the circumstances of the Company.

The issue of the shares to M/s Tegoni, Walters, Glatz and Haines and their willingness to acquire same on the terms set out indicate the Participating Directors’ confidence in the future of the Company.

6.5 Voting Exclusion Statement

A voting exclusion statement is included for each of the resolutions 6, 7, 8 and 9 in the Notice accompanying the Explanatory Memorandum.

6.6 Director’s recommendations

The Directors abstain from making any recommendation on Resolutions 6, 7, 8 and 9.

7. Resolution 10: Issue of Shares to Managing Director- Dr Frank Glatz as short term incentive

7.1 Background

As per the current arrangements, Dr Glatz’s total remuneration is $342,400 of which $125,000 is at risk and will be paid to Dr.Glatz on quarterly basis as short term incentive, subject to Dr. Glatz meeting performance targets of revenue and margins set by the Board.

To preserve the Company’s cash flow during the current growth phase, Dr. Glatz has agreed to receive short term incentive portion of his remuneration by issue of shares.

To the extent that Shareholders do not approve the issue of shares, short term incentive to Dr. Glatz will be paid in cash.

7.2 ASX Listing Rule 10.14

Whilst the Board can make offers to issue shares to Directors under Loan Share Plan; allotment is not able to proceed until after Shareholder approval is obtained under ASX Listing Rule 10.14.

By Resolution 10, the Company is seeking shareholders’ approval under ASX Listing Rule 10.14 fully paid ordinary shares to Dr. Glatz, under Loan Share Plan, up to the value of $125,000, by way of short term incentive as part of his remuneration arrangements, as per the Resolution of the Board. Shares will be issued in equal instalments at quarterly intervals subject to Dr. Glatz being able to satisfy quarterly performance targets set up by the Board. ($31,250 each quarter).

7.3 Technical information required by ASX Listing Rule 10.15

Pursuant to Listing Rule 10.15 the following information regarding Resolution 10 is provided to members:

(a) Shares may be offered under the Loan Share Plan to Dr. Glatz or his nominee
(b) Total short term incentive payable to Dr.Glatz for the 12 months period ending 30 September 2016 will be as $125,000;
(c) The maximum number of shares which may be issued to Dr. Glatz is determined by the short term incentive that the Company has agreed to pay by issue of shares to Dr. Glatz for the 12 months period ending on 30 September 2016 ($125,000) divided by the deemed issue price of the shares calculated in accordance with paragraph (d) below. The number of Shares issued each quarter will be a function of the deemed issue price and the proportion of incentive that the Company decides to satisfy through issue of Shares;
(d) The Shares will be issued for nil cash consideration as they will be issued in satisfaction of part of the remuneration arrangements agreed to be paid by the Company to Dr. Glatz at quarterly intervals. The Shares will be deemed to have an issue price of no less than the volume weighted average sale price for each quarter of each year, subject to paragraph (c ) above;
(e) For the 12 months ending 30 September 2016, the maximum number of Shares that may be issued to Dr.Glatz assuming a deemed issue price of $0.20 per Share, being the closing share price to 12 October 2015, will be approximately 625,000 shares;
(f) The Company had last adopted Loan Share Option Plan in November 2014, the details of shares issued under Loan Share plan are provided under item 6.3(f).
(j) The Board may, from time to time at its absolute discretion, declare that any director, Officer of the Company or a subsidiary of the Company is eligible to be offered to subscribe for Shares under the Loan Share Plan. The directors in office at the date of preparing this Notice of Meeting are M/s Richard Tegoni, Frank Glatz, Trevor Haines and Stephen Walters who is the Company’s Managing Director.
(g) No loan will be provided in respect of the issue of Shares as they are being issued in consideration for Directors’ remuneration which the Company has agreed to pay to Dr. Glatz for 12 months period to 30 September 2016.

(h) The Shares will be issued to Dr.Glatz within 12 months from the date of Annual General Meeting and will be issued on a quarterly basis according to the incentive owing to Dr. Glatz at that time, except to the extent the Company elects to pay Dr. Glatz’s short term incentive in cash.

7.4 Related Party Requirements of Chapter 2E of the Corporations Act 2001

Shareholder approval under Chapter 2E of the Corporations Act- Related Parties is not required because the Shares are being issued in satisfaction of Directors’ remuneration that will be owed by the Company to Dr. Glatz on a quarterly basis. The issue of Shares constitutes reasonable remuneration in accordance with Section 211 of the Corporations Act that has been calculated on commercial terms, having regard to the circumstances of the Company.

7.5 Voting Exclusion Statement

A voting exclusion statement is included in the Notice accompanying the Explanatory Memorandum

7.6 Director’s recommendations

The Directors abstain from making any recommendation to the Resolution 10.

SPECIAL RESOLUTION

8. Resolution 11: Approval of 10% placement facility

8.1 Background

Listing Rule 7.1A came into effect on 1 August 2012 and enables eligible entities to issue Equity Securities up to 10% of its issued share capital through placements over a 12 month period after the annual general meeting (10% Placement Facility). The 10% Placement Facility is in addition to the Company’s 15% placement capacity under Listing Rule 7.1.

An eligible entity for the purposes of Listing Rule 7.1A is an entity that is not included in the S&P/ASX 300 Index and has a market capitalisation of $300 million or less.

The Company is an eligible entity for the purposes of Listing Rule 7.1A as it is not included in the S&P /ASX 300 Index and has a market capitalisation of approximately $24.84 million as at 12 October 2015.

The Company is now seeking shareholder approval by way of a special resolution to have the ability to issue Equity Securities under the 10% Placement Facility.

The exact number of Equity Securities to be issued under the 10% Placement Facility will be determined in accordance with the formula prescribed in Listing Rule 7.1A.2 (refer to Section 8.2(c) below).

The effect of Resolution 11 will be to allow the Directors to issue the Equity Securities under Listing Rule 7.1A during the period up to 12 months after the Meeting without subsequent Shareholder approval and without using the Company’s 15% placement capacity under Listing Rule 7.1.

Resolution 11 is a special resolution and therefore requires approval of 75% of the votes cast by Shareholders’ present and eligible to vote (in person, by proxy, by attorney or, in the case of a corporate Shareholder, by a corporate representative).

8.2 ASX Listing Rule 7.1A

a) Shareholder approval

The ability to issue Equity Securities under the 10% Placement Facility is subject to shareholder approval by way of a special resolution at an annual general meeting.

b) Equity Securities

Any Equity Securities issued under the 10% Placement Facility must be in the same class as an existing quoted class of Equity
Securities of the Company.

The Company as at the date of the Notice has only fully paid ordinary shares on issue.

c) Formula for calculating 10% Placement Facility Listing Rule 7.1A.2 provides that eligible entities which have obtained shareholder approval at an annual general meeting may issue or agree to issue, during the 12 month period after the date of the annual general meeting, a number of Equity Securities calculated in accordance with the following formula:

(A X D)-E

A is the number of shares on issue 12 months before the date of issue or agreement:

A) plus the number of fully paid shares issued in the 12 months under an exception in Listing Rule 7.2;
B) plus the number of partly paid shares that became fully paid in the 12 months;
C) plus the number of fully paid shares issued in the 12 months with approval of holders of shares under Listing Rules 7.1 and 7.4. This does not include an issue of fully paid shares under the entity’s 15% placement capacity without shareholder approval;
D) less the number of fully paid shares cancelled in the 12 months.

Note that A has the same meaning in Listing Rule 7.1 when calculating an entity’s 15% placement capacity.

D is 10%

E is the number of Equity Securities under or agreed to be issued under Listing Rule 7.1A.2 in the 12 months before the date of the issue or agreement to issue that are not issued with the approval of shareholders under Listing Rules 7.1 or 7.4.

d) Listing Rule 7.1 and Listing Rule 7.1A

The ability of an entity to issue Equity Securities under Listing Rule 7.1A is in addition to the entity’s 15% placement capacity under Listing Rule 7.1.

At the date of this Notice, the Company has on issue 124,223,159 ordinary shares and has a capacity to issue:

(i) 18,633,474 equity securities under Listing Rule 7.1 subject to shareholders’ approval being obtained under Resolution 5 ; and
(ii) subject to Shareholders’ approval being obtained under Resolutions 5 and 11, 12,422,316 equity securities under Listing Rule 7.1A.

The actual number of Equity Securities that the Company will have capacity to issue under Listing Rule 7.1A will be calculated at the date of issue of the Equity Securities in accordance with the formula prescribed in Listing Rule 7.1A.2 (refer to 8.2(c) above).

e) Minimum Issue Price

The issue price of Equity Securities issued under Listing Rule 7.1A must be not less than 75% of the volume weighted average price of Equity Securities in the same class calculated over the 15 ASX trading days immediately before:
(i) the date on which the price at which the Equity Securities are to be issued is agreed; or
(ii) if the Equity Securities are not issued within 5 ASX trading days of the date in paragraph (i) above, the date on which the Equity Securities are issued.

f) 10% Placement Period

Shareholder approval of the 10% Placement Facility under Listing Rule 7.1A is valid from the date of the annual general meeting at which the approval is obtained and expires on the earlier to occur of:

(i) the date that is 12 months after the date of the annual general meeting at which the approval is obtained; or (ii) the date of the approval by shareholders of a transaction under Listing Rules 11.1.2 (a significant change to the nature or scale of activities) or 11.2 (disposal of main undertaking),

or such longer period if allowed by ASX (10% Placement Period).

8.3 Information required by ASX Listing Rule 7.3A

ASX Listing Rule 7.3A sets out a number of matters which must be included in a notice of meeting seeking an approval under ASX Listing Rule 7.1A.The following information is provided for the purposes of Listing Rule 7.3A:

a) The Equity Securities will be issued at an issue price of not less than 75% of the volume weighted average price for the Company’s Equity Securities over the 15 ASX trading days immediately before:
(i) the date on which the price at which the Equity Securities are to be issued is agreed; or
(ii) if the Equity Securities are not issued within 5 ASX trading days of the date in paragraph (i) above ,the date on which the Equity Securities are issued.
b) If Resolution 11 is approved by Shareholders and the Company issues Equity Securities under the 10% Placement Facility, the existing Shareholders’ voting power in the Company will be diluted as shown in the table below. There is a risk that:
(i) the market price for the Equity Securities may be significantly lower on the date of the issue of the Equity Securities than on the date of the Meeting; and
(ii) the Equity Securities may be issued at a price that is at a discount to the market price for the Equity Securities on the issue date,

which may have an effect on the amount of funds raised by the issue of the Equity Securities.

The table below also shows the dilution of existing Shareholders on the basis of the current market price of Shares and the current number of ordinary securities for variable “A” calculated in accordance with the formula in Listing Rule 7.1A (2) as at the date of this Notice.

The table also shows:

(i) two examples where variable “A” has increased, by 50% and 100%.Variable “A” is based on the number of ordinary securities the Company has on issue. The number of ordinary securities on issue may increase as a result of issues of ordinary securities that do not require Shareholder approval (for example, a pro rata entitlements issue or scrip issued under a takeover offer) or future specific placement under Listing Rule 7.1 that are approved at a future Shareholders’ meeting; and
(ii) two examples of where the issue price of ordinary securities has decreased by 50% and increased by 100% as against the current market price.

Variable “A” in Listing Rule 7.1A.2			Dilution
		50% decrease in Current Issue Price $0.10	Current Issue Price $0.20	100% increase in Current Issue Price $0.40
124,223,159 Current Variable “ A”	10% Voting dilution	12,422,316 OrdinaryShares	12,422,316 OrdinaryShares	12,422,316 OrdinaryShares
	Funds raised	$1,242,232	$2,484,463	$4,968,926
186,334,739 50% increase in current Variable “A”	10% Voting dilution	18,633,474 Ordinary Shares	18,633,474 Ordinary Shares	18,633,474 Ordinary Shares
	Funds raised	$1,863,347	$3,726,695	$7,453,390
248,446,318 100% increase in current Variable “A”	10% Voting dilution	24,844,632 OrdinaryShares	24,844,632 OrdinaryShares	24,844,632 OrdinaryShares
	Funds raised	$2,484,463	$4,968,926	$9,937,583

The table has been prepared on the following assumptions:

  - (i) The current issue price is $0.20, being the closing price of the Company’s Shares on ASX on 12 October 2015.

  - (ii) The Company issues the maximum number of Equity Securities available under the 10% Placement Facility. (iii) The 10% dilution reflects the aggregate percentage dilution against the issued share capital at the time of issue. This is why the voting dilution is shown in each example as 10%.

  - (iv) The table shows only the effect of issues of Equity Securities under Listing Rule 7.1A, not under the 15% placement capacity under Listing Rule 7.1.

  - (v) The issue of Equity Securities under the 10% Placement Facility consists only of Ordinary shares. If the issue of Equity Securities includes Listed Options, it is assumed that those Listed Options are exercised into Shares for the purpose of calculating the voting dilution effect on existing Shareholders.

c) The Company will only issue and allot the Equity Securities during the 10% Placement Period. The approval under Resolution 11 for the issue of the Equity Securities will cease to be valid in the event that Shareholders approve a transaction under Listing Rule 11.1.2 (a significant change to the nature or scale of activities) or Listing Rule 11.2 (disposal of main undertaking).

d) The Company seeks to issue the Equity Securities for the following purposes:

 - for cash consideration in which case the Company intends to use the funds raised for working capital purposes mainly to cover for

    - a) marketing and distribution expenses of the Company’s products;

    - b) research and development of existing and new product applications; c) maintenance of intellectual property; d) staff and office costs, audit and compliance expenses, and ASX fees; e) for general working capital float to maintain minimum levels of inventories and cash liquidity in the business.

e) The Company’s allocation policy is dependent on the prevailing market conditions at the time of any proposed issue pursuant to the 10% Placement Facility. The identity of the allotees of the Equity Securities will be determined on a caseby-case basis having regard to the factors including but not limited to the following:
(i) the purpose of the issue;
(ii) alternative methods of raising funds that are available to the Company, including but not limited to, rights issue or other issue in which existing security holders can participate;
(iii) the effect of the issue of the Equity Securities on the control of the Company;
(iv) the circumstances of the Company, including ,but not limited to, the financial situation and solvency of the Company; and
(v) advice from corporate, financial and broking advisers (if applicable).

The allottees under the 10% Placement Facility have not been determined as at the date of this Notice but may include existing substantial Shareholders and/or new Shareholders who are not related parties or associates of a related party of the Company.

f) For the purposes of Listing Rule 7.3A.6 the following information is provided.

The Company obtained Shareholder approval for the 10% Placement Capacity at its 2014 Annual General Meeting. The approval was ceased to be valid on 21 April 2015, as the Company has entered into a transaction falling under Listing Rule 11.1.2. i.e. merger with Stellar Films Group.

The table below shows the total number of equity securities issued in the past 12 months preceding the date of the Annual General Meeting and the percentages those issues represent of the total number of equity securities on the issue at the commencement of the 12 month period.

Equity securities issued in the prior 12 month period	87,078,834 ordinary shares Of the above ordinary shares issued, no ordinary shares were issued under 10% placement capacity.
Percentage previous issues represent of total number of equity securities on issue at commencement of 12 monthperiod	234.43%

The table below along with notes set out specific details for each issue of equity securities that have taken place in the 12 month period preceding the date of the Annual General Meeting.

No te	Date	Number of Equity Securities Issued (adjusted for 100:1 consolidation effect)	Class of Equity Securities Issued	Name of Person to Whom Equity Securities were issued to	Issue Price (adjusted for 100:1 consolidation effect)	Discount	Cash Consideration & Use/Intended Use of Funds
1	3/12/2014	500,000	Ordinary Shares	Professional & Sophisticated Investors	$0.20	NIL	$100,000 For working capital
2	31/12/2014	4,752,500	Ordinary Shares	Eligible Shareholders	$0.20	NIL	$950,500 For working capital
3	31/12/2014	11,215	Ordinary Shares	Issue of shares on exercise of Options	$0.60	NIL	$6,729 For working capital
4	6/1/2015	115,000	Ordinary Shares	Issued to Directors in lieu of remuneration	$0.20	NIL	$23,000
5	21/4/2015	51,972,604	Ordinary Shares	Issued as merger consideration to Stellar Vendors	$0.15	NIL	$7,795,891 Merger Consideration
6	23/4/2015	115,000	Ordinary Shares	Issued to Directors in lieu of remuneration	$0.20	NIL	$23,000
7	15/5/2015	7,827,144	Ordinary Shares	Placement ofShares	$0.14	16%	$1,095,800 For working capital
8	26/6/2015	17,072,355	Ordinary Shares	RightsIssue	$0.14	16%	$2,390,130 For working capital
9	30/6/2015	4,713,016	Ordinary Shares	Placement ofShares	$0.14	16%	$659,822 For working capital

Notes:

500,000 Ordinary shares were issued to Professional & Sophisticated Investors utilising Company’s placement capacity under listing Rule 7.1. Share Issue was subsequently ratified by the shareholders at the General Meeting held on 7 April 2015.Ordinary Shares issued are fully paid ordinary shares in the capital of the Company with full entitlements to participate in dividends and to vote in meetings.
The funds were raised via a share purchase plan offered to the shareholders at an issue price of $0.20/share. Ordinary Shares issued under share purchase plan are fully paid ordinary shares in the capital of the Company with full entitlements to participate in dividends and to vote in meetings.
11,215 Ordinary shares were issued on exercise of similar number of December 2014 Expiry Options.
A total of 115,000 ordinary shares were issued to Directors-M/s Richard Tegoni, Steven Bendel and Gideon Meltzer in lieu of their part cash remuneration for the quarter ending 31 December 2014. Issue of shares to Directors was approved by the shareholders at the annual general meeting held on 28 November 2014.
On 21 April 2015, 51,972,604 fully paid ordinary shares were issued to Stellar Vendors on completion of the merger between Stellar Films Group and Cardia Bioplastics Limited.
A total of 115,000 ordinary shares were issued to Directors-M/s Richard Tegoni, Steven Bendel and Gideon Meltzer in lieu of their part cash remuneration for the quarter ending 31 March 2015. Issue of shares to Directors was approved by the shareholders at the annual general meeting held on 28 November 2014.

On 8 May 2015, the Company has raised $1.1m by issue of 7,827,144 shares at an issue price of $0.14 per share. Ordinary shares were issued to professional and sophisticated investors under the approval given by shareholders at the general meeting held on 7 April 2015.
On 23 June 2015, the Company has raised $2.4million by issue of 17,072,355 new shares pursuant to the Company’s oversubscribed non-renounceable rights issue. The shares were issued at an issue price of $0.14 per share. The Rights Issue Offer entitled shareholders to subscribe for one new share for every six shares held in SECOS at an issue price of $0.14 (14 cents) each.
Oversubscription from the non-renounceable rights issue of $0.66million were subsequently placed with professional and sophisticated investors and 4,713,016 fully paid ordinary shares were issued. The placement shares were issued under the Company’s 15% capacity pursuant to Listing Rule 7.1.

8.4 Information required by ASX Listing Rule 7.3A.7 (Voting Exclusion)

A voting exclusion statement is included in the Notice. At the date of the Notice, the Company has not approached any particular existing shareholder or security holder or an identifiable class of existing security holder to participate in the issue of the Equity Securities. No existing shareholder’s votes will therefore be excluded under the voting exclusion in the Notice.

8.5 Directors’ Recommendation

The Directors recommend that members vote in favour of Resolution 11.

OTHER MATTERS

The Directors are not aware of any other information that:

(a) is reasonably required by members in order to decide whether or not it is in the Company’s interests to pass each of the proposed resolutions; and,
(b) is known to the Company or to any of its directors;

that has not previously been disclosed either direct to members or generally to the market in accordance with the Company’s continuing disclosure obligations under the Listing Rules of ASX.

GLOSSARY

In this Notice and the Explanatory Memorandum:

(a) $ means Australian Dollars
(b) 10% Placement Facility has the meaning given in Section 8.1
(c) 10% Placement Period has the meaning given in Section 8.2
(d) AEDST means Australian Eastern Daylight Saving Time, being the time in Melbourne, Victoria, Australia.
(e) Annual Report means the Directors’ Report, the Financial Report and the Auditor’s Report in respect to the financial year ended 30 June 2015.
(f) ASIC means Australian Securities and Investments Commission.
(g) Associate has the same meaning as in the Corporation Act.
(h) ASX means ASX Limited or the Australian Securities Exchange, as the context requires.
(i) ASX Listing Rules and Listing Rules means the listing rules of the ASX.
(j) Auditor means the auditor of the Company.
(k) Auditor’s Report means the auditor’s report on the Financial Report.
(l) Board means the Directors of the Company as at the date of this Notice of Meeting.
(m) Chair and Chairman means the person appointed to chair the Meeting.
(n) SECOS and Company means SECOS Group Limited (ACN 064 755 237).
(o) Closely Related Party has the meaning given in section 9 of the Corporations Act.
(p) Constitution means the constitution of the Company as at the commencement of the Meeting.
(q) Corporations Act means the Corporations Act 2001 (Cth).
(r) Director means a director of the Company.
(s) Equity Securities has the meaning as in the ASX Listing Rules.
(t) Explanatory Memorandum means the explanatory memorandum to the Notice of Meeting.
(u) Financial Report means the annual financial report prepared under chapter 2M of the Corporations Act for the Company and its controlled entities.
(v) Key Management Personnel or KMP means key management personnel as identified in the Remuneration Report for the financial year ended 30 June 2015.
(w) Loan Share Plan means share plan as adopted by the Company at 2014 Annual General Meeting.
(x) Managing Director means the Managing Director of the Company.
(y) Option means an option which entitles the holder to subscribe for a Share in the Company.
(z) Notice or Notice of Meeting means this notice of Annual General Meeting.
(aa) Proxy Form means the proxy form attached to the Notice of Meeting.
(bb) Remuneration Report means the remuneration report contained in the Company’s 2015 Annual Report. (cc) Resolution means a resolution contained in this Notice of Meeting.
(dd) Trading Day means a day determined by ASX to be a trading day in accordance with the Listing Rules.
(ee) Share means fully paid ordinary share in the capital of the Company. (ff) Shareholder means a shareholder of the Company.

In this Notice and the Explanatory Memorandum words importing the singular include the plural and vice versa.

SECOS GROUP LIMITED

(ACN 064755237)

Mr Sam Sample Flat 123 123 Sample Street Sampleville VIC 3030

All Registry communication to Advanced Share Registry Ltd PO Box 1156 Nedlands WA 6909

Telephone: (08) 93898033 Facsimile: (08) 92623723

Sequence No: 1234567890

PROXY FORM

STEP 1- Appointment of Proxy

I /We being a member/s of SECOS Group Limited and entitled to attend and vote hereby appoint the Chairman of the Meeting If you are not appointing the Chairman of the Meeting as your (mark with an “X”) OR proxy please write here the full name of the individual or body corporate (excluding the registered Security holder) you are appointing as your proxy .

