MYECO GROUP LTD — Interim / Quarterly Report 2012

Apr 29, 2012

ACN 064 755 237

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TO : COMPANY ANNOUNCEMENTS OFFICE ASX LIMITED

DATE : 30 April 2012

QUARTERLY REPORT – 31 March 2012

The Cardia Bioplastics Limited (“Cardia or Company”) Quarterly Report for the March Quarter 2012 consists of the Activities Report & Quarterly Cash Flow (Appendix 4C)

Review of Operations for March 2012 Quarter:

Corporate:

Cash at hand:

The consolidated cash position of the group at 31 March 2012 was $1,941,192 (December 2011 $1,493,063)

Capital Raising- Renounceable Rights Issue

During the quarter, the Company raised approximately $1.55m (before costs) from a renounceable rights issue offer to its shareholders from the maximum raising amount of $2.35m on full subscription.

Exercise of Options

During the quarter, an amount of $3,707 was raised via exercise of June 2012 Cardia Options by the option holders.247,101 Ordinary Shares were issued on exercise of these options.

Working Capital

Net operating cash outflow during the quarter of $892,199 (December 2011 $1,008,543) was $116K lower than the December 2011 quarter.

Collection from debtors during the quarter was within the payment terms negotiated.On the expenditure side, the Company continued to maintain finished goods ($550K) and critical raw materials stock of ($700K).Cash movements associated with all other operating activities were broadly consistent with the December 2011 quarter. The Company’s burn rate is tracking at around $4m p.a on a current annualised basis.

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In the March 2012 quarter, the company raised $1.55m via a renounceable rights issue to its shareholders. The purpose of the Rights Issue Offer was to provide funding (based on the current cash burn) for working capital purposes up to the end of the September 2012 quarter, assuming full subscription of $2.35m.

The Shortfall of approximately $800,000 can be placed within the ASX and Corporations Act requirements and the Company has until 13 June 2012 to do so. Your Board is actively seeking to place this shortfall.

Given the short fall from the issue, the Company has now put in place a cost restructure program to reduce the current cash burn as the company pursues sales growth.

The Company also expects cash flow from the movement of current inventories and debtors of approximately $1.3m to contribute positively to working capital.

The result of the above strategies will reduce the cash burn and is expected to provide sufficient funding to meet the working capital requirements of the company for at least next two quarters. Cost restructuring measures are expected to take effect from May 2012 with the program fully implemented by the end of June 2012 quarter.

Business Operations

– Sales March 2012 quarter.

Sales to 31 March 2012 are tracking in line with the sales target of $5m for the year to 30 June 2012.

• Sales in the March 2012 quarter of $1,114,884 represented a 182% increase compared to the same quarter for 2011 and an increase of 37.89% on December 2011 quarter sales of $808,520 confirming sales continued to grow.

• Sales year to date to March 2012 are $3,338,837, (a 179% increase from sales of $1,195,263 in the nine months to March 2011).

• Whilst sales were expected to exceed the annualised target sales of $5m on a run rate based on March 2012 quarter sales, take up of Cardia products in new market sectors did not occur at the pace anticipated and therefore the target sales estimate of $5m for the year to 30 June 2012 remains unchanged.

• Sales for the quarter included sales of kitchen waste bags in China supplied under the trial contracts with four city districts of Shanghai Pudong, Hangzhou West Lake, Yuhang and Nanjing City and also sales to the American and Australian market segments.

Sales contracts delivered from development projects during the quarter.

Hygiene Bio-Products: Annualised US$500,000 Contract for American Diaper Products Company.

Cardia has entered into an annual supply contract for hygiene bio-films worth at least US$500,000 p.a. with a leading American diaper products company.

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Cardia is also engaged with several international and national hygiene brand owners focused on delivering to the market hygiene bio-products and bio-packaging with an environmental benefit and lower carbon footprint along with other benefits (such as soft touch, matt finish & recyclability).These next generation Bio-hygiene products include hygiene films and packaging for diaper, wipes and feminine hygiene applications.

The “Global Industry Analysts” estimated the global disposable diaper market to be worth $26.6 billion per year in 2010.[1]

Cardia has invested considerable capital over several years in the development of its Bio-Hygiene portfolio and is now confident (as endorsed by this contract) that the Cardia Bio-Hygiene offering has the potential to contribute significantly to the potential revenue growth of the company.

