MYECO GROUP LTD — AGM Information 2016

Nov 17, 2016

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AGM Presentation

Leading developer & manufacturer of sustainable packaging

November 2016

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Disclaimer

Forward looking statements disclaimer

This presentation contains “forward-looking statements.” Such forward-looking statements may include, without limitation:

• (i) estimates of future earnings;

• (ii) estimates of future production and sales;

• (ii) estimates of future cash costs;

• (iv) estimates of future cash flows;

• (v) statements regarding future debt repayments; and

• (vi) estimates of future capital expenditures.

Where the Company expresses or implies an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, forward looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by such forward-looking statements. Such risks include, but are not limited to increased production costs, as well as political and operational risks in the countries and states in which we operate or sell product to, and governmental regulation and judicial outcomes.

The Company does not undertake any obligation to release publicly any revisions to any “forward-looking statement” to reflect events or circumstances after the date of this presentation, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws.

All financial amounts are expressed in Australian dollars unless otherwise indicated.

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Corporate Overview

Business Overview

• SECOS develops and manufactures patented renewable resource-based bioplastic* resins and finished products for the global packaging and plastic products industries

• Uniquely positioned - a leading global supplier of both low carbon and compostable plastic products

• Core market segments

• Films & Packaging

• Waste Management Solutions

• Global manufacturing and distribution

• Formed through merger of Cardia Bioplastics and Stellar Films in April 2015

• Highly experienced Board and executive team

Capital Structure
ASX code	SES
Shares on issue	162.2mil
Share price (17th November 2016)	8 cents
Market capitalisation	$13mil
12 Monthly rolling turnover	$1.1mil
Top 20 shareholders	57.02%
Total number of shareholders (16th November 2016)	1450

• Bioplastics: sustainable bio-based and/or biodegradable plastics

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Financial Results Overview – “Like for Like”

Significant improvement in operating and trading profile:

($’000)	30/6/2016	30/6/2015	Variance
Sales Revenue	20,955	24,040	(3,085)
Gross Profit	1,429	842	+587
Gross Margin	6.8%	3.5%	+3.3%
Other Income	281	300	(19)
Expenses	(6,041)	(7,074)	+1,033
Tax Expense	(280)	-	(280)
Reported NPAT from continuing operations	(4,610)	(5,932)	+1,322

• Sales decrease due to focus on higher margin business, reflected in 94% increase in Gross Margin to 6.8%

• Margin growth is expected to continue through improvements in efficiency & scale

• Group expenses have reduced by $1M Post merger with further improvements expected

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Year Of Transition

• SECOS exits non-performing business units (Cardia Brazil & Akronn JV) now operating 3 manufacturing units in Australia, China & Malaysia

• Reduction in low margin business

• Improved manufacturing efficiency

• Merger cost savings continue (insurance, raw materials, freight & IT)

• Balance sheet strengthened

• Cash-burn & losses reduced

• 58% increase in dog waste bag capacity

• R&D for high speed composting product near completion

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Operating Cash Flows

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Receipts from customers Net operating cash flows
6,000
5,000
4,000
3,000
2,000
1,000
-
Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16
-1,000
-2,000
$'000
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• June higher margin sales lead to lower cash receipts

• September quarter receipts decreased due to planned downtime in August Nanjing expansion

• Strong sales in September expected to improve cash receipts in next quarter

• Review of all activities has led to a reduction in operational costs

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Global Market Opportunity

SECOS is strategically positioned to benefit from the trend to sustainable packaging

• Global bioplastics market is forecast to grow by >280% from 2016 to 2019

Bioplastics packaging is less than 1% of the global plastics packaging market with exponential growth potential, driven by:

Global Bioplastics Growth

• Increasing government regulation of environment and waste management

• Increasing organic waste recycling

• Increased cost of landfills

• Increased consumer demand for sustainable products

• Global brands transitioning to bioplastics to meet social demand

Source: European Bioplastics/ IfBB Industry Report 2015

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The SECOS Advantage

• SECOS products

• use less petroleum and contain up to 50% renewable material

• have up to a 70% lower carbon footprint than conventional petroleum based polyethylene

• meet international standards for compostability and biodegradability

• are fully recyclable via the normal plastic waste stream

• are printable, colourable, and can be processed efficiently on standard plastics processing equipment

• are heavy metal free and food-safe compliant

• Product positioning

• more environmentally friendly

• price competitive with traditional plastics

• Quality approved for top tier packaging companies – GMO Free, Certified Compostable, Food Handling approved, ISO9001, independent life cycle assessment

• SECOS products do not compromise on performance, softness or strength

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Product Mix

• BioHybrid[TM] resin sales will increase

• as traditional packaging moves to become more sustainable

Sales 15/16

• Waste management growth expected in 2017 across Australia & New Zealand

• Ongoing transition to higher margin products

• Hygiene will benefit from sustainable

• & breathable product range expansion

• Growth in Films & Packaging will benefit from commercialisation of ongoing R&D projects