Or failing the individual or body corporate named, or if no individual or body corporate is named, the Chairman of the meeting, as my/our proxy at the Annual General Meeting of SECOS Group Limited to be held at Suite 6, Level 2, 205-211 Forster Road, Mount Waverley 3149 on 17 November 2015 at 10.30 am (AEDST) and at any adjournment of that meeting, to act on my/our behalf and to vote in accordance with the following directions or if no directions have been given, as the proxy sees fit unless I/We have appointed a Director, or any of the Company’s other key management personnel or a closely related party of that person, as our proxy.

The Chairman of the meeting is appointed as your proxy or may be appointed by default, and you do not wish to direct your proxy how to vote, please mark this box. By marking this box you expressly authorise the Chairman of the annual general meeting to exercise your proxy on Resolutions 1, 6, 7, 8, 9 &10. By marking this box, you acknowledge that the Chairman of the meeting may vote as your proxy even if he has an interest in the outcome of the resolution and votes cast by the Chairman of the meeting for those resolutions, other than as proxy holder, will be disregarded because of that interest. The Chairman intends to vote undirected proxies in favour of all the Resolutions. If you do not mark this box, and you have not directed your proxy how to vote, the Chairman of the meeting will not cast your votes on a resolution if the Chairman has an interest in the outcome of that resolution, and your votes will not be counted in calculating the required majority if a poll is called. Accordingly, if you want your vote to be counted in respect of a resolution, you should direct your proxy how to vote in respect of it.

STEP 2- Voting directions to your Proxy-please mark  to indicate your directions

For Against Abstain[*] To adopt Remuneration Report Re-election of Director- Dr. Frank Glatz Re-election of Director- Mr. Stephen Walters Re-election of Director- Mr. Trevor Haines Ratification of Issue of shares to Sophisticated and Professional Investors Issue of Shares to Mr. Richard Tegoni in lieu of Director Remuneration Issue of Shares to Mr. Stephen Walters in lieu of Director Remuneration Issue of Shares to Dr. Frank Glatz in lieu of Director Remuneration Issue of Shares to Mr. Trevor Haines in lieu of Director Remuneration Issue of Shares to Dr.Frank Glatz as short term incentive Approval of 10% placement facility If you mark the Abstain box for a particular item, you are directing your proxy not to vote on your behalf on a show of hands or on a poll and your votes will not be counted in computing the required majority on a poll. PLEASE SIGN HERE this section must be signed in accordance with the instructions overleaf to enable your directions to be implemented. Individual or Security holder 1 Security holder 2 Security holder 3 Sole Director and Company Secretary Director Director/Company Secretary Contact Daytime Telephone -------------------Date / / 2015*

Resolution 1	To adopt Remuneration Report
Resolution 2	Re-election of Director- Dr. Frank Glatz
Resolution 3	Re-election of Director- Mr. Stephen Walters
Resolution 4	Re-election of Director- Mr. Trevor Haines
Resolution 5	Ratification of Issue of shares to Sophisticated and Professional Investors
Resolution 6	Issue of Shares to Mr. Richard Tegoni in lieu of Director Remuneration
Resolution 7	Issue of Shares to Mr. Stephen Walters in lieu of Director Remuneration
Resolution 8	Issue of Shares to Dr. Frank Glatz in lieu of Director Remuneration
Resolution 9	Issue of Shares to Mr. Trevor Haines in lieu of Director Remuneration
Resolution 10	Issue of Shares to Dr.Frank Glatz as short term incentive
Resolution 11	Approval of 10% placement facility

*If you mark the Abstain box for a particular item, you are directing your proxy not to vote on your behalf on a show of hands or on a poll and your votes will not be counted in computing the required majority on a poll.

STEP 3- PLEASE SIGN HERE this section must be signed in accordance with the instructions overleaf to enable your directions to be implemented.

Contact Name ----------------------------

Voting and Instructions for Appointment of Proxy:

YOUR VOTE IS IMPORTANT

FOR YOUR VOTE TO BE EFFECTIVE IT MUST BE RECORDED BEFORE 10.30 AM ON 15 NOVEMBER 2015.

TO VOTE BY COMPLETING THE PROXY FORM

STEP 1 Appointment of Proxy

Indicate here who you want to appoint as your Proxy

If you wish to appoint the Chairman of the meeting as your proxy, mark the box. If you wish to appoint someone other than the Chairman of the meeting as your proxy please write the full name of that individual or body corporate. If you leave this section blank, or your named proxy does not attend the meeting, the Chairman of the meeting will be your proxy. A proxy need not be a member of the Company. Do not write the name of the issuer company or the registered member in the space.

Proxy which is a Body Corporate

Where a body corporate is appointed as your proxy, the representative of that body corporate attending the meeting must provide evidence of his or her appointment by providing an “Appointment of Corporate Representative” form prior to admission. An Appointment of Corporate Representative form can be obtained from the company’s Share Registry.

Appointment of a Second Proxy

You are entitled to appoint up to two proxies to attend the meeting and vote on a poll. If you wish to appoint a second proxy, an additional Proxy Form may be obtained by telephoning the company’s Share Registry or you may copy this form.

To appoint a second proxy you must:

(a) complete two Proxy Forms. On each Proxy Form state the percentage of your voting rights or the number of securities applicable to that form. If the appointments do not specify the percentage or number of votes that each proxy may exercise, each proxy may exercise half your votes. Fractions of votes will be disregarded.
(b) return both forms together in the same envelope.

STEP 2 Voting Directions to your Proxy

You can tell your Proxy how to vote

To direct your proxy how to vote, place a mark in one of the boxes opposite each item of business. All your securities will be voted in accordance with such directions unless you indicate only a portion of voting rights are to be voted on any item by inserting the percentage or number of securities you wish to vote in the appropriate box or boxes. If you do not mark any of the boxes on a given item, your proxy may vote as he or she chooses unless you have appointed a Director, or any of the Company’s other key management personnel or a closely related party of that person, as your proxy. If you mark more than one box on an item your vote on that item will be invalid. Where permitted, the Chairman of the meeting will vote undirected proxies in favour of all the items of business. This will be on the basis that the Proxy Form expressly authorises the Chairman to vote all undirected proxies even if the resolution is connected directly or indirectly with the remuneration of a Director.

If you appoint a Director (other than the Chairman of the meeting), or any of the Company’s other key management personnel or a closely related party of that person, as your proxy and you do not direct your proxy how to vote on Resolutions 1,6,7,8,9 & 10, the proxy will not be permitted to vote your proxy on those resolutions. Accordingly, if you want your vote to be counted on those resolutions, you should direct your proxy how to vote in respect of it.

STEP 3 Sign the Form

The form must be signed as follows:

Individual: This form is to be signed by the member.

Joint Holding: Where the holding is in more than one name, all the members must sign.

Power of Attorney: to sign under a Power of Attorney, you must have already lodged it with the registry. Alternatively, attach a certified photocopy of the Power of Attorney to this form when you return it.

Companies: this form must be signed by a Director jointly with either another Director or a Company Secretary. Where the company has a Sole Director who is also the Sole Company Secretary, this form must be signed by that person. Please indicate the office held by signing in the appropriate place.

STEP 4 Lodgement of a Proxy

This Proxy Form (and any Power of Attorney under which it is signed) must be received at an address given below not later than 48 hours before the commencement of the meeting at 10.30 a.m (AEDST) on 17 November 2015. Any Proxy Form received after that time will not be valid for the scheduled meeting. Proxies may be lodged with the Company’s registry in any one of the following ways:

BY MAIL – Advanced Share Registry Limited PO Box 1156, Nedlands, Western Australia- 6909 BY FAX+61 (08) 92623723 IN PERSON – Advanced Share Registry Limited 110 Stirling Highway, Nedlands Western Australia -6009

Attending the Meeting: If you wish to attend the meeting please bring this form with you to assist registration.

GROUP

ACN 064 755 237

SECOS Group Limited and Its Controlled Entities ANNUAL REPORT 2015

Changing the World of Packaging

2015

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Earth Friendly
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SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

2015

COMPANIES

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SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

2015 CONTENTS

Page No.

5 CORPORATE DIRECTORY
6 CHAIRMAN’S REPORT
7 DIRECTORS’ REPORT
26 AUDITOR’S INDEPENDENCE DECLARATION
FINANCIAL STATEMENTS
27 STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
29 STATEMENT OF FINANCIAL POSITION
30 STATEMENT OF CHANGES IN EQUITY
31 STATEMENT OF CASH FLOWS
32 NOTES TO THE FINANCIAL STATEMENTS
70 DIRECTORS’ DECLARATION
71 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS
74 SHAREHOLDERS’ INFORMATION

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SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

2015

CORPORATE DIRECTORY

DIRECTORS:

Richard Tegoni (Chairman) Stephen Walters (Managing Director) Frank Peter Glatz (Chief Operating Officer) Trevor Haines (Chief Financial Officer)

COMPANY SECRETARY: Rekha Bhambhani

REGISTERED OFFICE: Suite 6, Level 2 205-211 Forster Road, Mount Waverley VICTORIA 3149 Telephone (03) 85666800 Facsimile (03) 95620422 Email: [email protected]

SHARE REGISTRY: Advanced Share Registry Limited 110 Stirling Highway, NEDLANDS W.A. 6009 Telephone: +61 8 9389 8033 Facsimile: +61 8 9262 3723

BANKERS: Bank of Melbourne Level 8, 530 Collins Street, MELBOURNE VIC 3000 AUDITORS: William Buck Level 20, 181 William Street, MELBOURNE, VIC 3000

LAWYERS: CBW Partners Level 1, 159 Dorcas Street, South Melbourne, VIC 3205.

STOCK EXCHANGE: Australian Securities Exchange Level 4 North Tower Rialto, 525 Collins Street, MELBOURNE VIC 3000

CORPORATE WEBSITE: www.cardiabioplastics.com

ECOMMERCE WEBSITE: www.cardiabioproducts.com

CORPORATE GOVERNANCE SATEMENT:

The Corporate Governance Statement was approved by the Board of Directors on 30 September 2015 and can be found on the Invest page at www.cardiabioplastics.com

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

2015

CHAIRMAN’S REPORT

Dear Shareholders,

On behalf of the Board of SECOS Group Ltd (“SECOS” or the Company”) I am very pleased to present the Audited Annual Report for the year ending 30 June 2015.

2015 represented a year of significant transformation for the Company. SECOS was formed through the merger of Cardia Bioplastics (“Cardia”) and Stellar Films Group (“Stellar”) in April 2015 to become a leader in sustainable packaging with our core market segments being Films & Packaging and Waste Management Solutions.

SECOS has the technology and capability to produce the highest quality sustainable cast films made from renewable resources and tailored to the global personal care and hygiene market. The Company’s manufacturing operations are located in Melbourne, Australia, Kuala Lumpur, Malaysia and Nanjing, China. SECOS’ annual production capacity is 7,200 tonnes of bioplastics resins and 15,000 tonnes of cast film and 2,000 tonnes of blown film and finished products with cost effective capacity expansion options. The group supplies some of the world’s largest brand owners, retailers and packaging companies with high quality films and is now well positioned to meet the growing demand for sustainable plastic products within this segment.

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The merger and business transformation was supported by an oversubscribed $3.2million capital raising completed in June 2015. Funds were immediately utilised to expand working capital, and to finance merger integration costs and the increased working capital position has resulted in a rapid expansion of sales across all business units and is expected to expand further throughout the year from the uptake of the group’s trademark Biohybrid™ films.

SECOS’ sustainable packaging strategy sits at the centre of the group’s business plan with Cardia Bioplastics providing the technology and expertise in the rapidly growing plastics made from renewable resources market. The manufacture of compostable and Biohybrid™ resins at the group’s China plant provides an important supply chain component for the production of high quality sustainable films produced at the group’s cast film plants. This vertical integration enables SECOS to produce consistently high quality, low cost sustainable hygiene films for supply to tier one global hygiene product companies around the world. Sustainable packaging must compete with traditional plastics using more than just its environmental credentials and SECOS has the technology and business model to do just that. SECOS can provide consistently high quality sustainable resin and film which can compete with traditional plastics on price, softness, strength and performance while meeting customer demands to be more environmentally friendly.

SECOS’ business unit, Cardia Bioplastics, has been successful in securing sales of compostable waste diversion bags to over ten Victorian councils and now supplies up to 5% of all households in Victoria with its compostable kitchen tidy bags. SECOS will continue to work closely with Councils and waste management companies to expand the rollout of waste diversion programmes. Waste diversion programmes are expected to significantly reduce the amount of organic waste being dumped into landfills which has hazardous consequences on the environment and our community.

The merger and restructure of the group’s key assets and capital raising initiatives throughout the year has been a monumental task. However with many of these major milestones behind us SECOS management can now continue to focus on expanding its position as a world leader in sustainable packaging. I would like to thank the SECOS Board, staff and shareholders for their continued support and commitment to the group.

Richard Tegoni Chairman

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

DIRECTOR’S REPORT

2015

The Directors present their report on the consolidated entity consisting of SECOS Group Limited (“SECOS” or the “Company”) and the entities it controlled (“the Group”) at the end of, or during, the year ended 30 June 2015.

DIRECTORS

The following persons were Directors of SECOS during the financial year and up to the date of this report: Richard Tegoni (Chairman) Stephen Walters (Managing Director, Appointed 21 April 2015) Frank Glatz (Chief Executive Officer) Trevor Haines (Chief Financial Officer, Appointed 21 April 2015) Steve Bendel (Resigned 21 April 2015)

Gideon Meltzer (Appointed 7 November 2013, Resigned 24 August 2015)

COMPANY SECRETARY

The Company Secretary is Rekha Bhambhani, B.Com, ACIS, ASA, ACA (ICAI), DISA (ICAI) who was appointed to the position on 10 August 2010. Miss Bhambhani had been Chief Financial Officer of Cardia for the last 9 years and has also worked as an assistant with the previous Company SecretaryMr John Wilson on company secretarial matters. Prior to that, she has worked in accounting and finance positions in India for more than 8 years.

PRINCIPAL ACTIVITIES

During the year, activities were directed towards the development of the Bioplastics business and after the acquisition of Stellar Group Companies (“Stellar Films Group Pty Ltd and Stellar Films (Malaysia) Sdn Bhd”), the Company has worked towards the full integration of its businesses to exploit expected synergies of the merger with Stellar.

SIGNIFICANT CHANGES IN STATE OF AFFAIRS

Change of name

Following approval at the general meeting of shareholders on 7 April 2015, Cardia Bioplastics Limited changed its name to SECOS Group Limited effective 8 April 2015. ASX code change from “CNN” to “SES” has occurred on 22 April 2015

Consolidation of Capital

Following receipt of shareholder approval at the Company’s General Meeting held on 7 April 2015, SECOS Group Limited completed the consolidation of capital.

The basis for the consolidation of capital was as follows:

• every 100 shares to be consolidated into 1 share

• every 100 options to be consolidated into 1 option and the exercise price of such options will be amended in inverse proportion to this ratio in accordance with Listing Rule 7.22.1

Acquisition of Stellar Films Group Companies- reverse acquisition

On 21 April 2015, the Company completed its legal acquisition of 100% of shares in Stellar Group Companies. Under the acquisition, the Company (formerly known as Cardia Bioplastics Limited) has issued 129.93 new Cardia shares for each Stellar Films Group Pty Ltd’s (“Stellar”) share held. The Company has issued 51,972,604 ordinary shares to Stellar vendors.

On Completion of the merger with Stellar Films Group, Mr Stephen Walters and Mr Trevor Haines were appointed as Managing Director and Chief Financial Officer, respectively of SECOS Group Limited and Mr Steven Bendel, who has been a non-executive director of the Company since 7 October 2013, retired from the Board.

The acquisition has been treated as a “reverse acquisition” in accordance with AASB 3 ”Business Combinations” whereby Stellar is deemed to be the accounting acquirer of the consolidated Group. Within the financial statements, the comparatives for the year ended 30 June 2014 represent those of Stellar Group companies. For the year ended 30 June 2015, the financial statements present the activities of Stellar Group companies up to the acquisition date, 21 April 2015 and that of the merged group thereafter.

SECOS’ integration of the businesses was substantially completed at the reporting date.

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

DIRECTOR’S 2015 REPORT

Capital Raising

On 8 May 2015, the Company has raised $1.1m by issue of 7,827,144 shares at an issue price of $0.14 per share. Ordinary shares were issued to professional and sophisticated investors under the approval given by shareholders at the general meeting held on 7 April 2015.
On 23 June 2015, the Company has raised $2.4million by issue of 17,072,355 new shares pursuant to the Company’s oversubscribed nonrenounceable rights issue. The shares were issued at an issue price of $0.14 per share.
Oversubscription from the non-renounceable rights issue of $0.66million were subsequently placed with professional and sophisticated investors and 4,713,016 fully paid ordinary shares were issued. The placement shares will be issued under the Company’s 15% capacity pursuant to Listing Rule 7.1.

There were no other significant changes in the state of affairs of the Group during the financial year.

OPERATING RESULTS

The consolidated loss for the year attributable to the members of the Group was:

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2015 2014
$ $
Loss for the year after income tax (4,279,803) (2,227,481)
- -
Loss/(Profit) attributable to non-controlling interests
Net Loss attributable to members of the Company (4,279, 803) (2,227,481)
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To assist the interpretation of the underlying performance of the group, a pro forma statement is presented below:

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2015 2014
$ $
Revenues 17,957,801 21,850,657
Operating expenses (19,467,603) (22,329,970)
EBITDA * before acquisition and merger transaction costs (1,509,802) (479,313)
Depreciation and amortisation (327,766) (256,750)
Depreciation and amortisation (included in cost of sales) (367,328) (410,884)
-
Impairment of receivables and inventories (1,066,350)
Borrowing costs (321,186) (276,641)
-
Merger transaction costs (309,446)
Share in loss of joint venture (877,925) (803,893)
-
Gain on Acquisition 500,000
Income tax expense/ (benefit) - -
Profit/(loss) after income tax (4,279,803) (2,227,481)
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EBITDA is a non- IFRS measure and represents earnings from continuing operations before interest, tax, depreciation and amortisation, impairment of assets and significant items most notably, share of joint venture, gain on acquisition and other transaction costs associated with the merger.

DIVIDENDS

The Directors do not recommend the payment of a dividend for this financial year and dividends of $901,000 have been declared and paid during the last financial year.

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

DIRECTOR’S REPORT

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Changing the World of Packaging
2015
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REVIEW OF OPERATIONS:

Cardia Bioplastics and Stellar Films Group announced their proposed merger to create a leader in sustainable packaging in November 2014. During the financial year FY2014/15, the businesses conducted due diligence, negotiated merger agreements, reviewed its joint business strategy and manufacturing operations, and merged to form SECOS Group in April 2015.

The key synergies of the merged SECOS Group are the following:

Market access and reach in absorbent hygiene products market, a US$72 billion industry growing 5.5% per annum.[1]
Emerging, high growth bioplastics industry with SECOS focusing on films & packaging and waste management markets. ‘Markets and Markets’ Research Group predicts the global biodegradable and compostable plastics market to be worth more than US$3.4 billion by 2020.[2]
Unique global product offering at competitive pricing to absorbent hygiene products market – soft touch and warm feel, matt finish, quietness in handling, environmentally preferred, made from renewable resources, lower carbon foot print, heavy metal free hygiene products.
Enhanced competitiveness through integrated production from resins to films to coated products.
Geographic footprint of combined operations; focus on high growth Asian market. Strategic decision to discontinue funding of Cardia’s Brazilian film and bag making business.
Stellar’s underutilised production assets – Stellar’s Australian cast film plant can produce as much hygiene film in three weeks as Cardia’s hygiene film extrusion lines can produce in one year.
Production and supply chain efficiency of combined operation.
Operational savings and cost-effective expansion options.
Complementary intellectual property positions and customer reach.
Highly focused management teams with internationally recognised industry experts in sustainable packaging.
Scale and resources to deliver successful implementation of growth strategy in personal care and hygiene films, and bioplastics products.

The stand-alone Cardia Bioplastics business delivered a $6,552,605 sales revenue and 30% business growth during the financial year FY2014/15 compared to FY2013/14. Cardia continued its traction in global commercialisation during FY2014/15 converting a number of its product developments into global sales. The Company executed several long-term supply agreements with strategic customers including Sealed Air and Transpacific Industries; City Councils including the cities of Albury and Wodonga; market-leading brand owners including Breville and Henkel; and sales to large European and USA retailers. These agreements are the culmination of a lengthy and rigorous sales development process. This process validates the environmental offering of Cardia products, their cost-competitiveness and that they meet the specific requirements of customers’ product applications. With a growing list of long-term customers, the Company is making significant headway towards establishing itself as a global manufacturer and supplier of renewable resins and finished products to the plastics and packaging industries. In addition to growing sales with new customers, the Company maintained material business contracts with established key customers such as China City Councils including Shanghai-Pudong and Nanjing, and Australian Councils including City of Brisbane.

Stellar Films Australia posted revenues of $3,293,405 for the financial year FY2014/15 compared to revenues of $6,067,130 for the financial year FY2013/14 which represents a 45.7% decline in revenues. The decline reflects the original Stellar Films business strategy to close the Australian manufacturing facilities and relocate production to the Stellar Films plant in Kuala Lumpur, Malaysia. This decision was made on the back of the high Australian Dollar to United States Dollar exchange rate and high Australian domestic polymer costs relative to the business’ export markets.

However, as a result of the successful development of a range of high quality sustainable and cost competitive cast films using the Cardia Biohybrid™ resin technology, the decision was made to keep the Australian plant in operation. The SECOS strategy is to capitalise on the opportunity to sell these unique cast films that are environmentally preferred and differentiated in their property profile to the global personal care and hygiene industry.

Since the merger there has been considerable activity and success in winning back business that was once enjoyed on a regular basis by the Australian plant. Monthly sales of approximately $400,000 to the absorbent pet care products business in Japan have been secured. New sales development projects are underway to grow the Stellar Films Australia business by capitalising on the increasing global demand for its high quality films. The weakening of the Australian Dollar further has further strengthened Stellar’s competiveness in its targeted export markets.

SALES REVIEW BY STRATEGIC BUSINESS UNIT

Cardia Bioplastics posted revenues of $1,007,398 for the financial year FY2014/15 compared to revenues of $5,023,491 for the financial year FY2013/14. In accordance with guidelines and principles of AASB 3 – Business Combination, the merger has been treated as a reverse acquisition. Therefore Cardia sales revenues for FY2014/15 are reported only for the trading period from the merger date, 21 April 2015, through to 30 June 2015. Cardia Bioplastics is categorised under “Distribution Division” operating segment of the Group.