Current Sales Contract- under negotiations

Cardia is currently in the final stages of negotiating a commercial supply contract with a major global packaging company. Cardia has been developing several packaging applications with this company over several years. One of these packaging applications (the most advanced) has now successfully completed in-market trials leading to commercial negotiations for an annualised supply contract. This contract is expected to be executed shortly (once all terms have been finalised). On execution, the market will be informed accordingly.

Product Launches:

1. New recyclable food contact bio-packaging resins compliant with both U.S. FDA standards and EU regulations .

These new Biohybrid™resins now provide Cardia with an expanded market opportunity into food packaging applications that use mono- and multi-layer films, injection and blow moulding products that include every day food packaging items such as bags, food packaging films, containers, closures, tubs and bottles to name a few.

2. World’s first Bio-container for nutritional supplements and cosmetics market Following on from achieving compliance to FDA and European food contact for its fully recyclable Biohybrid™resins Cardia has launched the world’s first food contact compliant Bio-container for the global nutritional supplement market and cosmetics industries.

A global marketing strategy to launch the Bio-Containers commenced in the quarter.

This follows extensive development work with both a major nutritional supplement company and a US manufacturer of plastic containers who are looking to launch the world’s first Cardia Biocontainer into the USA market in 2012.

A report by “Research and Markets” on the US Nutritional Supplement industry estimated this industry to be worth US$22.5 billion per annum.[2] Cardia estimates that the packaging (including containers) for this industry alone represents a multi-million dollar business opportunity.

1 "Disposable Diaper Market To Reach $26.6 Billion By 2010", The Free Library and StrategyR.com. 2 Research and Markets is an internet based market research company. A market research report on the Nutrition Supplement Business was released in November 2011 by Research & Markets .com

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Global development projects:

Cardia remained active with its portfolio of development projects in the March 2012 quarter, continuing to work with several international and national brand owners and packaging companies with the objective of changing over their conventional packaging to Cardia’s Bio-packaging that contains less oil and a lower carbon footprint. The individual projects are at various stages of development, ranging from initial production trials to market validation and moving towards commercial launch.

Manufacturing

CBMM, Kuala Lumpur, Malaysia

Cardia Bioplastics Manufacturing Malaysia (CBMM) Joint Venture (“JV”) has completed the installation of its film, printing and bag making equipment (“plant”) in the December 2011quarter.

Principal Business and Investments

No funds were applied to any of the Company’s other business or investments during the quarter.

The monetary value of Cardia’s investment portfolio is not considered to be material (less than 5% of the company’s net assets) as at 31 March 2012. The Company’s five business divisions remain: environmental technologies, medical and agricultural biotechnologies, mineral exploration and natural pharmaceuticals.

Notwithstanding this,the Cardia Board is currently focused on its bioplastics business and will continue to review any other opportunities which can enhance value to its shareholders’ investments in the Company.

PAT VOLPE Chairman

About Cardia Bioplastics

Cardia Bioplastics Limited (“Cardia”) develops, manufactures and markets sustainable resins and finished products derived from renewable resources for the global packaging and plastic products industries. The company holds a strong provisional patent portfolio to drive its mission to be an international supplier of technically advanced sustainable resins made from renewable resources. Cardia has its Headquarters and Global Applications Development Centre in Melbourne, Australia. The Product Development Centre and manufacturing plant is in Nanjing, China. Cardia offices are located in Europe, Malaysia, China and the Americas. These offices complement a network of leading distributors across Australia, the Americas, Asia and Europe. The company’s growth is fuelled by the global trend towards sustainable packaging. Cardia gives customers the choice of using sustainable Cardia Biohybrid™resins or Compostable resins for their packaging or plastic product applications. As a service to customers, the Cardia Bioproducts’ team offers design, development and production of ready to use finished goods, such as film and bag products. The company’s materials are suitable for film, injection moulding, blow moulding, foam, extrusion and coating applications.