Garbage Bag Liners & Dog Bags

Films & Packaging

Hygiene Resin

Trading

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==> picture [104 x 104] intentionally omitted <==

Significant Demand for Dog Waste Bags

Recent Developments

• Secured new business with a large chain of Pet Stores in Canada & the USA

Gross Biohybrid Dog Bag Sales ‘000 FY 15/16 (Actual) & FY16/17 (Forecast) $900 $800 $700 $600 $500 $400 $300 $200 $100 $0

• Additional production capacity at Nanjing plant to meet the increased demand for Biohybrid[TM] and Compostable dog waste bags

• August 2016 expanded capacity by 58% which is now fully utilised

• Further 70% capacity increase by March 2017 to meet additional demand from the US

• Outlook for 2017 dog bag sales expected to exceed $2.4M (+400% on 2016 sales)

• Additional bag lines required to exceed sales of $800k per quarter

Dog bag sales impacted by installation of new assets in Q4 with growth expected to continue in 2017

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Growth Strategy

• Expand dog waste bag sales in the Japanese, Australian and US markets

• Expand compostable bag sales (in USA, Australia & Malaysia) to governments, councils and retail as part of waste diversion program rollouts

• Focus on the group’s top 20 major sales opportunities with the highest probability of conversion within the next six to twelve months

• Improve the sales strike rate by focusing on commercially ready products

• Increase sales of hygiene films by leveraging sustainable technology

• Expand Malaysian production to allow production of wide width compostable packaging films

• Establish bag making & resin manufacturing at Malaysian plant to expand capacity

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Strong Sales Growth Pipeline

Short Term Sales Pipeline - Potential additional $7m p.a.

Large Pet Store Chain	USA	Biohybrid Dog Waste Bags
Global Packaging Convertor	USA	Compostable Delivery Air Cushions
Packaging Convertor	USA	Compostable T-Shirt Bags & Boutique Carry Bags
Large Pet Sheet Manufacturer	Japan	Pet Sheet Pads
High Speed Composting	Australia	Bags For Local Government, Business & Public Venues

Medium Term Sales Pipeline - Potential additional $12m p.a.

Blow Moulding Business	UK	Biohybrid Resin For Cosmetic Bottles
Local Governmet	USA	Compostable Bin Liners
Large Regional Hygiene Manufacturer	Thailand	Baby Diaper & Sanitary Napkin Films
Pet Sheet Manufacturer	USA	Biohybrid Pet Sheets
Wholesale/Distributor	USA	Compostable Film & Resin for Coffee Bags
New Age Breathable Film	Australia	Biohybrid Breathable Film

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Leadership Team

Mr Richard Tegoni Executive Chairman	Background in Finance, Banking, Sales & Marketing. MBA (AGSM), Diploma in Financial Markets (SIA) Appointed Executive Chairman September 2014. Appointed Non-Executive Director December 2012 and Non-Executive Chairman October 2013.
Mr Stephen Walters Group Managing Director	More than 20 years experience in plastics & packaging in General Management, Commercial & Sales roles. B.Bus (Marketing) Appointed as Group Managing Director in April 2015.
Mr Donald Haller Jr. Non-executive Director	Major shareholder in EarthVision Bio Solutions, Inc. , a key distributor of SECOS products in the USA. Background in accounting and management consulting as a Partner with PwC and Ernst & Young. Former CFO of a top 15 US insurance company.
Mr Trevor Haines Executive Director – Corporate Development	More than 20 years experience in senior accounting & group controlling management roles in various divisions of ICI Australia, AVC & Orica Australia. B.Com, FCPA. Appointed as Chief Financial Officer in April 2015.
Mr Edmond Tern CFO	More than 25 years manufacturing accounting experience across a number of Australian and multinational businesses. B.Ec and Bus. Admin., CPA Appointed as Chief Financial Officer in August 2016.

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Investment Summary

• Growing rapidly in the bioplastics and sustainable packaging market

• Expanding sales driven by unique environmentally friendly products

• Strong IP and patent position

• Sales strategy focused on high profile brand owners, retailers, packaging companies and local government

• Joint product development with leading global consumer goods and packaging companies

• Cost-effective manufacturing in Nanjing, Kuala Lumpur and Melbourne, with low cost expansion options and global distribution

• Fully integrated business supplying compostable and Biohybrid™ resins and films and waste management products ensuring product quality and cost competiveness.

• Highly focused management team with internationally recognised industry experts

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Global Manufacturing and Sales Capability

SECOS has the ability to service customers globally from three manufacturing hubs with a global network of sales offices and distribution partners

Annual Capacity of 7,200MT of resin, 270 million bags & 1,500MT of film

9,500MT pa of film capacity

Resin Production Finished Goods Sales Offices Distributors

6,000MT pa of film capacity

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