1 Edana Outlook Asia 2014 Conference, P&G presentation

2 Markets and Markets Research, Biodegradable Plastics Market by Type, by Application - Global Trends & Forecasts to 2020

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

DIRECTOR’S 2015 REPORT

Stellar Films Australia is categorised under “Manufacturing Division” operating segment of the Group.

Stellar Films Malaysia posted revenues of $12,983,591 for the financial year FY2014/15 compared to revenues of $15,466,000 for the financial year FY2013/14 which represents a 16% decline in revenue.

The decline in revenue reflects the tough trading conditions throughout the middle part of the financial year as polymer resin prices continually increased and as a result less profitable parcels of business were let go in favour of more profitable and strategic opportunities.

Stellar Films Malaysia has successfully secured business in 17 export markets (accounting for 80% of all sales) servicing the hygiene and pet care markets throughout Asia. Sales to Japan represented 36.5% of all sales with Thailand following at 31% of all sales.

The recent drop in the cost of polymer resins coupled with the depreciation of the Malaysian Ringgit has seen the business gain significant sales momentum across all categories.

Taking all of these aspects into consideration, the business now has a solid platform to further strengthen and grow its sales portfolio.

Stellar Films Malaysia is categorised under “Manufacturing Division” operating segment of the Group.

are heavy metal free, ideal attributes for the growing personal care and hygiene product applications.

The absorbent hygiene products market is a $72 billion industry growing 5.5% a year, with growth being driven by demographics and economic development across both developed and developing markets.[5] Factors such as, births increasing across Asia, ageing populations, female population growth and increasing middle classes with higher disposable income are driving demand for quality disposable personal hygiene products including baby nappies, feminine hygiene products and adult incontinence products.

Brand owners and consumers are demanding more environmentally friendly, sustainable and non-toxic solutions for disposable personal hygiene products. Cardia Biohybrid™ hygiene films deliver on all requirements - environmentally friendly, sustainable, heavy metal free and body friendly with soft touch and warm feel. The new Biohybrid™ hygiene films are both a more sustainable and a healthier choice.

During FY2014/15 SECOS Group successfully scaled up production at Stellar Films Australian operations of its Cardia Biohybrid™ films tailored for the global personal care and hygiene product markets. SECOS has received product requests and specifications for its Biohybrid™ hygiene films from ten potential customers for in-house validation and product performance testing. Stellar Films Australian manufacturing plant has the capacity to produce up to 6,000 tonnes of high quality hygiene films per annum.

MARKET SEGMENT REVIEW

SECOS Group is focused on leveraging its expertise and positioning in its target markets of Films & Packaging and Waste Management Solutions. Below is a review of the key sales activities and achievements of FY2014/15.

The following sales contracts and commercial launches in the business segment of Films & Packaging have been delivered and communicated to the market in FY2014/15 and up to the date of this report.

FILMS & PACKAGING

The global plastics packaging market is estimated to be a $200 billion market.[3] Sustainable and renewable Bioplastics packaging is < 1% of the plastics packaging market with exponential growth potential.[4] SECOS’ key target segments of the packaging market are personal care and hygiene, protective and food packaging.

3 Packagingtoday.com, Packaging industry overview (2011)

4 European Bioplastics Industry Report 2010, www.european-bioplastics.org/market/[5 ] Edana Outlook Asia 2014 Conference, P&G presentation

SECOS Group is well positioned to benefit from the trend towards sustainable packaging, offering customers a broad range of high quality Stellar cast films and the choice of sustainable Cardia Biohybrid™ or compostable resin technology for their packaging or plastic product solutions.

Stellar Films is an international manufacturer of high quality cast films tailored to their customer requirements, including films for the disposable nappy, feminine hygiene, incontinence and medical disposable markets.

Cardia Biohybrid™ proprietary technology combines renewable thermoplastics with polyolefin material to reduce dependence on finite oil resources and lower carbon footprint. Biohybrid™ films produced on Stellar Films proprietary cast film process are differentiated through their unique soft touch, warm feel and quietness in handling that is ideal for personal care product applications. Environmentally preferred and body friendly, containing GMO free renewable plant based material, Biohybrid™ films contain less oil, have a lower carbon footprint and

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

DIRECTOR’S REPORT

2015

Kenyan manufacturer places initial orders with Stellar Films for expanding personal care and hygiene market

Stellar Films Group receives initial container orders for its high grade hygiene films for expanding Kenyan personal care and hygiene market. Hygiene films manufactured by Stellar Films Malaysia business which is achieving high sales growth. Stellar Films Malaysian manufacturing plant has the capacity to produce up to 9,000 tonnes of high quality hygiene films per annum.

SECOS Group successfully scales up production of Biohybrid™ films for global hygiene market

SECOS successfully scales up production of environmentally friendly, high quality and cost competitive Biohybrid™ films tailored for the global personal care and hygiene product markets. SECOS has received product requests and specifications for its Biohybrid™ hygiene films from ten potential customers for in-house validation and product performance testing. Stellar Films Australian manufacturing plant has the capacity to produce up to 6,000 tonnes of high quality hygiene films per annum.

Stellar Films launches sustainable personal care films made from Cardia Biohybrid™ technology

Stellar Films and Cardia Bioplastics partnered to produce sustainable films using Cardia Biohybrid™ patented technology for the personal care and medical products industry. Environmentally friendly Biohybrid™ films offer high product performance and are cost competitive. Films are strong and tough while delivering a unique soft touch and warm feel ideal for the personal care industry. Market launch of these novel films at Outlook Asia 2014, the world’s premier non-woven personal care products conference in Singapore commencing 26 November 2014.

Sealed Air uses Cardia Compostable films for new PakNatural® Biodegradable Cushion Bags Leading global protective packaging manufacturer Sealed Air selects Cardia Compostable films for new PakNatural® Biodegradable Cushion Bags. Validation of Cardia Compostable films in Sealed Air’s high performance protective packaging application.

Cardia Bioplastics in talks to appoint BioShoppe as distributor

Cardia Bioplastics in talks with BiotechCorp to appoint BioShoppe as distributor for Cardia Compostable and Biohybrid™ products to the Malaysian Government and market. BioShoppe to market Cardia Compostable and Biohybrid™ bag and waste management products. Cardia Compostable and Biohybrid™ bags qualify for MyHijau Green Directory Listing. Cardia sustainable bags featured as leading BioNexus products at BioMalaysia & Bioeconomy Asia Pacific 2014 conference and exhibition.

Leading German Consumer Goods Company chooses Cardia Biohybrid™ technology

Leading German Consumer Goods Company chooses Cardia Biohybrid™ technology for their product packaging. Cardia Biohybrid™ technology validated in high performance rigid packaging application, enhancing shelf life of packaged product. Cardia Biohybrid™ products meet stringent four years quality testing regime. Initial container orders received for European market launch in early 2015. Biohybrid™ resin sales are expected to benefit as the company continues to secure global brand owners.

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SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

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Changing the World of Packaging DIRECTOR’S
2015 REPORT
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WASTE MANAGEMENT SOLUTIONS

Organic waste is a component of the waste stream from plant or animal sources that is readily biodegradable. It forms a significant proportion of waste generated, and an even more significant portion of waste sent to landfill. Degradation of organics in landfill generates the potent greenhouse gas methane, and also produces potentially polluting leachate. In 2011, around 14 million tonnes of organic waste was generated in Australia alone. Separating organic waste at household level and diverting it from landfill is being implemented by many councils around the world. Biohybrid™ and compostable waste management products can significantly contribute to efficient organic waste management through organics recycling. It is expected that Cardia’s sustainable waste management products will benefit from the regulatory changes that are being implemented by many governments around the world.

SECOS Group is developing the sustainable waste management products market with a particular emphasis on organic waste recycling through its Cardia Bioplastics business. Cardia’s key sales regions for its environmentally preferred waste management products were China, USA, Europe and Australia during FY2014/15 with the expectation of increasing sales going forward.

Cardia has established itself as a reliable supplier of quality environmentally preferred waste management products to the China Government market, securing orders and supply contracts to Shanghai and Nanjing City Councils during FY2014/15.

Cardia conducted a strategic review of the global waste management products market and decided to focus on the organic waste management market with a particular focus on organics recycling bags and pet care products. Cardia set up film and bag making equipment at its new purpose built factory in Nanjing, China to service this particular growth market with a Biohybrid™ and Compostable bag making capacity of over 250 million bags per year. Cardia launched its new Compostable and Biohybrid™ product ranges in response to growing market demand for bioplastics packaging during FY2014/15. The new Cardia Bioproducts Compostable and Biohybrid™ bag range offers businesses and households the opportunity to make a quality sustainable choice. Cardia Compostable bags are now available to retailers, councils, businesses and households thus enabling greater diversion of organic waste from landfills.

Cardia signed a two-year contract with Cleanaway in December 2014 and received first year order for 7.8 million compostable kitchen tidy bags and 50,000 kitchen tidy bins for the rollout of an organics kerbside collection program in Albury, Wodonga and the major towns of Corowa and Indigo. Since successfully delivering the organics diversion programme with Cleanaway, Cardia has secured orders from four additional councils in the State of Victoria for large scale organics diversion programmes. Kitchen organic waste collection using Cardia Compostable bags will expand and cover approximately 100,000 households representing 5% of households in the State of Victoria with further growth expected in Victoria, Australia and internationally.

Cardia launched its new range of Compostable and Biohybrid™ dog waste bags at Interzoo 2014 in Germany and has been successful in securing initial orders at the trade fair. The business has developed well since then and the Company set up six new film extrusion and bag making lines to meet further increased orders including orders from US and European retailers.

The following sales contracts and commercial launches in the business segment of Waste Management Solutions have been delivered and communicated to the market in FY2014/15 and up to the date of this report.

6 http://www.environment.gov.au/system/files/resources/0a517ed7-74cb-418b-9319-7624491e4921/files overview-organics_0.pdf

7 European Commission, DG Environment, http://ec.europa.eu/environment/waste/compost/index.htm

In order to further extend its market reach Cardia launched its Cardia Bioproducts website where consumers, businesses and councils can now buy bags directly from Cardia. The Cardia Bioproducts website sells compostable bags ranging from produce bags, kitchen tidy bags, various sizes of household waste bags, shopping bags, garden bags, nappy bags to dog waste bags.

Over the last five years, Cardia Bioplastics has closely cooperated with Australian Councils, waste management companies and industrial composters to validate and optimise the product offering of its compostable kitchen tidy bags and kitchen tidy bins, from household use to waste collection and composting. With several councils implementing organic waste diversion programmes during FY2014/15 Cardia has benefited from this work through the expanding uptake of its waste management products by Australian Councils for their organic waste diversion programmes.

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

DIRECTOR’S REPORT

Cardia Bioplastics launches on-line distribution sales channel through Cardia Bioproducts

website. New Cardia Bioproducts website retailing & wholesaling Cardia Bioproducts range. Website makes Cardia Bioproducts Compostable and Biohybrid™ bag range available to households, businesses and councils.

Expanding uptake of Cardia Compostable waste management products by Australian Councils

for their organic waste diversion programmes

Cardia Bioplastics organic waste management products being used by Albury City, City of Wodonga, and Corowa and Indigo Shires for kitchen scraps and garden waste diversion programmes. Cardia has secured orders from four additional councils in the State of Victoria for large scale organics diversion programmes. Cardia’s waste diversion programme now covers approximately 100,000 households representing 5% of households in the State of Victoria. Further validates Cardia Compostable waste management products for organics diversion programmes.

Cardia Bioplastics Launches New Cardia Bioproducts Bag Range

Cardia launches new Cardia Bioproducts bag range in response to growing market demand for bioplastics packaging. New Cardia Bioproducts Compostable and Biohybrid™ bag range offers businesses and households the opportunity to make a quality sustainable choice. Cardia Compostable bags now available for retailers, councils, businesses and households enable greater diversion of organic waste from landfills.

Cardia Bioplastics signs two year supply contract with Cleanaway

Cleanaway selects Cardia Bioplastics organic waste management products for first large-scale organics diversion program. Cleanaway signs two-year supply contract and places first year order for 7.8 million Cardia Compostable kitchen tidy bags and 50,000 Kitchen Tidy Bins for commercial roll out. Cardia Bioplastics organic waste management products to be used by Albury City Council, City of Wodonga, and Corowa and Indigo Shires kitchen scraps and garden waste diversion program. Kitchen organics collection program to cover 50,000 households and to commence in April 2015. Further validates Cardia Compostable waste management products for organics diversion programs

$150,000 orders of Cardia Bioplastics dog bags received from US and European Retailers

Cardia Bioplastics implements expansion of its film and bag production at its new purpose built factory in Nanjing, China. Set up of six new film extrusion and bag making lines to meet further increased orders including orders from USA and European retailers for organic waste management bags. Doubles both Biohybrid™ and Compostable bag making capacity to over 250 million bags per year. First $150,000 orders of dog bags received from US and European Retailers. Expanded film extrusion and bag making capacity fully utilised due to growing global demand for Cardia Bioplastics products.

2015

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SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

2015

DIRECTOR’S REPORT

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Cardia Bioplastics wins $350,000 waste management products supply contract in Nanjing, China Nanjing Jianye District awards Cardia Bioplastics orders of A$350,000 and extends its supply contract for waste management products. Annual supply requirement forecast for A$1 million. Contract represents 7% of Nanjing City households with potential to expand rollout. Significant opportunity to secure additional City Councils in China. Continues momentum of growth for Cardia’s China business with focus on organic waste management products.

Cardia Bioplastics launches new Dog waste bags at INTERZOO 2014 the World-Leading Exhibition for the Pet Supplies Industry

Cardia Bioplastics launches fresh new Compostable and Biohybrid™ dog waste bags. Cardia Bioplastics exhibiting at Interzoo 2014 in Nuremberg, Germany to present its Dog Waste bag range. Cardia Bioplastics dog waste bags poised for growth in pet retail sector.

TECHNOLOGY REVIEW

During the financial year 2014/15, SECOS Group through its Cardia Bioplastics business made further developments in its bioplastics technology, strengthening its Intellectual Property position. Cardia now owns an intellectual property portfolio of eleven patent families, with twenty-eight patents so far granted in Europe, USA, Australia, China, Japan, New Zealand and South Africa, and thirty-nine more patents pending registration. The patents protect the composition formulations, manufacturing processes and application technology invented by Cardia’s Research & Development team.

Intellectual Property underpins the technical differentiation of Cardia’s Compostable and Biohybrid™ product range. Cardia capitalises on growth of bioplastics with leading brand owners and government bodies where strong intellectual property position is a key requirements for commercial success.

The following advances in Cardia Bioplastics technology and product certifications were communicated during the FY2014/15 and up to the date of this report.

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Cardia secures European patent protection for its bioplastics technology

European Patent Office grants cornerstone patent for Cardia Compostable resin and process technology. Cardia Bioplastics expands patent portfolio to twenty-eight registered patents protecting its bioplastics technologies with thirty-nine more patents pending registration. Cardia’s proprietary innovation in compostable, Biohybrid™ and PPC-starch technologies validated through international patents. Cardia capitalises on growth of bioplastics with leading brand owners and government bodies where strong intellectual property position is a key requirements for commercial success.

Cardia secures expanded patent protection for its bioplastics technology

Cardia expands patent portfolio to nineteen patents granted with forty two more pending registration. Seven new Cardia Compostable, Biohybrid™ and PPC-starch technology patents granted in Japan, Australia, New Zealand and China in 2014. Intellectual Property underpins commercially successful Cardia Compostable and Biohybrid™ product ranges. Cardia Bioplastics’ technical differentiation endorsed with patents. Cardia capitalises on growth of bioplastics with leading brand owners where strong intellectual property position is a key requirement.

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

DIRECTOR’S REPORT

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Changing the World of Packaging
2015
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MANUFACTURING REVIEW BY STRATEGIC BUSINESS UNIT

SECOS Group has developed proprietary manufacturing processes for its bioplastic resin, high quality cast films and finished products derived from renewable resources. SECOS Group manufacturing plants are located in Melbourne, Australia, Kuala Lumpur, Malaysia and Nanjing, China. SECOS annual production capacity is 7,200 tonnes of bioplastics resins and 15,000 tonnes of cast film and 2,000 tonnes of blown film and finished products with cost effective capacity expansion options. The Company has set up fully integrated product supply chain from bioplastic resin to certified compostable and Biohybrid™ films and bags that ensures product quality and cost competiveness. All operations are quality systems ISO9001 certified.

Cardia Bioplastics manufactures its bioplastic resins, films and finished products derived from renewable resources at its Nanjing, China manufacturing plant.

During FY2014/15 Cardia successfully completed the relocation of its resin production to a new purpose built factory in Nanjing, China. The factory has the capacity to produce 7,200 tonnes of bioplastic resin per annum. The plant operates under strict production and quality processes which have been recognised with ISO9001 Quality Certification and the China Environmental Label. The plant has low operating costs and is highly scalable.

In line with its business strategy to establish a finished products division with own dedicated resources and manufacturing capability, Cardia’s China film and bag production was relocated to the new factory and expanded in capacity to 250 million bags per annum. This project was completed in December 2014.

The Cardia China production team has particularly focused on establishing efficient production in the new facility, on the new equipment with a largely new workforce. Over the last half year they have delivered significant efficiency gains, increasing their production capacity in line with ramping up sales orders. As production has stabilised and progresses towards high utilisation, the business will lower its relative production cost with a positive effect on product margins and profitability of the business.

Stellar Films Australia produces co-extruded high quality cast films for the hygiene, pet care and medical markets at its Melbourne, Australia manufacturing plant. This plant has the capacity to produce up to 6,000 tonnes of high quality hygiene cast film per annum and is regarded as one of the most efficient plants of its type in the world achieving enviable product quality and efficiency rates. The production plant is differentiated through its co-extrusion capability and embossing technology and is ideal for applications such as nappy back sheets and sanitary napkins, Stellar’s cast films are in high demand by its global customers.

Since the reopening of Stellar’s plant in April 2015, the business has secured sales worth approx. $400,000 per month representing annualised sales revenue of $4,800,000 per annum. With the plant now running at approximately 30% capacity the potential growth opportunity is significant. Sales projects are underway to grow the business by capitalising on the increasing demand for Stellar’s high quality films.

Stellar Films Malaysia produces its high quality cast films for the hygiene, pet care and medical markets at its Kuala Lumpur, Malaysia manufacturing plant. This plant has the capacity to produce up to 9,000 tonnes of high quality hygiene cast film per annum. The production plant is differentiated through its multiple cast film lines, embossing, printing and lamination capability. It can efficiently produce a broad range of hygiene cast films tailored to its specific customer processes. The business is located in a government approved manufacturing zone with the facility being within close proximity of Malaysia’s major shipping port. Malaysia is centrally located in the high growth Asian market.

The Stellar Films Malaysia Production team runs a very efficient operation with a strong focus on quality management. The combination of product quality, cost structure, efficiency of supply, central geographic location differentiates Stellar Films Malaysia plant as a preferred supplier to their ‘Just in Time’ supply driven customers located in the high growth Asian region.

During the FY2014/15 the Stellar Films Malaysia production team focused on further enhancing their quality operation to meet and exceed their customers’ orders requirements and increasing orders. Several new product developments have been delivered and new customers won, including new hygiene film sales to Kenyan manufacturer for their expanding personal care and hygiene market, and several pet care customers including growing supply to Japan.

To further enhance its market position and more closely align with its Japanese customers ‘Just in Time’ manufacturing and supply chain requirements, Stellar Films Malaysia has commenced a Kaizen 5S workplace organization programme.

The following manufacturing related activities were communicated to the market in FY2014/15 and up to the date of this report:

During the FY2014/15 the Stellar Films Australia and Cardia Bioplastics technical teams have successfully scale-up production of its environmentally friendly, high quality and cost competitive Biohybrid™ films tailored for the global personal care and hygiene product markets. The company now manufactures a broad range of Biohybrid™ hygiene films at its Stellar Films Australian cast film manufacturing plant to meet customer demand. The Biohybrid™ films produced on Stellar Films proprietary cast film process exhibits a high performance property profile and delivers product innovation for a rapidly changing market.

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

DIRECTOR’S 2015 REPORT

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Stellar Films Australia - Investor Update

Cardia Bioplastics successfully completes relocation to new purpose built factory and installation of three new production lines

Cardia Bioplastics successfully completes relocation of production to new purpose built factory in China. Three new film extrusion and bag making lines installed and now operating at full capacity. Cardia Board approved purchase of six additional film extrusion and bag making lines to meet Cardia’s current order pipeline. In-house production of Cardia’s finished product range significantly improves production efficiency, quality and turnaround times of customer orders while also lowering manufacturing costs.

Employees:

SECOS Group has a total of 150 employees of which 82 are located in China, 51 in Malaysia, 16 in Australia, 1 in USA.

INVESTMENTS

As at 30 June 2015, the Company held the 18,780,000 ordinary shares in unlisted entity Bioglobal limited, representing 2.97% of the issued capital of that Company.

The Company held other investments which were immaterial in value and/or were inactive during the year.

PATENTS AND TRADE MARKS:

The Company continued to invest funds into securing and expanding its IP position and now owns a portfolio of 11 patent families with 28 patents granted and an additional 39 applications at various stages of the granting process. The patents cover Bioplastics formulations, processes and applications for global packaging products.

SECOS patent families (11) are held in the name of Tristano Pty Ltd. The CO2 Starch patents are held in the name of CO2 Starch Pty Ltd. Both are wholly owned subsidiary company of SECOS Group Ltd.

SECOS also holds 4 trademarks.

FINANCIAL POSITION

The net assets of the consolidated entity were $7.9 million, as at 30 June 2015 compared to $1.6 million as at 30 June 2014, an increase of $6.3million. This increase has resulted primarily due to the following reasons:

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$ m
Capital Raising (net of costs) post-merger 3.80
Net assets acquired through reverse acquisition of Cardia Bioplastics 6.40
Loss from Operating Activities for the year (4.30)
Foreign currency translation differences for foreign operations 0.40
Total Increase 6.30
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SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

DIRECTOR’S REPORT

2015

The Directors consider the group to be in a stable financial position.

EARNINGS (LOSS) PER SHARE

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2015 2014
$ $
Basic Loss Per Share (0.07) (0.04)
Weighted average number of ordinary shares used in the calculation of basic
loss per share 61,336,204 51,972,604
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The weighted average number of ordinary shares are calculated based on the ordinary shares that would have been in existence had the reverse acquisition occurred as at 1 July 2013.