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Appendix 4C

Quarterly report for entities admitted on the basis of commitments

Introduced 31/3/2000. Amended 30/9/2001

Name of entity Cardia Bioplastics Ltd ABN Quarter ended (“current quarter”) 89 064 755 237 31 March 2012

Consolidated statement of cash flows

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Current quarter Year to date (9 months)
Cash flows related to operating activities $A’000 $A’000
1.1 Receipts from customers 685 2,736
1.2 Payments for (a) staff costs (511) (1,390)
-
(b) advertising and marketing (24)
(c) research and development (215) (679)
(d) leased assets (14) (162)
(e) other working capital (849) (4,362)
1.3 Dividends received - -
1.4 Interest and other items of a similar nature received 4 41
1.5 Interest and other costs of finance paid - -
1.6 Income taxes paid - -
1.7 Other (provide details if material) 8 362
Net operating cash flows (892) (3,478)
1.8 Net operating cash flows (carried forward)
Cash flows related to investing activities
1.9 Payment for acquisition of:
- -
(a)businesses (item 5)
- -
(b) equity investments
- -
(c) intellectual property
(d) physical non-current
assets - (78)
(e) other non-current - -
assets
1.10 Proceeds from disposal of:
- -
(a) businesses (item 5)
- -
(b) equity investments
- -
(c) intellectual property
- -
(d) physical non-current
assets
(e) other non-current - -
assets
1.11 Loans to other entities - -
1.12 Loans repaid by other entities - -
1.13 Other investing activities - -
Net investing cash flows - (78)
1.14 Total operating and investing cash flows (892) (3,556)
Cash flows related to financing activities
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1.15 Proceeds from issues of shares, options, etc. 1.16 Proceeds from sale of forfeited shares 1.17 Proceeds from borrowings 1.18 Repayment of borrowings 1.19 Dividends paid 1.20 Other (provide details if material) Net financing cash flows	1,352 - - - - -	1,352 - - - - -
	1,352	1,352
Net increase (decrease) in cash held 1.21 Cash at beginning of quarter/year to date 1.22 Exchange rate adjustments to item 1.21 1.23 Cash at end ofquarter	460 1,493 (12)	(2,204) 4,155 (10)
	1,941	1,941

Note:

Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities

1.24 1.25		Aggregate amount of payments to the parties included in item 1.2 Aggregate amount of loans to the parties included in item 1.11	Current quarter $A'000
			180
			-
1.26		Explanation necessaryfor an understandingof the transactions
		Item 1.24 Mr P Volpe was paid a salary of $69,488 inclusive of superannuation for the quarter. Mr F Glatz was paid a salary of $80,726 inclusive of superannuation for the quarter Directors’ fees (inclusive of superannuation) totalling $28,613 were paid to Mr P Volpe - $14,988 and , Mr John Scheirs-$13,625 During the Quarter, amount of $1,395 (Ex GST) was paid to Excelpas Pty Ltd, a company controlled by Dr.John Scheirs for providing consultancy services to the Company.

Non-cash financing and investing activities

• 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows

• 2.2 Details of outlays made by other entities to establish or increase their share in businesses in which the reporting entity has an interest

n/a

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Financing facilities available

Add notes as necessary for an understanding of the position. (See AASB 1026 paragraph 12.2).

3.1 Loan facilities 3.2 Credit standby arrangements	Amount available $A’000	Amount used $A’000
	n/a	n/a
	n/a	n/a

Reconciliation of cash

Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.	Current quarter $A’000	Previous quarter $A’000
4.1 Cash on hand and at bank * 4.2 Deposits at call 4.3 Bank overdraft 4.4 Term Deposits 4.5 Deposits against Letter of Credits	1,941	1,493
		-
		-
	-	-
Total: cash at end of quarter(item 1.23)	1,941	1,493

Acquisitions and disposals of business entities

5.1 Name of entity 5.2 Place of incorporation or registration 5.3 Consideration for acquisition or disposal 5.4 Total net assets 5.5 Nature of business	Acquisitions (Item 1.9(a))	Disposals (Item 1.10(a))
	-	-
	-	-
	-	-
	-	-
	-	-

Compliance statement

• 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act (except to the extent that information is not required because of note 2) or other standards acceptable to ASX.

• 2 This statement does give a true and fair view of the matters disclosed.

Sign here: Sd-....................................................... Date: 30 April 2012. (Company Secretary) Print name: Rekha Bhambhani

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Notes

1. The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.

2. The definitions in, and provisions of, AASB 1026: Statement of Cash Flows apply to this report except for the paragraphs of the Standard set out below.

3. 6.2 - reconciliation of cash flows arising from operating activities to operating profit or loss

4. 9.2 - itemised disclosure relating to acquisitions  9.4 - itemised disclosure relating to disposals  12.1(a) - policy for classification of cash items  12.3 - disclosure of restrictions on use of cash  13.1 - comparative information

5. Accounting Standards. ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

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