MYECO GROUP LTD — AGM Information 2020

Nov 24, 2020

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Annual General Meeting Presentation 25 November 2020

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(ASX: SES)
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SECOS Group Summary

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Revenue on the rise:

• Q1FY21 start $5.8 million + 26% over previous quarter & 35% vs same period last year

• Q2FY21 is forecasted to lift to $7.3-$7.8 million

• 1HFY21 expected revenue of $13.1 - $13.6 million (subject to shipping schedules)

• 2HFY21 expect sales growth to continue

Asset Expansion:

• China scale up for supply of additional resin and bag orders is on track to meet forecast volume output

• Malaysian compostable bio-resin business seeing increasing orders and utilization rates

• SECOS has ordered additional compounding capacity in Malaysia, given growth in resin demand this will double Malaysia bio-resin capacity

• Evaluation commenced concerning additional bioresin, film & bag expansion in Malaysia

Margins:

• Bio-resin margins lifting with additional volume

• Deliveries of Jewett-Cameron (JCC) compostable pet waste bags are weighted to 2HFY21 and expected to further assist margins

Customers

• Start up of JCC business during Q1FY21

• America’s bioresin sales run rate increases over previous quarters

• Council volumes strong with – addition of Melville, retention of Penrith, and level of new opportunities

• MyEcoBag™site launched with Woolworths (WOW) SKU’s, sales exceeding WOW set targets

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2

Geographic Spread, Customers & Assets

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Product Sales mix

• Increase in Bio-resin sales push percent of total compostable sales to nearly 60% of total sales

Geographic sales mix

• Bioresin & compostable bags plus start up of JCC business during Q1FY21, but bulk of sales in 2HFY21

• Further growth expected in Compostable bag sales

• Traditional sales improving marginally over low June and December quarters but anticipated to be stronger in 2HFY21

• Biopolymer resin sales increasing

• YTD sales mix change increases the proportion of compostable product sales into the Americas, both compostable bioresin & compostable bags

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Geographic Sales Mix FY 20

Geographic Sales Mix: YTD Oct. 20

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SEA Australasia
Nth Asia Americas
Sub-continent Africa
SEA Australasia Nth Asia
Other
Americas Sub-continent Africa
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3

Replacing Single Use Plastic

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80 million tones of
plastic produced
every year for use in
single use plastic
applications
500 – 1 trillion
plastic bags
produced each
year; equal to
20 million
tones of plastic
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Of the 80 million[1] tones of plastic produced each year for single use flexible packaging, 25 % or 500 billion -> 1 trillion[2] single use plastic bags are produced each year. On average each bag is utilized for 12 minutes[2] . Assuming an average of 20 grams of plastic is utilized this suggests approximately 20 million tons of oil-based plastic is used to produce these bags.

Consumers choice is to:

• Reduce

• Reuse

• Recycle – only 1 in 200[2] plastic bags are recycled!

• Oxy-biodegradable being phased out and banned in Europe

• Compostable

• Paper: to replace these plastic bags with paper (assuming 20 grams a bag) would require 240 – 480 million trees[3] .

=> Compostable Biopolymers are a natural, reliable substitute

1. Ellen Macarther Foundation

2. https://conservingnow.com/plastic-bag-consumption-facts

3. www.worldatlas.com › articles-how many trees to make 1 mt of paper

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Retail Bag Market Evolution

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Courier Bags:
Compostable
PE & rPE supply
offerings
Bin Liner & trash bags: Compostable & Plant based
PE & rPE supply offerings
PE Bag Market :
• Pet Waste Bags
• Bin Liners
Pet Waste bags: Compostable & Plant
PE & rPE & EPI based based offerings (ie • Courier Bags
supply Biohybrid) Others we may
cater to with resin
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• Pet Waste Bag market is at an early stage of adoption in terms of Compostable dog bags

• Many US & UK brands are not integrated into compostables production

• SECOS supplies to other brands under their names or our own brand under the name MyEcoBag™, MyEcoWorld™, or Cardia™for converters

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Compostable Film Market

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Blown Lines
Generally
narrower films &
used for
bags/pouches.
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Cast Lines : wider
films with greater
running speeds vs
blown lines
=> scale.
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• Trials on cast film lines continue & evaluating further resin formulation options

• SECOS intends to use new resin formulations and its cast film assets to enter new markets, increase its margins, and provide significant scale advantages

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6

Outlook

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• Continue to target growing consumer interest in alternatives to conventional plastic products in consumer markets which are quickly evolving but starting from a very low base

• Increasing Council tender business predicted via Food Organics and Garden Organic initiatives

• MyEcoBag™—expand to other Australian retailers and other geographic areas

• Near term focus on first sales of Courier Bags for brand owners and MyEcoBag™Brand

• Capture future resin grade and film opportunities for new application development

• Continue investment in developing compost cast film grade for production utilizing cast lines

• Align manufacturing capacity with anticipated demand, i.e. we can scale up to meet what we see as a market opportunity.

SECOS is Committed to replacing Single Use plastics ; and in so doing reducing environment contamination as well as marine plastic waste.

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7

DISCLAIMER

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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;

• (iii) 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. The Company trades globally using over four different currencies which may materially impact the consolidation of the group’s accounts and may impact the outcome of future events or results expressed or implied in this presentation.

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SECOS Group (ASX: SES)
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