EVENTS AFTER THE REPORTING DATE

Other than the matters discussed below, there has not arisen in the interval between the end of the financial year and the date of this report, any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company to affect the operations of the consolidated entity, the results of these operations or the state of affairs of the consolidated entity in subsequent years

• On 24 August 2015, Mr Gideon Meltzer resigned as a Non-Executive Director of the Company.

FUTURE DEVELOPMENTS

SECOS will continue to focus on its principal business activities with its sustainable packaging strategy and waste management solutions.

ENVIRONMENTAL REGULATIONS

The Group’s operations are not subject to any significant environmental regulations under the law of the Commonwealth or the States.

INFORMATION ON DIRECTORS

Richard Tegoni	Experience	Appointed Non-Executive Director 21 December 2012
MBA (AGSM), Diploma in Mortgage		Non-Executive Chairman effective 18 October 2013
Broking, Diploma in in Financial		Executive Chairman effective 16 September 2014
Markets (SIA)		Background in Finance & Banking and Sales & Marketing
	Age	47
	Special Responsibilities	Executive Chairman
		Corporate Strategy and Capital Raisings
		Member of Audit and Compliance committee
	Interest in Shares & Options:	5,607,541 Ordinary Shares
	Directorships held in Other Listed Entities:	Has not held a directorship in any other listed entity over
		the last 3 years
Stephen Walters	Experience :	Appointed Managing Director -21 April 2015
B.Busi (Marketing)		More than 20 years in the plastics and packaging
		industries in general management, commercial and sales
		roles with Borden Chemical, ICI Australia and Orica.
	Age :	58
	Special Responsibilities	As Managing Director is responsible for the general
		management of the Company.
	Interest in Shares & Options:	28,584,937 Ordinary Shares
	Directorships held in Other Listed Entities:	Has not held a directorship in any other listed entity over
		the last 3years

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

DIRECTOR’S 2015 REPORT

Dr Frank Peter Glatz	Experience:	Appointed 1 May 2009
Ph. D, M.Sc,MBA		Background in the Fast Moving Consumer Goods
		(FMCG) companies, plastic industry with particular
		emphasis on development of new technologies and
		packaging applications.
	Age:	51
	Special Responsibilities:	As Chief Executive Offcer is responsible for the
		development and international marketing of Bioplastics
		business.
	Interest in Shares & Options:	219,530 Ordinary Shares
	Directorships held in other Listed Entities	Has not held a directorship in any other listed entity over
		the last 3 years.
Trevor Haines	Experience :	Appointed Chief Financial Offcer -21 April 2015
B.Com, FCPA		More than 20 years in senior accounting and fnancial
		management roles in various divisions of ICI Australia,
		AVC and Orica.
	Age :	55
	Special Responsibilities	As Chief Financial Offcer is responsible for the fnancial
		management of the Company.
	Interest in Shares & Options:	28,584,937 Ordinary Shares
	Directorships held in Other Listed Entities:	Has not held a directorship in any other listed entity over
		the last 3years
Gideon Meltzer	Experience	Appointed 7 November 2013
		Resigned 24 August 2015
B.Eco ,LLB, Graduate Diploma in		Experienced Corporate Executive
Taxation Law
	Age:	47
	Special Responsibilities:	Non-Executive Director
		Corporate Governance
	Interest in Shares & Options:	196,193 Ordinary Shares
	Directorships held in Other Listed Entities	Has not held a directorship in any other listed entity over
		the last 3 years
Steven Bendel	Experience:	Appointed 7 October 2013
B.Ed., Graduate Diploma in		Resigned 21 April 2015 Background in Accounting practice , banking and fnance
Business (Accounting), CPA
	Age:	46
	Special Responsibilities:	Non-Executive Director
	Interest in Shares & Options:	500,000 Ordinary Shares
	Directorships held in other Listed Entities:	Has not held a directorship in any other listed entity over
		the last 3years.

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

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Changing the World of Packaging
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DIRECTOR’S REPORT 2015

DIRECTORS’ MEETINGS

The number of meetings of the Company’s Board of Directors and the Audit and Compliance Committee held during the year ended 30 June 2015 and the number of meetings attended by each Director.

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Board Meetings Audit & Compliance Committee
Director Number eligible to Number attended Number eligible to Number attended
attend attend
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R Tegoni	16	16	2	2
S Walters	4	4	-	-
F P Glatz	16	15	-	-
T Haines	4	4	-	-
G Meltzer	16	16	-	-
S Bendel	12	9	-	-
Rekha Bhambhani(CompanySecretary)	16	16	2	2

REMUNERATION REPORT (AUDITED)

Remuneration Policy

The Group's policy for determining the nature and amount of remuneration of board members and senior executives of the Group is as follows:

§ The remuneration structure for executive officers, including executive directors, is based on a number of factors, including length of service and particular experience of the individual concerned.
§ All key management personnel receive a base salary and superannuation and/or equivalent. Fringe Benefits and performance incentives are negotiated with the employees depending upon their duties and responsibilities and their area of expertise.
§ Performance Incentives are generally paid once predetermined key performance indicators have been met. Predetermined key performance indicators include achievement of quarterly revenue targets set by the Board coupled with achievement of gross margin targets.
§ Incentives are paid in the form of a bonus as a percentage of base salary.

Key management personnel receive a superannuation guarantee contribution/social security payments when required by the government of the respective region and do not receive any other retirement benefits.

Upon retirement, key management personnel are paid employee benefit entitlements accrued to the date of retirement. Termination payments are generally not payable on resignation or dismissal for serious misconduct. Termination payments cannot exceed more than 1 year’s base salary as required by Corporations Act 2001.

All remuneration paid to key management personnel is valued at the cost to the Company and expensed.

The Company has not used services of remuneration consultants during the year.

The Board’s policy is to remunerate non-executive directors at market rates for time, commitment and responsibilities. The Board collectively determines payments to the non-executive directors and reviews their remuneration annually, based on market practice, and duties and accountability. Independent external advice is sought when required. No such advice was sought during the year.

ASX listing rules require the aggregate non-executive directors remuneration be determined periodically by a general meeting. The most recent determination was at the General Meeting held on 7 July 2009, where the shareholders approved an aggregate remuneration of $220,000.

Although no executive options are currently on issue, any options issued in the future and not exercised before or on the date of termination will automatically lapse.

Performance-based Remuneration

The Group seeks to emphasise reward incentives for results and continued commitment to the Group through the provision of incentive payments based on the achievement of revenue targets return linked with profitability targets. The performance-related proportions of remuneration based on

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

DIRECTOR’S 2015 REPORT

REMUNERATION REPORT (CONTINUED)

these targets are included in the following table. The objective of the reward schemes is to both reinforce the short and long-term goals of the Group and provide a common interest between management and shareholders.

Company Performance, Shareholder Wealth and Directors' and Executives' Remuneration

The remuneration policy has been tailored to increase goal congruence between shareholders, directors and executives. To achieve this aim, performance based bonus incentives based on key performance indicators have been introduced. For FY2015, remuneration of few key management personnel was linked with performance, details are provided in the table below. As noted previously in the Directors’ report, the completion of the merger transaction during the financial year has meant that it is not possible to assess shareholder wealth against key management remuneration in the current period.

With the focus of the company’s business activities being to expand the new merged business, the Company believes that this policy is effective. Performance in relation to the KPIs is assessed annually, with bonus incentives being awarded depending on the number and deemed difficulty of the KPIs achieved. Following the assessment, the KPIs are reviewed by the Board in light of desired and actual outcomes, and their efficiency is assessed in relation to the Group’s goals and shareholder wealth, before the KPIs are set for the following year.

The key management personnel of the Group consisted of the following persons:

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Proportions Proportions
of of
Group Key Management Position held as at 30 June 2015 and any Contract Details remuneration remuneration
Personnel change during the year (Duration & Termination) package package
related to not related to
performance performance
Executive Directors
Richard Tegoni Executive Chairman effective 16 September 2014 No Fixed Term - 100%
Non-Executive Chairman effective 18 October 2013
Appointed Non-Executive Director-21 Appointed 21 December 2012
December 2012
Stephen Walters Appointed Managing Director effective 21 April 2015 2 years from 21 April 2015 - 100%
Frank Glatz Managing Director until 20 April 2015, assumed role No Fixed Term 20% 80%
as Chief Executive Officer effective 21 April 2015.
Trevor Haines Appointed Chief Financial Officer effective 2 years from 21 April 2015 - 100%
21 April 2015
Non-Executive Directors
Steven Bendel Non-Executive Director No Fixed Term
- 100%
Resigned as Non Executive Director effective Appointed 7 October 2013
21 April 2015. Resigned 21 April 2015
Gideon Meltzer Non-Executive Director No Fixed Term - 100%
Resigned as Non Executive Director effective Appointed 7 November 2013
24 August 2015. Resigned 24 August 2015
Other Key Management Personnel
Rekha Bhambhani Company Secretary No Fixed Term - 100%
Appointed 10 August 2010
Robert Morgan Appointed as Group Manufacturing Director 2 years from 21 April 2015 - 100%
effective 21 April 2015
Ong Kean Hwa Executive Director of Stellar Films No Fixed Term - 100%
(Malaysia) Sdn Bhd. Appointed 1 July 2003
Peter Symons Appointed as Manufacturing Manager No Fixed Term - 100%
effective 21 April 2015 Ceased to be KMP effective 21
April 2015
Chen Yi Managing Director of Biograde (Nanjing) Pty Ltd No Fixed Term
20% 80%
Appointed 1 May 2009
Chen Chan Ping Technical Director, China Operations No Fixed Term - 100%
Appointed 1 May 2009
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Terms of employment require that the relevant group entity provide the contracted person with a minimum period of notice (one to three months) prior to termination of contract. Similarly a contracted person has to provide minimum period notice (one to three months) prior to the termination of their contract. In the instance of serious misconduct the Company can terminate employment at any time.

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

2015

DIRECTOR’S REPORT

REMUNERATION REPORT (CONTINUED)

Changes in Directors and Executives subsequent to year-end

On 24 August 2015, Mr Gideon Meltzer resigned as Non-Executive Director.

Other than the above, there were no changes in Directors and Executives subsequent to year-end.

Remuneration Details

The remuneration disclosures for the Key management personnel contained in the following tables are as follows:

The 2015 disclosures represent 2 months remuneration (the period from 22 April 2015 to 30 June 2015) of the Group’s Key management personnel and 10 months remuneration (the period from 1 July 2014 to 21 April 2015) of the key management personnel of Stellar Films Group Companies.
The 2014 disclosures represent 12 months remuneration of the key management personnel of Stellar Films Group Companies.

2015

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Equity-settled
Long –term
Short term Benefits Post-Employment share-based Total
benefits payments
Name
Non-
Salary and Superannuation or
monetary Employee Shares
Fees Equivalent
benefits Leave
$ $ $ $ $ $
- - - -
R.Tegoni 16,667 16,667
S. Walters 116,980 53,385 3,096 1,902 - 175,363
F. Glatz 33,090 - 3,144 - - 36,234
T.Haines 95,467 58,148 2,759 1,541 - 157,915
G.Meltzer 6,667 - - - - 6,667
R.Bhambhani 16,667 - 1,583 - - 18,250
-
R.Morgan 101,130 65,678 2,766 1,685 171,259
- -
P.Symons 72,158 33,300 1,174 106,632
O. Kean Hwa 142,681 - 17,124 - - 159,805
Yi.Chen 11,527 - 4,957 - - 16,484
C.Chen 7,531 - 3,238 - - 10,769
Total 620,565 210,511 38,667 6,302 - 876,045
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2014

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Long –term Equity-settled Total
Short term Benefits Post Employment benefits share-based
payments
Name
Non-
Salary and Superannuation or
monetary Employee Shares
Fees Equivalent
benefits Leave
$ $ $ $ $ $
S. Walters 123,122 61,292 - 2,213 - 186,627
T.Haines 94,843 64,405 - 1,705 - 160,953
- -
R.Morgan 104,890 71,725 1,961 178,576
- - -
P.Symons 99,527 43,678 143,205
O. Kean Hwa 137,808 - 16,538 - - 154,346
Total 560,190 241,100 16,538 5,879 - 823,707
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SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

DIRECTOR’S 2015 REPORT

REMUNERATION REPORT (CONTINUED)

In addition to the above two tables, the Corporation Act 2001 requires the remuneration of the directors and other key management personnel of the Company, prior to the merger with Stellar Films Group Pty Ltd to be disclosed. Cardia Bioplastics paid remuneration for the period 1 July 2014 to 21 April 2015 (2014: 12 months to 30 June 2014) which is as follows:

2015

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Equity-settled Total
Short term Benefits Post-Employment share-based
Name payments
Non-monetary Superannuation or
Salary and Fees Shares
benefits Equivalent
$ $ $ $ $
R. Tegoni 32,083 - - 30,000 62,083
F. Glatz 156,317 - 14,850 - 171,167
S .Bendel 17,125 - - 8,000 25,125
G .Meltzer 18,458 - - 8,000 26,458
Yi.Chen 52,920 - 22,756 - 75,676
C.Chen 34,574 - 14,867 - 49,440
R.Bhambhani 81,667 - 7,758 - 89,425
Total 393,144 - 60,231 46,000 499,374
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*Share based payment are shares issued in lieu of cash remuneration. Details of the share issues are provided below:

On 6 January 2015,11,500,000 fully paid ordinary shares under Loan Share Plan to three of its directors in lieu of the part payment of their respective remuneration for the quarter ending 31 December 2014. The shares are issued at an issue price of $0.002/share. The share issue price has been determined based on volume weighted average sale price of Cardia shares for 2014 December Quarter.
On 23 April 2015,115,000 fully paid ordinary shares under Loan Share Plan to three of its directors in lieu of the part payment of their respective remuneration for the quarter ending 31 March 2015. The shares are issued at an issue price of $0.20/share, on post consolidation basis. The share issue price has been determined based on volume weighted average sale price of SECOS (Cardia) shares for 2015 March Quarter ($0.002/Share, pre-consolidation).

The issue of these shares to Directors was approved by shareholders at the Annual General Meeting held on 28 November 2014 (Resolutions 7, 8 &9).

2014

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Equity-settled Total
Short term Benefits Post Employment share-based
Name payments
Non-monetary Superannuation or
Salary and Fees Shares
benefits Equivalent
$ $ $ $ $
R. Tegoni 20,000 - - - 20,000
F. Glatz 163,044 - 15,082 - 178,126
S .Bendel 9,155 - - - 9,155
G. Meltzer 8,090 - - - 8,090
P. Volpe 43,208 - - - 43,208
Yi.Chen 75,695 - 32,549 - 108,244
R .Bhambhani 80,000 - 7,400 - 87,400
C. Chen 55,051 - - - 55,051
Total 454,243 - 55,031 - 509,274
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SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

DIRECTOR’S REPORT

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Changing the World of Packaging
2015
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REMUNERATION REPORT (CONTINUED)

Cash Bonuses, Performance-related Bonuses

There was no performance related remuneration paid during the year.

Options Issued as part of remuneration for the year ended 30 June 2015.

No options were issued during the year as part of remuneration. For Shares and Options held by Key Management Personnel, please refer to tables below:

a. Option Holdings

Number of Options Held by Key Management Personnel (Direct and Indirect Interest)

2015 (Adjusted for capital consolidation effect on 100:1 Basis)

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Balance Granted as Options Net Change Balance
1.7.2014 Compensation Exercised Other [(I) ] 30.6.2015
Options Expiring 30 June 2015
(Adjusted for capital consolidation effect on
100:1 Basis)
F Glatz 14,906 - - (14,906) -
Options Expiring 15 July 2014
S Bendel 10,000,000 - - (10,000,000) -
Options Expiring 31 December 2014
R Tegoni 11,776,888 - - (11,776,888) -
S Bendel 2,000,000 - - (2,000,000) -
G Meltzer 1,111,111 - - (1,111,111) -
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(I)Net Change Other in Options refers to unexercised options lapsed upon their expiry.

2014

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Balance Net Change Balance
Granted as Options
Compensation Exercised
1.7.2013 Other [(II)] 30.6.2014
Options Expiring 30 June 2015
- - -
P Volpe 30,083,315 30,083,315
F Glatz 1,490,583 - - - 1,490,583
Options Expiring 15 July 2014
S Bendel - - - 10,000,000 10,000,000
Options Expiring 31 December 2014
- - -
R Tegoni 11,776,888 11,776,888
S Bendel - - - 2,000,000 2,000,000
G Meltzer - - - 1,111,111 1,111,111
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(II)Net Change Other in Options refers to options purchased and /or sold during the financial year. These options were purchased on market or subscribed to the entitlement issue offers of the Company during the year. No options were issued as part of any employee option scheme.

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

DIRECTOR’S 2015 REPORT

REMUNERATION REPORT (CONTINUED)

b. Share Holdings (Direct and Indirect)

2015 (Adjusted for capital consolidation effect on 100:1 Basis)

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Balance Received as Options Issued as Net Change Balance
Exercised consideration
1.7.2014 Compensation for merger * Other (III) 30.6.2015
R.Tegoni 2,635,442 150,000 - - 2,822,099 5,607,541
S Walters - - - 28,584,937 - 28,584,937
F Glatz 219,530 - - - 219,530
T.Haines - - - 28,584,937 - 28,584,937
R.Morgan - - - 28,584,937 - 28,584,937
S Bendel 460,000 40,000 - - - 500,000
G Meltzer 113,334 40,000 - - 42,859 196,193
R Bhambhani 15,000 - - - - 15,000
Yi.Chen 185,000 - - - - 185,000
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*Includes indirect interest held by S.Walters,T.Haines and R. Morgan via shareholdings of Stellar Developments Pty Ltd in SECOS Group Limited.

2014

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Balance Received as Options Net Change Balance
1.7.2013 Compensation Exercised Other (II) 30.6.2014
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R.Tegoni	228,231,445	-	-	35,330,666	263,544,111
F. Glatz	21,952,917	-	-		21,952,917
S .Bendel	20,000,000	-	-	26,000,000	46,000,000
G .Meltzer	-	-	-	11,333,333	11,333,333
P. Volpe	150,416,649	-	-	-	150,416,649
R .Bhambhani	1,500,000	-	-	-	1,500,000
Yi.Chen	18,500,000	-	-	-	18,500,000
G.Ward	7,581,250	-	-	-	7,581,250

(III) Net Change Other in Shares refers to shares purchased and /or sold during the financial year. These shares were purchased on market or subscribed to the entitlement issue offers of the Company during the year. No options were issued as part of any employee option scheme

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

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Changing the World of Packaging
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DIRECTOR’S REPORT 2015

OTHER TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL

For other transactions with key management personnel, please refer to Note 30.

There have been no other transactions involving equity instruments other than those described in the tables above.

OWNERSHIP INTERESTS IN RELATED PARTIES

Interests held in the following classes of related parties are set out in the following notes:

Controlled Entities Note 23

This concludes the remuneration report, which has been audited.

OPTIONS

At the date of this report there were no unissued ordinary shares of the Company under option.

INDEMNIFICATION AND INSURANCE OF DIRECTORS & OFFICERS

The Company has agreed to indemnify all the current Directors and Officers of the Company and of its controlled entities against all liabilities to another person (other than the Company or a related body corporate) that may arise from their position as Directors and Officers of the Company and its controlled entities, except where the liability arises out of conduct involving a lack of good faith. The Company agrees to meet the full amount of any such liabilities, including costs and expenses.

The Company has paid an annual premium to insure the Directors’ and Officers against liabilities incurred in their respective capacities. Under the policy, details of the premium are confidential.

INDEMNITY AND INSURANCE OF AUDITOR

The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the company or any related entity against a liability incurred by the auditor.

During the financial year, the company has not paid a premium in respect of a contract to insure the auditor of the company or any related entity.

PROCEEDINGS ON BEHALF OF THE COMPANY

No person has applied for leave of court to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings.

NON-AUDIT SERVICES

During the year the Company did not employ its auditor on assignments additional to their statutory audit duties.

AUDITOR’S INDEPENDENCE DECLARATION

The lead Auditor's Independence Declaration for the year ended 30 June 2015 has been received and can be found on page 26.

This report of the Directors incorporating the Remuneration Report is signed in accordance with a Resolution of the Board of Directors.

Richard Tegoni

Director 30 September 2015 Mount Waverley, Victoria

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

2015

AUDITOR’S INDEPENDENCE DECLARATION

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SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

FINANCIAL REPORT

2015

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2015

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Economic Entity
Notes 2015 2014
$ $
Sales from main operations 3 17,284,394 21,441,764
Cost of sales (main operations) (17,410,969) (21,127,622)
Trading income 445,345 405,105
Gross profit 318,770 719,247
Other income 3 228,062 3,788
Administrative expenses (875,386) (901,805)
Employment benefits (978,745) (764,528)
-
Marketing & Distribution expenses (87,355)
-
Research & Development expenses & Patent costs (201,347)
Depreciation & amortisation (327,766) (256,750)
Borrowing costs (321,186) (276,641)
Net foreign exchange (losses)/gains (233,571) 53,101
-
Other expenses (47,558)
Impairment-Trade & other receivables 10 (989,786) -
-
Impairment-inventories (76,564)
Merger transaction costs (309,446) -
Loss from operating activities (3,901,878) (1,423,588)
Share in loss of joint venture (877,925) (803,893)
Gain on acquisition 500,000 -
Loss before income tax 4 (4,279,803) (2,227,481)
Income tax expense 5 - -
Loss for the year after tax (4,279,803) (2,227,481)
Other comprehensive income, net of income tax
Items that may be reclassified subsequently to profit or loss
Foreign currency translation differences for foreign operations 395,062 (173,327)
Share of other comprehensive income of joint venture 23,021 (101,449)
418,083 (274,776)
Total comprehensive income for the year (3,861,720) (2,502,257)
(Loss)/Profit attributable to :
Members of the Company (4,279,803) (2,227,481)
- -
Non controlling Interest
Loss for the year after tax (4,279,803) (2,227,481)
Total comprehensive income attributable to :
Members of the company (3,861,720) (2,502,257)
- -
Non-controlling interest
Total comprehensive income for the year (3,861,720) (2,502,257)
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SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

FINANCIAL 2015 REPORT

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THEYEAR ENDED 30 JUNE 2015 (CONTINUED)

Earnings per share	$	$
-Basic loss per share	(0.07)	(0.04)

As set out in Note 1, basis of preparation, to these financial statements, as a result of the reverse acquisition of Cardia Bioplastics Limited and its controlled entities (“Cardia”) by Stellar Films Group Pty Ltd, the comparative information for 30 June 2014 represents results for Stellar Films Group Companies only for the period from 1 July 2013 to 30 June 2014. The statement of profit or loss and other comprehensive income for the year ended 30 June 2015 represents the results of Stellar Group Companies for the period from 1 July 2014 to 30 June 2015 and the results of Cardia for the period 22 April 2015 to 30 June 2015.

The accompanying notes form part of these financial Statements.

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

FINANCIAL REPORT

2015

STATEMENT OF FINANCIAL POSITION AT 30 JUNE 2015

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ECONOMIC ENTITY
Notes 2015 2014
$ $
Current Assets
Cash and cash equivalents 9 2,627,392 86,350
Trade and other receivables 10 3,508,535 3,645,951
Inventories 11 2,940,902 2,576,946
Total Current Assets 9,076,829 6,309,247
Non-Current Assets
Trade and other receivables 10 - 217,658
Investments accounted for using the equity method 12 - 488,011
Financial Assets 13 563,400 -
Deferred Tax Assets 5 251,861 252,801
Property, Plant and Equipment 14 3,632,208 3,295,650
Intangible Assets 15 3,532,345 -
Total Non-Current Assets 7,979,814 4,254,120
Total Assets 17,056,643 10,563,367
Current Liabilities
Trade and other payables 16 4,942,205 4,865,220
Borrowings 17 2,934,430 3,484,318
Short term provisions 18 717,861 307,928
Total Current Liabilities 8,594,496 8,657,466
Non-Current Liabilities
Borrowings 17 483,898 298,041
Long term provisions 19 44,330 -
Total Non-Current Liabilities 528,228 298,041
Total Liabilities 9,122,724 8,955,507
Net Assets 7,933,919 1,607,860
Equity
Issued Capital 20 10,549,724 400,004
Reserves 21 39,202 (378,881)
Accumulated Losses (2,693,066) 1,586,737
Parent Entity Interest 7,895,860 1,607,860
-
Non Controlling Interest 38,059
Total Equity 7,933,919 1,607,860
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As set out in Note 1, basis of preparation, to these financial statements, as a result of the reverse acquisition of Cardia Bioplastics Limited and its controlled entities (“Cardia”) by Stellar Films Group Pty Ltd, the comparative information for 30 June 2014 represents financial position of Stellar Group Companies only as at 30 June 2014. The statement of financial position as at 30 June 2015 represents that of the consolidated entity-SECOS Group which consolidates Stellar and Cardia as at that date.

The accompanying notes form part of these financial Statements.

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

FINANCIAL 2015 REPORT

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2015

Economic Entity

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Foreign
Issued Non
Accumulated Currency Parent Entity Total
Share Controlling
Losses Translation Interest Equity
Capital Interests
Reserve
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	$	$	$	$	$	$
Balance at 1.7.2013	400,004	4,715,218	(104,105)	5,011,117	-	5,011,117
(Loss)/Proft for the Year	-	(2,227,481)	-	(2,227,481)	-	(2,227,481)
Other Comprehensive income/ (defcit)for theyear	-	-	(274,776)	(274,776)	-	(274,776)
Total comprehensive income/ (defcit) for theyear	-	(2,227,481)	(274,776)	(2,502,257)	-	(2,502,257)
Transactions with owners in
their capacity as owners
Shares/Options issued during the
year	-	-	-	-	-	-
Cost of Capital	-	-	-	-	-	-
Balance at 30.06.2014	400,004	2,487,737	(378,881)	(2,508,860)	-	(2,508,860)
Dividends Paid	-	(901,000)	-	(901,000)	-	(901,000)
Balance at 30.6.2014	400,004	1,586,737	(378,881)	1,607,860	-	1,607,860

Balance at 1.7.2014	400,004	1,586,737	(378,881)	1,607,860	-	1,607,860
(Loss)/Proft for the Year	-	(4,279,803)	-	(4,279,803)	-	(4,279,803)
Other Comprehensive income/ (defcit)for theyear	-	-	418,083	418,083	-	418,083
Total comprehensive income/ (defcit) for theyear	-	(4,279,803)	418,083	(3,861,720)	-	(3,861,720)
Recognition of non-controlling
interest of Natural Pharmacy Ltd
on merger					38,059	38,059
Transactions with owners in
their capacity as owners
Shares issuedpursuant to merger	6,378,456	-	-	6,378,456	-	6,378,456
Shares/Options issued since
completion of merger	4,145,767	-	-	4,145,767	-	4,145,767
Cost of Capital	(374,503)	-	-	(374,503)	-	(374,503)
Balance at 30.06.2015	10,549,724	(2,693,066))	39,202	7,895,860	38,059	7,933,919

The accompanying notes form part of these financial Statements.

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

FINANCIAL REPORT

2015

STATEMENTS OF CASH FLOWS

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For the year ended 30 June 2015 ECONOMIC ENTITY
Notes 2015 2014
$ $
Cash Flows from Operating Activities
Receipts from customers 18,426,015 23,247,824
Payments to suppliers and employees (19,665,803) (22,553,049)
Interest received 1,563 3,788
Borrowing Costs (321,186) (276,641)
-
Research & Development Tax Credits received 218,458
Net Cash Outflow from Operating Activities 27 (1,340,953) 421,922
Cash Flows from Investing Activities
Purchase of fixed assets (11,230) (17,192)
-
Proceeds from sale of fixed assets 6,962
Loans to related parties (274,633) (433,066)
-
Cash Balance on business acquisition 834,807
Net Cash Outflow from Investing Activities 555,906 (450,258)
Cash Flows from Financing Activities
Proceeds from Borrowings 262,771 1,355,759
Repayment of Borrowings (660,197) (291,127)
Repayment of Finance lease liability (11,644) (8,047)
-
Proceeds from issues of ordinary shares and options 4,145,767
-
Payment of share and options issue costs (374,503)
Dividend Paid - (901,000)
Net Cash Inflow from Financing Activities 3,362,194 155,585
Net Decrease in Cash and Cash Equivalents Held 2,577,147 127,249
Cash and Cash Equivalents at the Beginning of the Financial Year (418,960) (542,341)
Effect of exchange rates on cash holding in foreign currencies 18,856 (3,868)
Cash and Cash Equivalents at the End of the Financial Year 9 2,177,043 (418,960)
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As set out in Note 1, basis of preparation, to these financial statements, as a result of the reverse acquisition of Cardia Bioplastics Limited and its controlled entities (“Cardia”) by Stellar Films Group Pty Ltd, the comparative information for 30 June 2014 represents Cash flows for Stellar Films Group Companies only for the period from 1 July 2013 to 30 June 2014. The statement of cash flows for the year ended 30 June 2015 represents the results of Stellar Group Companies for the period from 1 July 2014 to 30 June 2015 and the results of Cardia for the period 22 April 2015 to 30 June 2015

The accompanying notes form part of these financial Statements.

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

FINANCIAL 2015 REPORT

NOTES TO THE FINANCIAL STATEMENTS

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PREPARATION

These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as appropriate for for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board ('IASB').

The financial statements cover the economic entity of SECOS Group Limited and its controlled entities.

SECOS Group Limited is a listed public company, incorporated and domiciled in Australia. The Company is for-profit entity for accounting purposes.

The Financial statements were authorised for issue on 30 September 2015 by the Board of Directors.

Reverse acquisition

On 21 April 2015, SECOS Group Limited (formerly Cardia Bioplastics Limited), acquired 100% of the issued securities of Stellar Group Companies (“Stellar”). For accounting purposes, the business combination was treated as a reverse acquisition, representing the continuation of the existing group previously controlled by Stellar. Refer to the “Business Combinations” accounting policy in Note 1(o) for further details.

The following is a summary of the material accounting policies adopted by the economic entity in the preparation of the financial statements. The accounting policies have been consistently applied, unless otherwise stated.

New, revised or amending Accounting Standards and Interpretations adopted

The economic entity has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.

Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

Any significant impact on the accounting policies of the consolidated entity from the adoption of these Accounting Standards and Interpretations are disclosed below. The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of the consolidated entity.

The following Accounting Standards and Interpretations are most relevant to the consolidated entity: AASB 2012-3 Amendments to Australian Accounting Standards - Offsetting Financial Assets and Financial Liabilities

The consolidated entity has applied AASB 2012-3 from 1 July 2014. The amendments add application guidance to address inconsistencies in the application of the offsetting criteria in AASB 132 'Financial Instruments: Presentation', by clarifying the meaning of 'currently has a legally enforceable right of set-off'; and clarifies that some gross settlement systems may be considered to be equivalent to net settlement.

AASB 2013-3 Amendments to AASB 136 - Recoverable Amount Disclosures for Non-Financial Assets

The consolidated entity has applied AASB 2013-3 from 1 July 2014. The disclosure requirements of AASB 136 'Impairment of Assets' have been enhanced to require additional information about the fair value measurement when the recoverable amount of impaired assets is based on fair value less costs of disposals. Additionally, if measured using a present value technique, the discount rate is required to be disclosed.

AASB 2014-1 Amendments to Australian Accounting Standards (Parts A to C)

The consolidated entity has applied Parts A to C of AASB 2014-1 from 1 July 2014. These amendments affect the following standards: AASB 2 'Sharebased Payment': clarifies the definition of 'vesting condition' by separately defining a 'performance condition' and a 'service condition' and amends the definition of 'market condition'; AASB 3 'Business Combinations': clarifies that contingent consideration in a business combination is subsequently measured at fair value with changes in fair value recognised in profit or loss irrespective of whether the contingent consideration is within the scope of AASB 9; AASB 8 'Operating Segments': amended to require disclosures of judgements made in applying the aggregation criteria and clarifies that a reconciliation of the total reportable segment assets to the entity's assets is required only if segment assets are reported regularly to the chief operating decision maker; AASB 13 'Fair Value Measurement': clarifies that the portfolio exemption applies to the valuation of contracts within the scope of AASB 9 and AASB 139; AASB 116 'Property, Plant and Equipment' and AASB 138 'Intangible Assets': clarifies that on revaluation, restatement of accumulated depreciation will not necessarily be in the same proportion to the change in the gross carrying value of the asset; AASB 124 'Related Party Disclosures': extends the definition of 'related party' to include a management entity that provides KMP services to the entity or its parent and requires disclosure of the fees paid to the management entity; AASB 140 'Investment Property': clarifies that the acquisition of an investment property may constitute a business combination.

AASB 2013-7 – Amendments to AASB 1038 arising from AASB 10 in relation to Consolidations and interests of policyholders

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

FINANCIAL REPORT

2015

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

This Standard removes the specific requirements in relation to consolidation from AASB 1038, leaving AASB 10 as the sole source for consolidation requirements applicable to life insurer entities. AASB 10 is not expected to have a material impact on the Company.

AASB 2013-9 Amendments to Australian Accounting Standards – Conceptual Framework, Materiality and Financial Instruments

This standard amends certain Australian Accounting Standards to remove references to AASB 1031 as part of the AASB’s decision to withdraw the Australian specific guidance.

Reporting Basis and Conventions

The financial statements have been prepared on an accruals basis and are based on historical costs modified by the revaluation of selected noncurrent assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied.

Going Concern Assumption

The Consolidated Group’s revenue from sales has been insufficient to cover operational costs of the business and hence the company has incurred net loss of ($4,279,803) during the year ended 30 June 2015 (2014: Loss $2,227,481) and also experienced net cash outflows from operating activities of ($1,340,953) during the year ended 30 June 2015. (2014: $421,922).The Company’s continuing viability, its ability to continue as a going concern and to meet its debts and commitments as they fall due, are subject to the company being successful in:

° Accessing additional capital/debt - The Company has a track record of raising capital; during 12 months to June 2015, the Company has successfully raised approx. $4.1 million through rights issue and share placements after the completion of the merger.
° Continuing to develop profitable cash flows from current activities - The Group has been working on a number of development projects with global brand owners and international packaging companies. Some of these projects are in commercial negotiations and others have advanced to “in-market trials” stages. Whist no assurances can be given, it is expected that on successful outcomes, these development projects can significantly contribute positively to the group’s cash flows. The Group has already been successful in converting some of these development projects to commercial orders, the details of which have been communicated via the Company’s ASX announcements.
Moreover, SECOS’ New Board is continuously seeking and have put in measures in place to redirect resources to activities that are cash flow positive in the short-term.
° Controlling costs - The Group will continue to look for avenues to reduce costs as it develops its operations.
° Ability to divest non-core assets to increase cash position - The Group may consider divesting some of its non-core assets, the proceeds of which would yield a net inflow to future cash flows. The Group managed to sell its equity interest in P-Fuel Limited last year.

The Directors are seeking to raise funds via capital raising and/or debt and in line with the above matters have prepared the financial report on a going concern basis. At this time the Directors are of the opinion that no asset is likely to be realised for an amount less than the amount at which it is recorded in the Report.

These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that may be necessary should the Group be unable to continue as a going concern.

a. Principles of Consolidation

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of SECOS Group Limited ('company' or 'parent entity') as at 30 June 2015 and the results of all subsidiaries for the year then ended. SECOS Group Limited and its subsidiaries together are referred to in these financial statements as the 'economic entity'.Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an entity when the economic entity is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated entity. They are de-consolidated from the date that control ceases.

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

FINANCIAL 2015 REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the consolidated entity.

The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the noncontrolling interest acquired is recognised directly in equity attributable to the parent.

Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or loss and other comprehensive income, statement of financial position and statement of changes in equity of the consolidated entity. Losses incurred by the consolidated entity are attributed to the non-controlling interest in full, even if that results in a deficit balance.

Where the economic entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The consolidated entity recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss. A list of controlled entities is contained in Note 23 to the financial statements.

Goodwill

Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually for impairment, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss and are not subsequently reversed.

Goodwill is allocated to the Group's cash-generating units or groups of cash-generating units, representing the lowest level at which goodwill is monitored not larger than an operating segment. Gains and losses on the disposal of an entity include the carrying amount of goodwill related to the entity disposed of.

Changes in the ownership interests in a subsidiary that do not result in a change in control are accounted for as equity transactions and do not affect the carrying values of goodwill.

b. Income Tax

The charge for current income tax expense is based on the profit for the year adjusted for any non-assessable or disallowed items. It is calculated using tax rates that have been enacted or are substantially enacted at the end of the reporting period.

Deferred tax is accounted for using the liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the statement of comprehensive income except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.

Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the economic entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

c. Inventories

Inventories are measured at the lower of cost and net realisable value. The cost of manufactured products includes direct materials, direct labour and an appropriate portion of variable and fixed overheads. Overheads are applied on the basis of normal operating capacity. Costs are assigned on the basis of weighted average costs.

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

FINANCIAL REPORT

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Changing the World of Packaging
2015
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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

d. Property, Plant and Equipment

Land and buildings are shown at cost, less subsequent depreciation and impairment for buildings. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. Increases in the carrying amounts arising on revaluation of land and buildings are credited in other comprehensive income through to the revaluation surplus reserve in equity. Any revaluation decrements are initially taken in other comprehensive income through to the revaluation surplus reserve to the extent of any previous revaluation surplus of the same asset. Thereafter the decrements are taken to profit or loss.

Plant and equipment are measured on the cost basis less accumulated depreciation and accumulated impairment losses.

Capital work-in-progress comprises outstanding advances paid to acquire fixed assets and the cost of fixed assets that are not yet ready for their intended use at the reporting date.

The cost of fixed assets constructed within the economic entity includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of fixed and variable overheads.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the statement of profit or loss during the financial period in which they are incurred.

Depreciation

The depreciable amount of all fixed assets is depreciated on a straight line basis over their useful lives to the economic entity commencing from the time the asset is held ready for use.

The depreciation rates used for each class of depreciable assets are:

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Class of Fixed Asset Depreciation Rate
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Building	2.00%
Plant and Machinery Offce Equipment	10% to 33% 10% to 40%
Motor Vehicle	10% to 20%
Furniture & Fixtures	7.5% to 10%
Leasehold Improvements	2.50%
ComputerSoftware	20.00%

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the statement of comprehensive income.

e. Leases

The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.

A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to the ownership of leased assets, and operating leases, under which the lessor effectively retains substantially all such risks and benefits.

Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if lower, the present value of minimum lease payments. Lease payments are allocated between the principal component of the lease liability and the finance costs, so as to achieve a constant rate of interest on the remaining balance of the liability.

Leased assets acquired under a finance lease are depreciated over the asset's useful life or over the shorter of the asset's useful life and the lease term if there is no reasonable certainty that the consolidated entity will obtain ownership at the end of the lease term.

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

FINANCIAL 2015 REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line basis over the term of the lease.

f. Financial Instruments

Initial recognition and measurement

Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions to the instrument. For financial assets, this is equivalent to the date that the group commits itself to either the purchase or sale of the asset. (i.e. trade date accounting is adopted).

Financial instruments are initially measured at fair value plus transaction costs.

Classification and subsequent measurement

Financial instruments are subsequently measured at either of fair value, amortised cost using the effective interest rate method, or cost. Fair value represents the amount for which an asset could be exchanged or a liability settled, between knowledgeable, willing parties. Where available, quoted prices in an active market are used to determine fair value. In other circumstances, valuation techniques are adopted.

Amortised cost is calculated as:

a. the amount at which the financial asset or financial liability is measured at initial recognition;
b. less principal repayments;
c. plus or minus the cumulative amortisation of the difference, if any, between the amount initially recognised and the maturity amount calculated using the effective interest method;
d. less any reduction for impairment.

The effective interest method is used to allocate interest income or interest expense over the relevant period and is equivalent to the rate that exactly discounts estimated future cash payments or receipts (including fees, transaction contractual term) of the financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected future net cash flows will necessitate an adjustment to the carrying value with a consequential recognition of an income or expense in profit or loss.

The Group does not designate any interests in subsidiaries, associates or joint venture entities as being subject to the requirements of accounting standards specifically applicable to financial instruments.

i) Loans and receivables

Loans and receivable are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are stated at amortised cost using the effective interest rate method.

ii) Available-for-sale financial assets

Available for sale financial assets include any financial assets not included in the above categories. Available-for-sale financial assets are reflected at fair value. Unrealised gains and losses arising from changes in fair value are taken directly to equity.

iii) Financial Liabilities

Non-derivative financial liabilities compromising trade and other payables are recognised at amortised cost, comprising original debt less principal payments and amortisation.

Fair value

When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principal market; or in the absence of a principal market, in the most advantageous market.

Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

FINANCIAL REPORT

2015

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and transfers between levels are determined based on a reassessment of the lowest level of input that is significant to the fair value measurement.

For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where applicable, with external sources of data.

Impairment

At the end of each reporting period, the group assess whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a significant or prolonged decline in the value of the instrument is considered to determine whether impairment has arisen. Impairment losses are recognised in the statement of profit or loss. Receivables are impaired after taking into account the recent sales experience, the ageing of receivables, historical collection rates and specific knowledge of the individual debtors financial position.

Derecognition

Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferred to another party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised where the related obligations are discharged, cancelled or expired. The difference between the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss.

g. Impairments of Assets

At the end of each reporting period, the group reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset being the higher of the asset's fair value less costs to sell and value in use, is compared to the assets carrying value. Any excess of the assets carrying value over its recoverable amount is expensed to the statement of profit or loss.

Impairment testing is performed annually for goodwill and intangible assets with indefinite lives.

Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

h. Intangibles

Patents and trademarks

Costs incurred in relation to development, registration and maintenance of patents and trademarks are expensed as and when incurred.

Research and development

Expenditure during the research phase of a project is recognised as an expense when incurred. Development costs are capitalised only when technical feasibility studies identify that the project will deliver future economic benefits and these benefits can be measured reliably.

Development costs have a finite life and are amortised on a systematic basis matched to the future economic benefits over the useful life of the project.

i. Foreign Currency Transactions and Balances

Functional and presentation currency

The functional currency of each of the group’s entities is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity’s functional and presentation currency.

Transaction and balances

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

FINANCIAL 2015 REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Exchange differences arising on the translation of monetary items are recognised in the statement of profit or loss, except where deferred in other comprehensive income as a qualifying cash flow or net investment hedge.

Exchange differences arising on the translation of non-monetary items are recognised directly in other comprehensive income to the extent that the gain or loss is directly recognised in other comprehensive income; otherwise the exchange difference is recognised in the statement of profit or loss.

Group companies

The financial results and position of foreign operations whose functional currency is different from the group’s presentation currency are translated as follows:

Assets and liabilities are translated at year-end exchange rates prevailing at the end of reporting period.
Income and expenses are translated at average exchange rates for the period. The average rate is only used where the rate approximates the rate at the date of transaction.
Retained profits are translated at the exchange rates prevailing at the date of the transaction.

Exchange differences arising on translation of foreign operations are transferred directly to the group’s foreign currency translation reserve in the statement of financial position. These differences are recognised in the statement of profit or loss in the period in which the operation is disposed.

j. Employee Benefits

Short-term employee benefits

Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled within 12 months of the reporting date are recognised in current liabilities in respect of employees' services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.

Other long-term employee benefits

The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are recognised in non-current liabilities, provided there is an unconditional right to defer settlement of the liability. The liability is measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on high quality corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

Defined contribution superannuation expense

Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.

k. Provisions

Provisions are recognised when the consolidated entity has a present (legal or constructive) obligation as a result of a past event, it is probable the consolidated entity will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value of money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the provision resulting from the passage of time is recognised as a finance cost.

l. Cash and Cash Equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. For the statement of cash flows presentation purposes, cash and cash equivalents also includes bank overdrafts, which are shown within borrowings in current liabilities on the statement of financial position.

m. Revenue

Revenue from the sale of goods is recognised upon transfer of significant risks and rewards of ownership of goods to customers which normally occurs on the delivery of goods to customers.

Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets.

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

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Changing the World of Packaging
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FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

R&D Tax Credits in respect of qualified research and development expenditure are recognised as revenue in the year of receipt.

n. Goods and Services Tax (GST) and other similar taxes

Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of financial position.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.

o. Business combinations

The acquisition method of accounting is used to account for business combinations regardless of whether equity instruments or other assets are acquired.

The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest in the acquiree. For each business combination, the noncontrolling interest in the acquiree is measured at either fair value or at the proportionate share of the acquiree's identifiable net assets. All acquisition costs are expensed as incurred to profit or loss.

On the acquisition of a business, the consolidated entity assesses the financial assets acquired and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic conditions, the consolidated entity's operating or accounting policies and other pertinent conditions in existence at the acquisition-date.

Where the business combination is achieved in stages, the consolidated entity remeasures its previously held equity interest in the acquiree at the acquisition-date fair value and the difference between the fair value and the previous carrying amount is recognised in profit or loss.

Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent changes in the fair value of the contingent consideration classified as an asset or liability is recognised in profit or loss. Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity

The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling interest in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment in the acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair value of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a gain directly in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification and measurement of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred and the acquirer's previously held equity interest in Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional amounts recognised and also recognises additional assets or liabilities during the measurement period, based on new information obtained about the facts and circumstances that existed at the acquisition-date. The measurement period ends on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the information possible to determine fair value.

Reverse acquisition-SECOS Group Limited and Stellar Films Group

On 21 April 2015, SECOS Group Limited (formerly Cardia Bioplastics Limited) acquired 100% of the issued securities of Stellar Group Companies (“Stellar”).

Under the principles of AASB 3-“Business Combinations” Stellar is the accounting acquirer in the business combination and therefore, the transaction has been accounted for as a reverse acquisition. Accordingly, the financial statements are a continuation of Stellar and as such:

The assets and liabilities recognised and measured in the consolidated financial statements are at the carrying amounts of Stellar rather than their fair values,

The retained earnings and other equity balances recognised in the consolidated financial statements represent the retained earnings and other equity balances of Stellar;

The amount recognised for issued capital includes the value of shares issued to vendors of Stellar. Such shares were measured at the fair value of the share capital SECOS Group Limited on issue immediately prior to the reverse acquisition and

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

FINANCIAL 2015 REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The comparatives presented are that of Stellar.

Refer to Note 29 for further details of the business combination with Stellar effected during the year.

p. Earnings per share

Basic earnings per share

Basic earnings per share is calculated by dividing the profit attributable to the owners of SECOS Group Limited, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year

Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares

q. Comparative Figures

When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. The statement of profit or loss and other comprehensive income for 30 June 2014 represents results for Stellar Films Group Companies only for the period from 1 July 2013 to 30 June 2014. Financial position for 30 June 2014 represents financial position of Stellar Group Companies only as at 30 June 2014.

r. Critical Accounting Estimates ,Judgements and Assumptions

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed below.

Provision for impairment of receivables

The provision for impairment of receivables assessment requires a degree of estimation and judgement. The level of provision is assessed by taking into account the recent sales experience, the ageing of receivables, historical collection rates and specific knowledge of the individual debtors financial position.

Provision for impairment of inventories

The provision for impairment of inventories assessment requires a degree of estimation and judgement. The level of the provision is assessed by taking into account the recent sales experience, the ageing of inventories and other factors that affect inventory obsolescence.

Fair value measurement hierarchy

The economic entity is required to classify all assets and liabilities, measured at fair value, using a three level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date; Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and Level 3: Unobservable inputs for the asset or liability. Considerable judgement is required to determine what is significant to fair value and therefore which category the asset or liability is placed in can be subjective.

The fair value of assets and liabilities classified as level 3 is determined by the use of valuation models. These include discounted cash flow analysis or the use of observable inputs that require significant adjustments based on unobservable inputs.

Estimation of useful lives of assets

The economic entity determines the estimated useful lives and related depreciation and amortisation charges for its property, plant and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical innovations or some other event. The depreciation and amortisation charge will increase where the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down.

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

FINANCIAL REPORT

2015

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Goodwill and other indefinite life intangible assets

The economic entity tests annually, or more frequently if events or changes in circumstances indicate impairment, whether goodwill and other indefinite life intangible assets have suffered any impairment, in accordance with the accounting policy stated in note 1. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of assumptions, including estimated discount rates based on the current cost of capital and growth rates of the estimated future cash flows.

Impairment of non-financial assets other than goodwill and other indefinite life intangible assets

The economic entity assesses impairment of non-financial assets other than goodwill and other indefinite life intangible assets at each reporting date by evaluating conditions specific to the consolidated entity and to the particular asset that may lead to impairment. If an impairment trigger exists, the recoverable amount of the asset is determined. This involves fair value less costs of disposal or value-in-use calculations, which incorporate a number of key estimates and assumptions.

Income tax

The economic entity is subject to income taxes in the jurisdictions in which it operates. Significant judgement is required in determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The economic entity recognises liabilities for anticipated tax audit issues based on the economic entity's current understanding of the tax law. Where the final tax outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in which such determination is made.

Recovery of deferred tax assets

Deferred tax assets are recognised for deductible temporary differences only if the economic entity considers it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Employee benefits provision

The liability for employee benefits expected to be settled more than 12 months from the reporting date are recognised and measured at the present value of the estimated future cash flows to be made in respect of all employees at the reporting date. In determining the present value of the liability, estimates of attrition rates and pay increases through promotion and inflation have been taken into account.

Lease make good provision

A provision has been made for the present value of anticipated costs for future restoration of leased premises. The provision includes future cost estimates associated with closure of the premises. The calculation of this provision requires assumptions such as application of closure dates and cost estimates. The provision recognised for each site is periodically reviewed and updated based on the facts and circumstances available at the time. Changes to the estimated future costs for sites are recognised in the statement of financial position by adjusting the asset and the provision. Reductions in the provision that exceed the carrying amount of the asset will be recognised in profit or loss.

s. New Accounting Standards for Application in Future Periods

New Accounting Standards and Interpretations not yet mandatory or early adopted

Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective and have not been adopted by the economic entity for the annual reporting period ending 30 June 2015 are outlined in the tables below.

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Mandatory date for annual Reporting period
Standard reporting periods beginning standard to be adopted by
on or after) Economic Entity
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AASB 9 Financial Instruments and related standards	1 January 2018	1 July 2018
AASB 2014-4 Clarifcation of Acceptable Methods of Depreciation and	1 January 2016	1 July 2016
Amortisation
AASB 15 Revenue from Contracts with Customers and AASB 2014-5	1 January2017*	1 July2017
AASB 2014-9 Equitymethod in separate fnancial statements	1 January2016	1 July2016
AASB 2015-1 Annual improvements 2012 – 2014 cycle	1 January2016	1 July2016
2015-2 Amendments to Australian Accounting Standards – Disclosure	1 January 2016	1 July 2016
Initiative: Amendments to AASB 101
2015-3 Amendments to Australian Accounting Standards arising from the	1 July 2015	1 July 2015
Withdrawal of AASB 1031 Materiality

On 11 September 2015, the International Accounting Standards Board (IASB) issued an amendment to defer the effective date of IFRS 15 (the international equivalent of AASB 15) from 1 January 2017 to 1 January 2018. It is expected that the AASB will make a corresponding amendment to AASB 15, which will mean that the application date of this standard for economic entity will move from 1 July 2017 to 1 July 2018.

Management are currently assessing the impact of these new and revised standards, however, they are not expected to have a material impact on the company.

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

FINANCIAL 2015 REPORT

NOTE 2 PARENT ENTITY

The following information has been extracted from the books and records of the parent and has been prepared in accordance with Australian Accounting Standards. In accordance with requirements of AASB 3, Cardia’s balances have been used for the purpose of the parent entity disclosure.

STATEMENT OF FINANCIAL POSITION

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2015 2014
ASSETS $ $
Current assets 2,428,572 1,748,189
Non-current assets 23,589,906 13,099,371
TOTAL ASSETS 26,018,478 14,847,560
LIABILITIES
Current liabilities 259,495 64,822
Non-current liabilities 31,623 33,239
TOTAL LIABILITIES 291,118 98,061
EQUITY
Issued capital 59,565,013 46,959,841
Accumulated losses (34,156,913) (32,529,602)
Financial Asset Reserve 319,260 319,260
TOTAL EQUITY 25,727,360 14,749,499
STATEMENT OF COMPREHENSIVE INCOME
Loss for the year after tax (1,063,898) (521,932)
Total comprehensive income (1,063,898) (334,132)
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Guarantees

SECOS Group Limited has not entered into any guarantees, in the current or previous financial year, in relation to the debts of its subsidiaries.

Contingent liabilities

SECOS Group Limited had no contingent liabilities as at 30 June 2015. (2014: NIL).

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

FINANCIAL REPORT

2015

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 2 PARENT ENTITY (CONTINUED)

Contractual commitments

At 30 June 2015, SECOS Group Limited had not entered into any contractual commitments for the acquisition of property, plant and equipment (2014: NIL).

Significant accounting policies

The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 1, except for the following:

Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
Investments in associates are accounted for at cost, less any impairment, in the parent entity.

NOTE 3 REVENUE

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Economic Entity
2015 2014
$ $
Revenue
Sales
Sales from main operations 17,284,394 21,441,764
Trading Income 445,345 405,105
Total 17,729,739 21,846,869
Other Income
Interest 1,563 35
-
Research & Development Tax Credits 219,677
Other Income 6,822 3,753
Total 228,062 3,788
Total Revenue 17,957,801 21,850,657
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NOTE 4 LOSS FOR THE YEAR

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Economic Entity
2015 2014
$ $
The Loss before income tax has been arrived at after the following items of expenses
Expenses
Depreciation & amortisation 327,766 256,750
Rental expenses relating to operating leases 166,801 147,971
-
Research, development, and patent costs 193,880
Amounts written off as bad debts 6,342 3,573
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SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

FINANCIAL 2015 REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 5 INCOME TAX EXPENSE

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Economic Entity
2015 2014
$ $
a) The prima facie tax credit on loss before income tax is reconciled to the income tax
credit as follows :
Prima facie tax credit provided on loss before income tax at 30% (2014: 30%)
Economic Entity (1,283,941) (668,244)
(1,283,941) (668,244)
- Adjustment for foreign tax rates 80,533 55,999
-
- Non assessable-Research & Development Tax Offset (65,537)
- Other Non assessable income items (19,154) (15,429)
- Non –deductible expenses 513,601 199,701
- Other deductible expenses (4,915) (73,983)
- Share of loss in Joint Venture Entity 263,378 200,973
-
- Acquisition Gain recognized on business acquisition (150,000)
-
- Losses on merger with SECOS Group Limited (5,774,725)
(6,440,760) (300,983)
Deferred income tax assets not recognised 6,440,760 300,983
- -
Income tax expense
b) The Directors estimate that the potential deferred income tax assets at 30 June 2015 in
7,200,043 758,343
respect of tax losses not brought to account is :
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Deferred tax assets after discounting carried forward balance of $251,861 (2014: $ 252,801) have not been brought to account as it is not currently considered probable that future taxable profits will be available against which such assets could be utilised.

NOTE 6 KEY MANAGEMENT PERSONNEL COMPENSATION

Names and positions held of economic and parent entity key management personnel in office at any time during the financial year are included in the “REMUNERATION REPORT”.

Key management personnel remuneration details have been included in the Remuneration Report section of the Directors Report.

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2015 2014
$ $
Short-term employee benefits 547,212 663,482
-
Post-employment benefits 11,765
Long-term benefits 5,128 5,879
- -
Termination payments
- -
Share based payment
564,105 669,361
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NOTE 7 REMUNERATION OF AUDITORS

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Economic Entity
2015 2014
$ $
Remuneration of the auditor of the parent entity for
- auditing or reviewing the financial statements 45,000 -
Remuneration of other auditors of subsidiaries for :
- auditing or reviewing the financial statements of subsidiaries 7,697 7,032
52,697 7,032
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SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

FINANCIAL REPORT

2015

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 8 EARNINGS PER SHARE

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Economic Entity
2015 2014
$ $
a) Reconciliation of losses used to calculate earnings per share
Loss for the year (4,279,803) (2,227,481)
- -
Loss/(Profit) attributable to non-controlling interest
Loss used to calculate basic EPS (4,279,803) (2,227,481)
Number Number
b) Weighted average number of ordinary shares used in the calculation of basic loss
61,336,204 51,972,604
per share
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The weighted average number of ordinary shares are calculated based on the ordinary shares that would have been in existence had the reverse acquisition occurred as at 1 July 2013.

NOTE 9 CASH AND CASH EQUIVALENTS

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Economic Entity
2015 2014
$ $
Cash at bank and on hand 2,627,392 86,350
2,627,392 86,350
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Reconciliation of cash

Cash at the end of the financial year as shown in the statement of cash flows is reconciled to items in the statement of financial position as follows:

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Note 2015 2014
$ $
Cash and cash equivalents 2,627,392 86,350
Bank Overdrafts 17(a) (450,349) (505,310)
2,177,043 (418,960)
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NOTE 10 TRADE AND OTHER RECEIVABLES

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Economic Entity
2015 2014
$ $
Current
Trade Receivables 2,941,974 3,483,456
-
Less : provision for impairment (146,753)
2,795,221 3,483,456
Prepayments 213,253 70,169
Other receivables 500,061 92,326
3,508,535 3,645,951
Non -Current
Amount receivable from related parties 969,786 217,658
-
Less : Provision for impairment (969,786)
-
217,658
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SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

FINANCIAL 2015 REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 10 TRADE AND OTHER RECEIVABLES (CONTINUED)

Provision for Impairment of Receivables (Non- current)

Impaired non-current trade and other receivables balances include loans advanced by Stellar Group Pty Ltd to Akronn Industries of $345,710 ( 2014: $217,658) and amounts owed by Stellar Developments Pty Ltd to Stellar Group Pty Ltd- $624,076.

Provision for Impairment of Receivables (Current)

Current trade receivables are non-interest bearing and are generally on 30 to 90 day terms. A provision for impairment is recognised when there is objective evidence that an individual trade receivable is impaired. These amounts have been disclosed as a separate line item in Statement of comprehensive income. Receivables that are impaired aged more than 365 days.

On the above basis, the Directors have made key judgement in impairing current trade receivables by $20,000 (2014- NIL) at the reporting date. Break up of impaired receivable, on geographical basis, is provided below:

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2015 2014
$ $
Australia - -
Americas - -
Asia 20,000 -
Others - -
-
20,000
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Movement in the provision for impairment of receivables is as follows:

2015	Opening Balance 1.7.2014	Balance acquired on Business acquisition Charge for the Year Amounts Written Off Closing Balance 30.06.2015
	$	$ $ $ $
Economic Entity Balance acquired on Business acquisition Current Trade & Other Receivables	- -	126,753 - - 126,753 26,342 (6,342) 20,000
	-	126,753 26,342 (6,342) 146,753

2014		Opening Balance 1.7.2013 Charge for the Year Amounts Written Off Closing Balance 30.06.2014
Economic Entity Current Trade & Other Receivables		$ $ $ $ - - - -
		- - - -

Credit Risk- Trade and Other Receivables

The Group has no significant concentration of credit risk with respect to any single counter party or group of counter parties other than receivables specifically provided for and mentioned within this Note. The class of assets described as Trade and Other Receivables is considered to be the main source of credit risk related to the Group.

On a geographical basis, the Group has significant credit risk exposures in Australia, Americas and Asia given the substantial operations in those regions. The Group’s exposure to credit risk for receivables at the end of reporting period in those regions is as follows:

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

FINANCIAL REPORT

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Changing the World of Packaging
2015
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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 10 TRADE AND OTHER RECEIVABLES (CONTINUED)

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Economic Entity
2015 2014
$ $
Australia 338,039 680,175
Americas 180,226 238,341
Asia 2,777,017 2,570,422
Others - 86,844
3,295,282 3,575,782
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The following table details the Group’s trade and other receivables exposed to credit risk with ageing analysis and impairment provided for thereon. Amounts are considered as ‘past due’ when the debt has not been settled, with the terms and conditions agreed between the Group and the customer or counter party to the transaction. Receivables that are past due are assessed for impairment by ascertaining solvency of the debtors and provided for where there are specific circumstances indicating that the debt may not be fully repaid to the Group.

The balances of receivables that remain within initial terms (as detailed in the table) are considered to be of high credit quality.

The carrying amount of receivables is considered a reasonable approximation to fair values.

Economic Entity

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Gross Past Past due but not impaired Within initial
Amount due and (days overdue) trade terms
Impaired
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			<30	31-60	61-90	>90
2015
Trade Receivables	2,941,974	146,753	749,176	288,402	167,620	130,251	1,459,772
Other Receivables	500,061	-	18,428	138,259	12,494	52,688	278,192
Total	3,442,035	146,753	767,604	426,661	180,114	182,939	1,737,964
2014
Trade Receivables	3,483,456	-	1,150,008	449,810	171,571	51,341	1,660,726
Other Receivables	92,326	-	92,236	-	-	-	-
Total	3,575,782	-	1,242,244	449,810	171,571	51,341	1,606,726

Neither the Group nor parent entity holds any financial assets with terms that have been renegotiated, but which would otherwise be past due or impaired.

NOTE 11 INVENTORIES

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Economic Entity
2015 2014
$ $
Current
Raw materials and stores 1,058,760 894,769
Work in progress 195,249 158,422
Finished goods 1,686,893 1,523,755
2,940,902 2,576,946
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SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

FINANCIAL 2015 REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 12 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

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Economic Entity
Carrying amount of Investments
2015 2014
$ $
-
Interest in Joint Venture Entity 488,011
-
488,011
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A controlled entity, Stellar Films (Malaysia) Sdn Bhd has a 50.8% (2014: 50.8%) equity interest Joint venture entity- Akronn Industries. Akkronn Industries is incorporated in Malaysia and its principal activity is manufacture and distribution of silicone coated paper and film products.

The interest in joint venture entity is accounted for in the consolidated statements using the equity method of accounting.

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2015 2014
$ $
Movements During the year in Equity Accounted Investment in Joint Venture
a.
Entity
Balance at beginning of the financial year 488,011 909,349
Add Increase in Investments during the year 366,893 484,004
Share of joint venture entity’s loss after income tax (877,925) (803,893)
Share of joint venture entity’s other comprehensive income/ (deficit) 23,021 (101,449)
-
Balance at end of the financial year 488,011
b. Equity accounted losses of joint venture entity are broken down as follows:
Share of joint venture’s loss before income tax expense (877,925) (803,893)
Less Share of joint venture’s income tax expense - -
Share of joint venture’s loss after income tax (877,925) (803,893)
Summarised presentation of aggregate assets, liabilities and performance of
c.
joint venture entity
Current assets 863,004 575,412
Non-current assets 2,917,822 3,104,622
Total assets 3,780,826 3,680,034
Current liabilities 3,378,663 1,791,190
Non-current liabilities 1,705,211 1,490,906
Total liabilities 5,083,874 3,282,096
Net assets (1,303,048) 397,938
Revenues 1,671,880 121,530
Loss after income tax of joint venture entity (1,728,200) (1,582,467)
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Loan advanced by Stellar Films Malaysia to Akronn Industries have been accounted for as net investment in Joint Venture Entity. The loan amounts outstanding as at 30 June 2015 were $ 866,931 (2014: $ 589,432).

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

FINANCIAL REPORT

2015

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 13 FINANCIAL ASSETS

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Economic Entity
2015 2014
Non-Current
Available –for-sale financial assets
-
Unlisted Investments, at fair value (a) 563,400
-
563,400
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(a) Non-current- Available for sale financial assets consist of 18,780,000 ordinary shares in Bioglobal Limited (“Bioglobal”). As at 30 June 2015, these assets have been valued at 3 cents per share based on the offer price for the last capital raising by Bioglobal that occurred in August 2015.

(b) Refer to Note 32 for further information on fair value measurement.

NOTE 14 PLANT AND EQUIPMENT

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Economic Entity
2015 2014
$ $
Land and Buildings
Leasehold Land (99 years)
At cost 264,412 255,815
Total Land 264,412 255,815
Building
At cost 2,218,441 2,117,880
Accumulated depreciation (713,936) (638,911)
Total Buildings 1,504,505 1,478,969
Total Land and Buildings 1,768,917 1,734,784
Plant & Machinery
At cost 10,787,989 10,188,763
Accumulated depreciation (9,251,522) (8,808,415)
1,536,467 1,380,348
Office Equipments
At cost 554,098 502,623
Accumulated depreciation (482,316) (444,157)
71,782 58,466
Motor Vehicles
At cost 176,525 182,861
Accumulated depreciation (117,955) (125,404)
58,570 57,457
Furniture & Fixtures
At cost 65,190 53,042
Accumulated depreciation (52,386) (47,667)
12,804 5,375
Leasehold Improvements
At cost 153,800 -
-
Accumulated depreciation (6,281)
-
147,519
Computer Software
At cost 93,702 93,702
Accumulated depreciation (57,559) (34,482)
36,143 59,220
Total 3,632,208 3,295,650
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SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

FINANCIAL 2015 REPORT

Movement in Carrying Amounts

Reconciliations of the carrying amounts of plant and equipment at the beginning and end of the current and previous financial year are set out below. Economic Entity

2014 Leasehold Land Building $ $ Balance at 1 July 2013 271,888 1,596,099	2014 Leasehold Land Building $ $ Balance at 1 July 2013 271,888 1,596,099	2014 Leasehold Land Building $ $ Balance at 1 July 2013 271,888 1,596,099	Plant & Machinery $ 1,998,437	Offce Equipment $ 88,299	Motor Vehicles $ 83,105	Furniture & Fixtures $ 7,775	Leasehold Improvements $ -	Computer Software $ -	Total $ 4,045,603
Additions during the year	-	-	15,162	2,030	-	-	-	76,922	94,114
Disposals during the year	-	-			(1,800)	-	-	-	(1,800)
Foreign Exchange Rate Variations	(16,073)	(73,759)	(83,874)	(300)	(298)	(329)	-	-	(174,633)
Depreciation Expenses -		(43,371)	(138,493)	(31,563)	(23,550)	(2,071)	-	(17,702)	(256,750)
Depreciation included in Cost of goods sold -		-	(410,884)	-	-	-	-	-	(410,884)
Balance at 30 June 2014	255,815	1,478,969	1,380,348	58,466	57,457	5,375	-	59,220	3,295,650
2015 Balance at 1 July 2014	Leasehold Land $ 255,815	Building $ 1,478,969	Plant & Machinery $ 1,380,348	Offce Equipment $ 58,466	Motor Vehicles $ 57,457	Furniture & Fixtures Leasehold Improvements $ $ 5,375 -		Computer Software $ 59,220	Total $ 3,295,650
Additions during the year	-	-	8,763	2,467	-	-	-	-	11,230
Additions through acquisition/merger	-	-	640,523	42,693	52,174	9,630	149,622	-	894,642
Disposals during the year	-	-	(8,772)	(1,295)	(45,519)	-	-	-	(55,586)
Foreign Exchange Rate Variations	8,597	70,442	94,328	1,709	2,277	267	3,746	-	181,366
Depreciation Expenses	-	(44,905)	(211,392)	(32,258)	(7,819)	(2,467)	(5,848)	(23,077)	(327,766)
Depreciation
included in Cost of	-	-	(367,328)	-	-	-	-	-	(367,328)
goods sold
Balance at 30 June 2015	264,412	1,504,506	1,536,470	71,782	58,570	12,805	147,520	36,143	3,632,208

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

FINANCIAL REPORT

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Changing the World of Packaging
2015
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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 15 INTANGIBLE ASSETS

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Economic Entity
Note 2015 2014
$ $
Goodwill
Cost 29 3,532,345 -
- -
Accumulated impaired losses
-
Net carrying value 3,532,345
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Impairment Disclosures

All Goodwill is allocated to the Group’s distribution division, being a cash generating unit.

The recoverable amount of the cash-generating unit is determined based on value-in-use calculations. Value-in-use is calculated based on the present value of base cash flow projections. The cash flows are discounted using an estimated discount rate based on Capital Asset Pricing Model adjusted to incorporate risks associated with a particular segment.

Management has based the value-in-use calculations on three year budget forecasts of Bioplastics business. Revenue has been projected on the below mentioned assumptions. Costs are calculated taking into account historical gross margins as well as estimated weighted inflation rates over the period which is consistent with inflation rates applicable to the locations in which the unit operates. Discount rates are pre-tax and reflect risks associated with the distribution division.

The following assumptions were used in the value-in-use-calculations:

a. Revenue is premised on a “zero based budget” approach whereby each customer, or potential customer, has been specifically assessed having regard to current indications of demand, customer contacts or as assessed by the relevant sales manager.

Long term contracts typically include expenditure “rise and fall” clauses. Accordingly, Revenue is forecast to alter in line with relevant changes to the Group’s direct manufacturing costs.

b. Projected cash flows have been discounted using discount rate of 14%. (2014: NIL)
c. Gross profit margins are forecast to be in a range of 20%-45% dependent upon each geographic region. (2014: NIL)
d. Manufacturing capacity constraints both in China and Stellar Australia plants have been taken into the accounts in forecasting revenues.
e. The annual growth rate of 2% has been estimated in the calculation of terminal value.

Based on the above assumptions, the recoverable amount of the cash generating unit has been determined to exceed its carrying amount as at 30 June 2015 and accordingly; no impairment loss has been recognised.

Sensitivity to changes in assumptions

Gross Profit Margin Assumption: Management has considered the possibility of lower gross margins of up to 80% of those budgeted, on the assumption that should raw material prices increases beyond the budgeted raw material price inflation and the Group be not able to pass on additional costs to the customers or absorb through efficiency improvements or other cost cutting measures, then in that case, recoverable amount of the cashgenerating unit will exceed its carrying amount by $1.7Million.

Discount Rate Assumption: If the estimated cost of capital used in determining the pre-tax discount for the CGU had been 1% higher than management’s estimates (15% instead of 14%), then in that case , recoverable amount of the cash-generating unit will exceed its carrying amount.

Revenue Forecasts Assumption: Management has considered the possibility of not achieving revenue forecasts than those budgeted and have instead assumed 80% of forecasted revenue growth per year for the budgeted period of 3 years, then in that case, recoverable amount of the cashgenerating unit will exceed its carrying amount.

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

FINANCIAL 2015 REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 16 TRADE AND OTHER PAYABLES

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Economic Entity
2015 2014
$ $
Current
Unsecured Liabilities
Trade Payables 4,046,285 3,697,525
-
Deposits from customers 187,431
Sundry payables and accrued expenses 708,489 1,167,695
4,942,205 4,865,220
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NOTE 17 BORROWINGS

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Economic Entity
2015 2014
$ $
Current
Secured Liabilities
Bank Overdrafts 17 (a) 450,349 505,310
Bank Loans 17(a) 2,196,652 1,415,488
Foreign Currency Trade Finance 17(a) 174,645 1,552,888
Software License Finance 25 12,784 10,632
2,834,430 3,484,318
Unsecured Liabilities
-
Unsecured Loan (Shareholder) 100,000
-
100,000
2,934,430 3,484,318
Non Current
Secured Liabilities
-
Loan (Shareholder) 17(b) 55,000
Software License Finance 25 33,526 47,322
88,526 47,322
Unsecured Liabilities
Unsecured Loans (Related Parties) 30 395,372 250,719
395,372 250,719
483,898 298,041
3,418,328 3,782,359
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SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

FINANCIAL REPORT

2015

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 17 BORROWINGS (CONTINUED)

(a) Details of financing arrangements are set out as below:

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2015 2014
$ $
Total Facilities
Bank Overdrafts 497,119 529,158
Bank Loans 2,209,254 1,874,176
Multi-Option Line that includes
Bank Guarantee Facility 134,648 98,880
-
Letter of Credit Facility 49,398
Foreign Currency Trade Finance 174,645 1,552,888
3,065,064 4,055,102
Used at the reporting date
Bank Overdrafts 450,349 505,310
Bank Loans 2,196,652 1,415,488
Multi-Option Line that includes
Bank Guarantee Facility 24 134,648 98,880
Letter of Credit Facility 24 49,398 -
Foreign Currency Trade Finance 174,645 1,552,888
3,005,692 3,572,566
Unused at the reporting date
Bank Overdrafts 46,770 23,848
Bank Loans 12,602 458,688
- -
Multi-Option Line that includes
- -
Bank Guarantee Facility
- -
Letter of Credit Facility
- -
Foreign Currency Trade Finance
59,372 482,536
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Bank Overdrafts

The overdraft facilities comprise separate facilities for both Stellar Films Group Pty Ltd and Stellar Films (Malaysia) Sdn Bhd of $324,494 (2014 : $ 364,358) and $125,855 (2014: $140,952) respectively, both facilities being utilised for working capital purposes.

Bank Loans

Bank loans comprise:

Term loans totaling $1,750,154 (2014 :$628,992) for Stellar Films (Malaysia) Sdn Bhd which have utilised in funding the acquisition of plant and equipment as well as funding ongoing working capital requirements.
Year on year changes in the structure of the facilities comprised the refinancing of Stellar Films (Malaysia) Sdn Bhd’s foreign currency trade loans of $1,590,222 as a term loan in March 2015 and is included in the above disclosed amount.
A market rate facility of $446,498 (2014: $786,496) for Stellar Films Group Pty Ltd that has been utilised for working capital purposes.

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

FINANCIAL 2015 REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTES 17 BORROWINGS (CONTINUED)

Stellar Films Group Pty Ltd’s outstanding overdraft facility and market rate facilities as at 30 June 2015 have subsequently been combined into a new market rate facility with a term of 4 years. Whilst the combining of those 2 facilities has been approved by Stellar Films Group Pty Ltd’s incumbent banker, formal documentation is still in the process of being prepared.

Multi Option Facility

The multi option facility is available to Stellar Films (Malaysia) and includes bank guarantee, letter of credit, foreign currency trade finance and various other trade related facilities. The Facility is a revolving facility subject to an annual review.

Collateral Provided

Security provided in support of banking facilities in respect of the consolidated entities are as follows:

Stellar Films (Malaysia) Sdn Bhd:

General debenture creating fixed and floating charges over the assets and undertakings of the company to the combined value of MYR 9,200,000 (AUD$3,176,300).
Negative pledges dated 2 June 2005 and 31 May 2012.
Letters of comfort/awareness to the combined value of MYR 7,300,000 (AUD$2,520,325) provided by Stellar Films Group Pty Ltd.

Stellar Films Group Pty Ltd:

General security agreements over the assets and undertakings of Stellar Films Group Pty Ltd.
Guarantees and indemnities provided by the directors of Stellar Films Group Pty Ltd.
Guarantee and indemnity provided by Stellar Developments Pty Ltd as trustee for the Stellar Unit Trust supported by a general security agreement over the assets and undertakings of that entity.
(b) Secured Loan- $50,000 advanced by a shareholder has a registered general security agreements over the assets and undertakings of Stellar Films Group Pty Ltd and maturity term of 3 years.

NOTE 18 SHORT TERM PROVISIONS

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Economic Entity
2015 2014
$ $
Employee benefits 647,861 237,928
Lease make good provision 70,000 70,000
717,861 307,928
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Lease make good

The provision represents the present value of the estimated costs to make good the premises leased by the consolidated entity at the end of the respective lease terms.

NOTE 19 LONG TERM PROVISIONS

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Economic Entity
2015 2014
$ $
-
Employee benefits 44,330
-
44,330
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SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

2015

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 20 ISSUED CAPITAL

(A) Share Capital

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||||
|---|---|---|
|Economic Entity|
|2015|2014|
|$|$|
|Ordinary - fully paid shares|10,549,724|400,004|

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(B) Movements in Ordinary Share Capital

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Number of Issue Amount
Date
Shares Price $
1 July 2013 Balance * 51,972,604 400,004
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||||||
|---|---|---|---|---|
|30 June 2014|Balance|51,972,604|400,004|
|Recognition of shares in SECOS ( formerly Cardia) prior to merger|
|21 April 2015|42,523,040|6,378,456|
|in accordance with requirements of reverse acquisition accounting|
|Issue of shares to Directors in lieu of accrued remuneration of the|-|
|23 April 2015|115,000|
|March’15 Quarter|
|15 May 2015|Placement of Shares|7,827,144|0.14|1,095,800|
|26 June 2015|Rights Issue|17,072,355|0.14|2,390,145|
|30 June 2015|Placement of Shares|4,713,016|0.14|659,822|
|Cost of Capital|(374,503)|
|30 June 2015|Balance|124,223,159|10,549,724|

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As a result of the reverse acquisition, the number of shares are based on Stellar Films Group Pty Ltd on issue, converted at the exchange ratio of 129.93 Shares to 1.

(C) Ordinary Shares

Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held.

On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.

Ordinary Shares have no par value, and the company does not have a limited amount of authorised share capital.

(D) Capital Management

Management controls the capital of the group in order to maintain sufficient liquidity to cover the group’s working capital requirements, to meet any new investment opportunities as they arise and to safeguard the company’s ability to continue as a going concern

The group’s debt and capital includes ordinary share capital and financial liabilities supported by financial assets.

There are no externally imposed capital requirements.

Management effectively manages the group’s capital by regularly monitoring its current and expected liquidity requirements and by assessing the group’s financial risks, rather than using debt/equity ratio analyses. The group’s capital structure is adjusted in response to the changes in liquidity requirements and financial risks. These responses include the management of debt levels and share issues.

There have been no changes in the strategy adopted by management to control the capital of the group since the prior year.

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

FINANCIAL 2015 REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 21 RESERVES

Nature and Purpose of Reserves

Foreign Currency Translation Reserve

The foreign currency translation reserve records exchange differences arising on translation of a foreign controlled subsidiary as described in Note 1(j)

NOTE 22 FRANKING CREDITS

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Accounting Parent (Stellar)
2015 2014
$ $
The amount of the franking credits available for subsequent reporting
periods are:
Opening Balance (460,155) (899,947)
-
Income Tax Liability offset for the 2013 financial year 53,649
Declared Dividends - 386,143
Closing Balance (460,155) (460,155)
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The above amounts represent the balance of the franking account as at the end of the financial year available to Stellar Films Group Pty Ltd.

NOTE 23 CONTROLLED ENTITIES

Controlled Entities Consolidated

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Country of Equity Holding
Name
Incorporation (%) [(1)]
2015 2014
Stellar Films Group Pty Ltd [(2)] Australia 100% -
Stellar Films (Malaysia) Sdn Bhd [(2)] Malaysia 100% -
Cardia Bioplastics (Australia) Pty Ltd (100% owned by SECOS Group Limited) Australia 100% 100%
Tristano Pty Ltd (100% owned by Cardia Bioplastics (Australia) Pty Ltd) Australia 100% 100%
Biograde (Nanjing) Pty Ltd (100% owned by Biograde (Hong Kong) Pty Ltd) China 100% 100%
Biograde (Hong Kong) Pty Ltd (100% owned by Cardia Bioplastics (Australia) Pty Ltd) Hong Kong 100% 100%
Cardia Bioplastics Malaysia Sdn Bhd Malaysia 100% 100%
Cardia Bioplasticos (Brasil) Ltda Brazil 100% 100%
CO2Starch Pty Ltd Australia 100% 100%
Cardia Bioplastics LLC USA 100% 100%
Mine Remediation Services Pty Ltd Australia 69.36% 69.36%
Natural Pharmacy Pty Ltd Australia 66.00% 66.00%
Herbworx International Pty Ltd (60% owned by Natural Pharmacy Pty Ltd) Australia 39.60% 39.60%
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Percentage of voting power is in proportion to ownership.
Interest in sudsidiaries that were acquired as part of merger with SECOS Group Limited.

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

FINANCIAL REPORT

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Changing the World of Packaging
2015
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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 24 CONTINGENT LIABILITIES AND CONTINGENT ASSETS

The Group has given Bank Guarantees and issued Letter of Credits as at 30 June 2015.

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Economic Entity
2015 2014
$ $
Bank Guarantees 134,648 98,880
Letter of Credits 49,399 -
184,047 98,880
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There were no contingent assets as at 30 June 2015 (2014: NIL).

NOTE 25 LEASING COMMITMENTS

Commitments in relation to leases contracted for at the end of the reporting period but not recognised as liabilities, payable:

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Economic Entity
2015 2014
$ $
a Finance Lease Commitments
Not later than 12 months 16,584 16,584
between 12 months and 5 years 37,316 53,900
53,900 70,484
Less : future finance charges 7,590 12,530
Present value of minimum lease payments 46,310 57,954
b Operating Lease Commitments
Not later than 12 months 335,414 165,000
between 12 months and 5 years 501,937 41,250
837,351 206,250
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The consolidated entity leases property under operating leases expiring from one to five years. Leases generally provide the economic entity with a right of renewal from nil years to five years.

NOTE 26 OPERATING SEGMENTS

Segment Information

Operating segments are premised on the internal reports that are reviewed and used by the Board of Directors in assessing performance and determining the allocation of resources.

The Group is managed primarily on the basis of product category and service offerings as the diversification of the Group’s operations inherently have different risk profiles and performance assessment criteria. Operating segments are therefore determined on the same basis.

Reportable segments disclosed are based on aggregating operating segments where the segments are considered to have similar economic characteristics and are also similar with respect to the following:

-the products sold and/or services provided by the segment;

-the manufacturing process;

-the distribution method; and
-any external regulatory requirements.

The following operating segments have been identified

(i) Manufacturing Division
(ii) Distribution Division

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

FINANCIAL 2015 REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 26 OPERATING SEGMENTS (CONTINUED)

Types of products and services by segment

(i) Manufacturing Division

The manufacturing segment develops and manufactures sustainable resins derived from renewable resources for the global packaging and plastic products industries and also manufactures high quality cast films for the personal care, hygiene, pet care and medical product industries.

The Manufacturing segment, which includes the manufacturing units in China, Malaysia and Australia is responsible for distribution and sales of products locally and overseas.

The manufacturing segment also sells products to the distribution segment.

(ii) Distribution Division

Distribution segment includes the Group’s cash generating unit that is designated to develop and distribute the Group’s strategic products both locally and overseas.

Basis of accounting for purposes of reporting by operating segments

Accounting policies adopted

Unless stated otherwise, all amounts reported to the Board of Directors, are determined in accordance with accounting policies that are consistent to those adopted in the annual financial statements of the Group.

Inter-segment transactions

An internally determined transfer price is set for all inter-segment sales. This price is based on what would be realised in the event the sale was made to an external party at arm’s length. All such transactions are eliminated on consolidation of the group’s financial statements.

Inter-segment loans payable and receivable are initially recognised at the consideration received/to be received net of transaction costs. If intersegment loans receivable and payable are not on commercial terms, these are not adjusted to fair value based on market interest rates.

Corporate charges are allocated to reporting segments based on the segments’ overall performance of revenue generation within the Group. The Board of Directors believes this is representative of likely consumption of head office expenditure that should be used in assessing segment performance and cost recoveries.

Segment assets

Where an asset is used across multiple segments, the asset is allocated to that segment that receives majority economic value from that asset. In the majority of instances, segment assets are clearly identifiable on the basis of their nature and physical location.

Segment liabilities

Liabilities are allocated to segments where there is a direct nexus between the incurrence of the liability and the operations of the segment. Segment liabilities include trade and other payables.

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

2015

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 26 OPERATING SEGMENTS (CONTINUED)

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Intersegment
Manufacturing Distribution
eliminations/ Total
Consolidated-2015 Division Division
unallocated
$ $ $
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Revenue External Sales 16,717,648 566,746 - Inter-segment sales 575,059 - (575,059) Trading Income 445,345 - - R&D Tax Rebate Refund - 219,677 - Interest Revenue 76 1,487 - Other Income 6,822 - -	17,284,394 - 445,345 219,677 1,563 6,822
Total Segment Revenue 17,744,950 787,910 (575,059) EBITDA (1,375,556) (134,246) - Depreciation and amortisations - - (327,766) Depreciation and amortisations (included in cost of goods sold) - - (367,328) Borrowing costs - - (321,186) Impairments- Trade & Other Receivables (989,786) - - Impairment- Inventories (76,564) - - Merger Transaction Costs - - (309,446) Share in loss of Joint Venture - - (877,925) Gain on Acquisition - - 500,000 Proft/(loss) before income tax expense Income tax expense Proft/(loss) after income tax expense Assets Segment assets 11,882,332 2,139,533 - Inter segment assets 8,888,847 (8,888,847)	17,957,801 (1,509,802) (327,766) (367,328) (321,186) (989,786) (76,564) (309,446) (877,925) 500,000
	(4,279,803) -
	(4,279,803) 14,021,865 -
Total Segment assets 11,882,332 11,028,380 (8,888,847) Unallocated assets: Cash & cash equivalents Trade & other receivables Financial Assets Total Assets Included in segment assets are Goodwill - 3,532,345 - Investment in joint venture - - - Acquisition of non-current assets 11,230 - - Liabilities Segment Liabilities 8,183,649 812,523 - Inter segment liabilities 6,487,231 - (6,487,231) Total Segment liabilities 14,670,880 812,523 (6,487,231) Unallocated liabilities: Trade & Other Payables - - - Total Liabilities	14,021,865 2,340,132 131,246 563,400
	17,056,643 3,532,345 - 11,230 8,996,172 - 8,996,172 126,552
	9,122,724

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

FINANCIAL 2015 REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 26 OPERATING SEGMENTS (CONTINUED)

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Intersegment
Manufacturing Distribution
eliminations/ Total
Consolidated-2014 Division Division
unallocated
$ $ $
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Revenue External Sales 21,441,764 - - Inter-segment sales - - - Interest revenue 35 - - Other Income 3,753 - -	21,441,764 - 35 3,753
Total Segment Revenue 21,850,657 - - EBITDA (479,313) - - Depreciation and amortisations - - (256,750) Depreciation and amortisations (included in cost of goods sold) - - (410,884) Borrowing costs - - (276,641) Share in loss of Joint Venture - - (803,893) Proft/(loss) before income tax expense Income tax expense Proft/(loss) after income tax expense Assets Segment assets 10,563,367 - - Unallocated assets: - - - Total Assets Included in segment assets are Investment in joint venture 488,011 - - Acquisition of non-current assets 94,114 - - Liabilities Segment liabilities 8,955,507 - - Unallocated liabilities: - - Total Liabilities	21,850,657 (479,313) (256,750) (410,884) (276,641) (803,893)
	(2,227,481) -
	(2,227,481) 10,563,367 -
	10,563,367 488,011 94,114 8,955,507 -
	8,955,507

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2015 2014
Revenue by geographical region
$ $
Revenue attributable to external customers is disclosed below, based on the location
of the external customer
Australia 1,855,776 2,688,405
Asia 14,275,827 15,544,504
Americas 393,624 1,254,550
Others [()] 759,167 1,954,305
Total Revenue 17,284,394 21,441,764
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*Others include countries falling within Europe and Africa Continents.

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

FINANCIAL REPORT

2015

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 26 OPERATING SEGMENTS (CONTINUED)

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2015 2014
Assets by geographical region
$ $
The location of segment assets (non current) by geographical location of assets is
disclosed below:
Australia 3,970,448 640,002
Asia 3,445,966 3,614,118
Total Assets 7,416,414 4,254,120
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Major customers

The Group has a number of customers to whom it provides products. The Group has supplied a single external customer in the manufacturing segment who accounted for 24.83% (2014: 18.20%) of external revenue. The next two significant customers accounted for 13.98% (2014: 8.34%) and 7.38% (2014: 7.38%) of external revenue respectively.

NOTE 27 CASH FLOW INFORMATION

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Economic Entity
2015 2014
$ $
Reconciliation of Cash Flow from Operations with Profit after Income Tax
Operating Loss after income tax (4,279,803) (2,227,481)
Depreciation & Amortisation 327,766 256,750
Depreciation included in Costs of goods sold 367,328 410,884
Foreign Currency translation differences (73,079) (58,986)
-
Profit on Sale of Fixed Assets (6,962)
-
Impairments 1,066,350
Share in loss of joint venture entity 877,925 803,893
-
Gain on Acquisition (500,000)
Changes in operating assets and liabilities, net of business combination effects:
Decrease in receivables 688,235 1,400,955
Decrease in other operating assets 1040,853 812,779
Decrease in creditors (913,434) (255,524)
Increase/(decrease) in provisions and payables 63,868 (721,348)
Net cash outfow from operating activities (1,340,953) 421,922
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NOTE 28 EVENTS AFTER THE REPORTING DATE

On 24 August 2015, Mr Gideon Meltzer resigned as a Non-Executive Director of the Company.

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

FINANCIAL 2015 REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 29 BUSINESS COMBINATION

Stellar Films Group Companies

On 21 April 2015, the Company acquired 100% of the issued capital of the Stellar Film Group companies. The acquisition of Stellar Film Group Companies is considered a reverse acquisition in accordance with AASB 3-“Business Combination”, with Stellar Film Group deemed the parent for reporting purposes and the accounting subsidiary being Cardia Bioplastics Limited.

Details of the acquisition of SECOS Group Limited (formerly Cardia Bioplastics Limited) are as follows:

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$
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Fair Value of Assets and Liabilities at acquisition date
Cash and cash equivalents	834,807
Inventories	836,864
Plant and Equipment	894,643
Trade & Other Receivables	1,329,425
Prepayments	32,596
Financial Assets	563,400
Trade & Other Payable	(1,262,193)
Provisions	(245,372)
Unsecured Loan	(100,000)
Net assets at acquisition date	2,884,170
Less : Net assets attributed to non-controlling interest	(38,059)
Net assets acquired	2,846,111
Goodwill	3,532,345
Acquisition-date fair value of the total consideration transferred	6,378,456
Consideration Representing
Fully paid ordinary shares of SECOS Group Limited issued to Vendors	6,378,456
Acquisition and merger integration costs expensed to proft or loss	309,446

From the date of acquisition, SECOS Group Limited (formerly Cardia Bioplastics Limited) and its controlled entities have contributed approximately $1,228,495 of revenue and a loss before tax of ($516,267) (including acquisition and merger transaction costs of ($71,157) and depreciation and amortisation of ($44,031) to the loss from the continuing operations of the Group.

If the combination had taken place at the beginning of the financial year (1 July 2014), revenue from continuing operations would have been approximately $5million higher and loss from continuing operations for the year would have been approximately $2.25million higher.

The goodwill is attributed to the technology and global distribution network of the acquired business and the expected synergies and other benefits combining the activities of Cardia Bioplastics Limited to the Group. The calculation of goodwill amount arising on business combination is provisional as at 30 June 2015.The management has twelve months from the date of transaction to finalise the amount.

NOTE 30 RELATED PARTIES

Parent Entity

SECOS Group Limited is the legal parent entity.

Subsidiaries

Interests in subsidiaries are set out in Note 23

Associates

Interest in associates are set out in Note 12

Key management personnel

Disclosures relating to key management personnel are set out in Note 6 and the remuneration report in the directors’ report.

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

FINANCIAL REPORT

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Changing the World of Packaging
2015
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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 30 RELATED PARTIES (CONTINUED)

Transactions with related parties

The following transactions occurred with related parties:

a) During the year, an amount of $42,850 (Ex GST) (2014: $5,850) was paid to GM Legal and Corporate Advisory, a company controlled by Mr. Gideon Meltzer for providing legal services to the Company. The amount was paid by SECOS Group Limited during the pre-merger period from 1 July 2014 to 21 April 2015.
b) Stellar Directors related entities have advanced amounts to that Company for working capital purposes. As part of merger negotiations, on 31 March 2015, these entities have entered into respective loan agreements with Stellar for the amounts advanced. Pursuant to the loan agreements, loan amount advanced are on an unsecured basis and will be repayable after 2 years after the merger completion date i.e 21 April 2015, with SECOS having further discretion to extend the loan term for a further 12 months period. Loans will attract interest at bank market rates for the term.

The following balances are outstanding at the reporting date in relation to above loans from the related parties:

	2015 $	2014 $
Unsecured Loans from related parties	395,372	250,719

Loans to related parties

The following balances are outstanding at the reporting date in relation to the loans to related parties

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2015 2014
$ $
Loan from Stellar Films Group to Akronn Industries 345,710 217,658
-
Loan from Stellar Films Group to Stellar Development Pty Ltd 624,076
-
Less : Impairment (969,786)
-
Balance Outstanding 217,658
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Terms and Conditions

All transactions were made on normal commercial terms and conditions and at market rates.

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

FINANCIAL 2015 REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 31 FINANCIAL INSTRUMENTS

a) Financial Risk Management

The group’s financial instruments consist mainly of deposits with banks and short term investments, trade receivable and payable and available for sale financial assets.

The totals for each category of financial instruments, measured in accordance with AASB 139- “Financial Instruments-Recognition and Measurement” as detailed in the accounting policies to these financial statements, are as follows:

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Economic Entity
Note 2015 2014
$ $
Financial Assets
Cash and cash equivalents 9 2,627,392 86,350
Loans and receivables 10 3,442,035 3,575,782
Available –for- Sale Financial Assets 13 563,400 -
Total Financial Assets 6,632,827 3,662,132
Financial Liabilities
Trade and other payables 16 4,942,205 4,865,220
Borrowings 17 3,418,328 3,782,359
Total Financial Liabilities 8,360,533 8,647,579
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Financial risk management objectives

The consolidated entity's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and interest rate risk), credit risk and liquidity risk. The consolidated entity's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the consolidated entity. The consolidated entity uses natural hedges and derivative financial instruments such as forward foreign exchange contracts to hedge certain risk exposures. Derivatives are exclusively used for hedging purposes, i.e. not as trading or other speculative instruments. The consolidated entity uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange and other price risks, ageing analysis for credit risk.

Specific Financial Risk Exposures and Management

The main risks the group is exposed to through its financial instruments are credit risk, liquidity risk and market risk consisting of interest rate risk and foreign currency risk.

Credit risk

Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of contract obligations that could lead to a financial loss to the Group.

Credit risk is managed through the negotiation of payment terms with customers such as advance payment on order or payments through letter of credits, title retention clauses over goods, ensuring to the extent possible, that customers and counterparties to transactions are of sound credit worthiness and monitoring the financial stability of significant customers and counterparties. Such monitoring is used in assessing receivables for impairment.

The maximum exposure to credit risk by class of recognised financial assets at the end of the reporting period is equivalent to the carrying amount of those financial assets (net of any provisions) as presented in the statement of financial position.

The Group has no significant concentration of credit risk with any single counterparty or group of counterparties. However, on a geographical basis, the Group has significant credit risk exposures to Americas and Asia, given the substantial transactions from those regions. Details with respect to credit risk of Trade and Other Receivables are provided in Note 10

Trade and other receivables that are neither past due or impaired are considered to be of high credit quality. Aggregate of such amounts are as detailed in Note 10.

Credit risk arising on cash balances is not material.

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

FINANCIAL REPORT 2015

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Changing the World of Packaging
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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 31 FINANCIAL INSTRUMENTS (CONTINUED)

Liquidity risk

Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or meeting its obligations related to financial liabilities. The group manages liquidity risk by maintaining a reputable credit profile, managing credit risk related to financial assets, monitoring forecasted cash flows and ensuring that new funding facilities are in place either in the form of the issuing of new securities or establishing borrowing facilities.

Unused borrowing facilities at the reporting date are disclosed under Note 17

The bank overdraft facilities may be drawn at any time and are provided on an on-demand basis.

The bank loan facilities in respect Stellar Films (Malaysia) are repayable on demand but until such demand, have a maturity term of 16 months and is subject to monthly repayments amorstising to nil at maturity.

The bank loan facility for Stellar Group Pty Ltd matures on 31 December 2015. Subsequent to 30 June 2015, this facility has been approved to a new market facility with a term of 4 years but formal documentation is awaited from the Banker.

The multi option facility that includes bank guarantee, letter of credit and foreign currency trade finance is a revolving facility subject to an annual review.

Remaining contractual maturities

The following tables detail the consolidated entity's remaining contractual maturity for its financial instrument liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position.

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Weighted Remaining
Between 1 and Between 2
Economic Entity-2015 average 1 year or Less Over 5 years contractual
2 years and 5 years
interest rate maturities
% $ $ $ $ $
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Non-derivatives Non-interest bearing Trade Payables Other Payables Interest bearing- variable Bank Loans Foreign Currency Trade Finance Interest bearing- Fixed Secured Loan (shareholder) Unsecured Loan (shareholder) Unsecured Loans (related parties) Software Licence Finance Total Non-derivatives	- 4,046,285 - - - 4,046,285 - 895,920 - - - 895,920 7.43% 972,454 1,340,490 - - 2,312,944 1.83% 176,243 - - - 176,243 15.00% - - 55,000 - 55,000 15.00% 111,250 - - - 111,250 8.35% - 461,399 461,399 9.37% 16,584 16,584 20,732 - 53,900
	6,218,736 1,818,473 75,732 - 8,112,941
Derivatives Forward foreign exchange contracts net settled Total Derivatives	- 1,804,527 - - - 1,804,527
	- 1,804,527 - - - 1,804,527

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

FINANCIAL 2015 REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 31 FINANCIAL INSTRUMENTS (CONTINUED)

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Weighted Remaining
1 year or Between 1 and Between 2 Over 5
Economic Entity-2014 average contractual
Less 2 years and 5 years years
interest rate maturities
% $ $ $ $ $
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Non-derivatives Non-interest bearing Trade Payables - Other Payables - Interest bearing- variable Bank Loans 7.40% Foreign Currency Trade Finance 1.95% Interest bearing- Fixed Unsecured Loans (related parties) 10.00% Software Licence Finance 9.37% Total Non-derivatives	3,697,525 - - - 3,697,525 1,167,695 1,167,695 800,310 719,215 - - 1,519,525 1,568,029 - - - 1,568,029 - 300,863 - - 300,863 16,584 16,584 37,316 - 70,484
	7,250,143 1,036,662 37,316 - 8,324,121
Derivatives Forward foreign exchange contracts net settled - Total Derivatives -
	1,040,335 - - - 1,040,335
	1,040,335 - - - 1,040,335

The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above.

Fair Value of financial instruments

Unless otherwise stated, the carrying amount of financial instruments reflect their fair value.

Market risks

Interest rate risk

Exposure to interest rate risk arises on financial assets and financial liabilities recognised at the end of the reporting period whereby a future change in interest rates will affect future cash flows or the fair value of fixed rate financial instruments. The Group is also exposed to earnings volatility on floating rate instruments.

The variable interest rate borrowings expose the Group to interest rate risk which will impact future cash flows and interest charges are indicated by the following floating interest rate financial liabilities

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Note Economic Entity
2015 2014
$ $
Variable rate instruments
Bank Overdrafts 450,349 505,310
Bank Loans 2,196,652 1,415,488
Foreign Currency Trade Finance 174,645 1,552,888
2,821,646 3,473,686
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SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

FINANCIAL REPORT

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Changing the World of Packaging
2015
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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 31 FINANCIAL INSTRUMENTS (CONTINUED)

Interest rate risk sensitivity analysis

An official increase/decrease in interest rates of 100 (2014: 100) basis points would have an adverse/favourable effect on profit before tax of $28,216 (2014: $34,737) per annum. The percentage change is based on the expected volatility of interest rates using market data and analysts forecasts. In addition, minimum principal repayments of $888,119 (2014: $746,064) are due during the year ending 30 June 2016.

Foreign currency risk

The consolidated entity undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk through foreign exchange rate fluctuations.

As the Group’s significant purchase and sales transactions are in US Dollars, any fluctuations in US Dollars may impact on the Group’s financial results unless this exposure is appropriately hedged. The risk is measured using sensitivity analysis and cash flow forecasting.

In order to protect against exchange rate movements in US Dollar, the consolidated entity manages the risk through natural hedge to the extent possible and has also entered into forward foreign exchange contracts. These contracts are hedging highly probable forecasted cash flows for the ensuing financial year. Management has a risk management policy to hedge between 30% and 60% of anticipated foreign currency transactions for the subsequent 3-4 months.

For payments in all other foreign currencies, the Group has established that its exposure to foreign currency risk is not material at this stage.

The maturity, settlement amounts and the average contractual exchange rates of the consolidated entity’s outstanding forward foreign exchange contracts.

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Sell US Dollars Average exchange rates
2015 2014 2015 2014
$ $ $ $
Buy Australian Dollars
Maturity
0-3 months 1,227,743 401,010 0.8932 0.9608
3-6 months - -
Buy Malaysian Ringgits
Maturity
0-3 months 388,511 478,447 1.2451 1.0874
3-6 months 188,273 160,878 1.2552 1.0725
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The carrying amount of the Group’s foreign currency (US Dollars) denominated financial assets and financial liabilities at the reporting date were as follows:

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Financial Assets Financial Liabilities
2015 2014 2015 2014
$ $ $ $
US Dollars 1,903,015 2,179,952 2,332,957 2,917,399
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The Group has performed a sensitivity analysis relating to its net exposure to foreign currency risk at the end of reporting period. This sensitivity analysis demonstrates the effect on the current year results and equity which could result from a change in these risks.

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

FINANCIAL 2015 REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 31 FINANCIAL INSTRUMENTS (CONTINUED)

Foreign currency risk sensitivity analysis

At 30 June 2015, the effect on profit and equity as a result of changes in the value of the Australian Dollar to the US Dollar with all other variables remaining constant is as follows:

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Economic Entity
2015 2014
$ $
Change in Profit and Equity
- Improvement in AUD to USD by 5% 21,497 36,872
- Decline in AUD to USD by 5% (21,497) (36,872)
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The Directors assess that 5% variance in AUD to USD can have material impact on the Group’s operations in the event the Company’s receipts in USD are not sufficient to manage its USD payments through a natural hedge.

NOTE 32 FAIR VALUE MEASUREMENT

Fair value hierarchy

The following tables detail the economic entity's assets measured or disclosed at fair value, using a three level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly Level 3: Unobservable inputs for the asset or liability

	Level 3 $ Total $
Economic Entity - 2015

Assets Available for sale fnancial assets Unlisted Investments , at fair value Total Assets	563,400 563,400
	563,400 563,400

Assets and liabilities held for sale are measured at fair value on a non-recurring basis.

There were no transfers between levels during the financial year.

The carrying amounts of trade and other receivables and trade and other payables are assumed to approximate their fair values due to their shortterm nature.

Valuation techniques for fair value measurements categorised within level 3

Available for sale financial assets consist of 18,780,000 ordinary shares in Bioglobal Limited (“Bioglobal”). As at 30 June 2015, these assets have been valued at 3 cents per share based on the offer price for the last capital raising by Bioglobal that occurred in August 2015.

Level 3 assets

There were no movements in level 3 assets during the current and previous financial year.

Any reasonable change to unobservable inputs would not be material to these financial statements.

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

FINANCIAL REPORT

2015

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 33 COMPANY DETAILS

The principal place of business and registered office is Suite 6, Level 2, 205-211 Forster Road, Mount Waverley, Victoria, Australia 3149.

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

DIRECTORS’ 2015 DECLARATION

The Directors declare that the financial statements and notes, as set out on pages 27 to 69 and remuneration disclosures that are detailed within the Remuneration Report in the Directors’ Report, are in accordance with the Corporations Act 2001 and:
a. comply with Australian Accounting Standards, the Corporations Regulations 2001; and
b. give a true and fair view of the financial position as at 30 June 2015 and of the performance for the year ended on that date of the company and economic entity.
c. the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.
The Managing Director and Chief Financial Officer have each declared that:
a. the financial records of the company for the financial year have been properly maintained in accordance with section 286 of the Corporations Act 2001;
b. the financial statements and notes for the financial year comply with the Australian Accounting Standards; and
c. the financial statements and notes for the financial year give a true and fair view.
In the directors' opinion there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Directors.

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Richard Tegoni Director

Mount Waverley 30 September 2015

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS

2015

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SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

2015

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS

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SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS

2015

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SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

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Changing the World of Packaging
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SHAREHOLDERS’ 2015 INFORMATION

The shareholder information set out below was applicable as at 16 September 2015.

(A) DISTRIBUTION OF EQUITY SECURITIES

Analysis of numbers of equity security holders by size of holding:

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Ordinary Shares
1 - 1,000 311
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1 - 1,000	Ordinary Shares 311
1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and over	425 188 345 140
	1,409

There were 608 holders of less than a marketable parcel of ordinary shares.

(B) EQUITY SECURITY HOLDERS

The names of the twenty largest holders of quoted equity securities are listed below:

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Percentage of
Fully Paid Ordinary Shares Number Held
Issued Shares
%
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STELLAR DEVELOPMENTS PTY LTD GANSPRUSE PTY LTD GOBBLE PTY LTD HELPLESS PTY LTD FEMALE PTY LTD G & N LORD SUPERANNUATION PTY LTD MR RICHARD ROGER TEGONI + MRS DEBRA MARISA TEGONI MRS DEBRA MARISA TEGONI MRS JACLYN STOJANOVSKI + MR CHRIS RETZOS + MRS SUSIE RETZOS S/F A/C> INSYNC INVESTMENTS PTY LTD ADVANCE PUBLICITY PTY LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED DENTOST PTY LTD KIRZY PTY LTD VANFULL INVESTMENTS LIMITED SOMNUS PTY LTD MRS JANET LOUISE COLMAN COLONEL WEST PTY LTD REDCLIFF PTY LTD CHIMAERA CAPITAL LIMITED TOTAL	20,789,040 16.74 7,795,891 6.28 7,795,891 6.28 7,795,891 6.28 7,795,891 6.28 3,000,000 2.42 2,466,071 1.99 2,147,858 1.73 2,108,573 1.70 2,000,000 1.61 1,750,000 1.41 1,545,566 1.24 1,400,211 1.13 1,300,000 1.05 1,237,723 1.00 1,200,000 0.97 1,080,000 0.87 1,027,181 0.83 1,000,000 0.81 959,326 0.77
	76,195,113 61.39

STELLAR DEVELOPMENTS PTY LTD
GANSPRUSE PTY LTD
GOBBLE PTY LTD
HELPLESS PTY LTD
FEMALE PTY LTD
G & N LORD SUPERANNUATION PTY LTD
MR RICHARD ROGER TEGONI + MRS DEBRA MARISA TEGONI
MRS DEBRA MARISA TEGONI
MRS JACLYN STOJANOVSKI + MR CHRIS RETZOS + MRS SUSIE RETZOS S/F A/C>
INSYNC INVESTMENTS PTY LTD
ADVANCE PUBLICITY PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
DENTOST PTY LTD
KIRZY PTY LTD
VANFULL INVESTMENTS LIMITED
SOMNUS PTY LTD
MRS JANET LOUISE COLMAN
COLONEL WEST PTY LTD
REDCLIFF PTY LTD
CHIMAERA CAPITAL LIMITED
TOTAL

20,789,040
16.74
7,795,891
6.28
7,795,891
6.28
7,795,891
6.28
7,795,891
6.28
3,000,000
2.42
2,466,071
1.99
2,147,858
1.73

2,108,573
1.70
2,000,000
1.61
1,750,000
1.41
1,545,566
1.24
1,400,211
1.13
1,300,000
1.05
1,237,723
1.00
1,200,000
0.97
1,080,000
0.87
1,027,181
0.83
1,000,000
0.81
959,326
0.77

76,195,113
61.39

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

2015

SHAREHOLDERS’ INFORMATION

(C) SUBSTANTIAL SHAREHOLDERS

The names of the substantial shareholders listed in the holding company’s register as at 16 September 2015 are:

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Number of Ordinary Percentage of
Shares Held Issued Shares
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STELLAR DEVELOPMENTS PTY LTD	20,789,040	16.74
GANSPRUSE PTY LTD	7,795,891	6.28
GOBBLE PTY LTD	7,795,891	6.28
HELPLESS PTY LTD	7,795,891	6.28
FEMALE PTY LTD	7,795,891	6.28

(D) VOTING RIGHTS

The voting rights attaching to each class of equity security are set out below:

Ordinary Shares: On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.

Options: No voting rights.

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

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SECOS Group Limited

Suite 6, 205-211 Forster Road, Mt. Waverley VIC 3149 +61 3 8566 6800

Cardia Bioplastics

Australia

Suite 6, 205-211 Forster Road, Mt. Waverley VIC 3149 +61 3 8566 6800

North America

PMB 122, 1124 Fir Avenue, Blaine, Washington 98230 U.S.A. +1 888 605 1488

China

Room 1402-1403 66 Qinhuai Lu, Jiangning Qu, Nanjing Shi, Jiangsu Sheng, China, 211100 +86 25 5272 8473

Stellar Films Group

Australia

Suite 6, 205-211 Forster Road, Mt. Waverley VIC 3149 +61 3 8566 6800

Australia

6 Tilburn Road, Deer Park, VIC 3023 Australia +61 3 9361 8260

Malaysia

Stellar Films (M) Sdn Bhd 10, Jalan Sultan Muhamed, 4 Kawasan Selat Klang Utara, 42000 Pelabuhan Klang, Selangor Darul Ehsan, Malaysia +60 3 3176 3419

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GROUP
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stellarfilmsgroup.com cardiabioplastics.com cardiabioproducts.com [email protected]

AI assistant

MYECO GROUP LTD — AGM Information 2015

65304_rns_2015-10-15_99c3203a-605d-4304-b755-ce1a930046d5.pdf

NOTICE OF ANNUAL GENERAL MEETING

SECOS GROUP LIMITED

NOTICE OF ANNUAL GENERAL MEETING

INCLUDING

PROXY FORM

AND

EXPLANATORY MEMORANDUM

Place of Meeting

SECOS GROUP LIMITED

NOTICE OF ANNUAL GENERAL MEETING

BUSINESS

2015 Annual Financial Report

NON-BINDING RESOLUTION

Voting Exclusion Statement

ORDINARY RESOLUTIONS

Resolution 3: Re-election of Director- Mr. Stephen Walters

Resolution 4: Re-election of Director- Mr. Trevor Haines

Resolution 5: Ratification of Issue of Shares to Sophisticated and Professional Investors

Voting Exclusion Statement

Resolution 6: Issue of Shares to Director- Mr Richard Tegoni in lieu of Director Remuneration

Voting Exclusion Statement :

Resolution 7: Issue of Shares to Director- Mr Stephen Walters in lieu of Director Remuneration

Voting Exclusion Statement:

Resolution 8: Issue of Shares to Director- Dr Frank Glatz in lieu of Director Remuneration

Voting Exclusion Statement:

Resolution 9: Issue of Shares to Director- Mr Trevor Haines in lieu of Director Remuneration

Voting Exclusion Statement:

Resolution 10: Issue of Shares to Managing Director- Dr Frank Glatz as short term incentive

Voting Exclusion Statement:

SPECIAL RESOLUTION

Resolution 11: Approval of 10% placement facility

Voting Exclusion Statement

PROXIES

Appointing a proxy

Undirected Proxies and Voting Restrictions

Corporate representation

VOTING EXCLUSION

ENTITLEMENT TO ATTEND AND VOTE AT THE ANNUAL GENERAL MEETING

Rekha Bhambhani

EXPLANATORY MEMORANDUM TO NOTICE OF ANNUAL GENERAL MEETING

BUSINESS

2015 ANNUAL REPORT

NON-BINDING RESOLUTION

1. Resolution 1: Adoption of Remuneration Report

1.1 Background

Where permitted, the Chairman intends to exercise all undirected proxies in favour of Resolution 1.

1.2 Voting exclusion statement

1.3 Directors’ Recommendation

ORDINARY RESOLUTIONS

2. Resolution 2: Re-election of Director- Dr. Frank Glatz

2.1 Background

2.2 Directors’ Recommendation

3. Resolution 3: Re-election of Director- Mr. Stephen Walters

3.1 Background

3.2 Directors’ Recommendation

4. Resolution 4: Re-election of Director- Mr. Trevor Haines

4.1 Background

4.2 Directors’ Recommendation

5. Resolution 5: Ratification of Issue of Shares to Professional and Sophisticated Investors

5.1 Background

5.2 ASX Listing Rule 7.4

5.3 Technical information required by ASX Listing Rule 7.5

5.4 Directors’ Recommendation

6. Resolutions 6, 7, 8 & 9: Issue of shares to M/s Richard Tegoni, Stephen Walters, Frank Glatz and Trevor Haines under Share Loan Plan in lieu of Director Reumeration.

6.1 Background

6.2 ASX Listing Rule 10.14

6.3 Technical information required by ASX Listing Rule 10.15

6.4 Related Party Requirements of Chapter 2E of the Corporations Act 2001

6.5 Voting Exclusion Statement

6.6 Director’s recommendations

7. Resolution 10: Issue of Shares to Managing Director- Dr Frank Glatz as short term incentive

7.1 Background

7.2 ASX Listing Rule 10.14

7.3 Technical information required by ASX Listing Rule 10.15

7.4 Related Party Requirements of Chapter 2E of the Corporations Act 2001

7.5 Voting Exclusion Statement

7.6 Director’s recommendations

MYECO GROUP LTD AGM Information 2015