MYECO GROUP LTD — Interim / Quarterly Report 2015

Apr 28, 2015

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TO: COMPANY ANNOUNCEMENTS OFFICE ASX LIMITED DATE: 29 April 2015

March 2015 Quarterly Report

The Board of SECOS Group Limited (ASX: SES) presents its Quarterly Activities Report and Appendix 4C Quarterly Cash Flow Statement for the consolidated entity consisting of SECOS Group Limited (“SECOS” or “the Company”) and the entities it controlled (“the Group”) for the quarter ended 31 March 2015.

Overview

Cardia Bioplastics and Stellar Films Group merged to SECOS Group to create a leader in sustainable packaging. The merger was approved by Cardia Shareholders at Cardia’s Extra-ordinary General Meeting on 7 April 2015 and was completed on 21 April 2015.

Appendix 4C attached to this report for the March 2015 quarter reflects numbers of pre-merged entity only. Post-merger cash flows will be included from the June 2015 Quarter.

In addition to delivering the SECOS Group merger, Cardia Bioplastics progressed with implementing its business growth strategy in its films and packaging, waste management products and carrier bag target markets during the March 2015 quarter. In addition to delivering sales of $1,54 million and growing the business by 31.2% compared to the March 2014 quarter, Cardia secured additional sales contracts and orders that will underpin the growth of its business.

Highlights of the March 2015 quarter

• Consolidated cash position was $0.91 million as at 31 March 2015.

• Net Operating Cash (Out) Flow (“NOCF”) for the March 2015 quarter was $0.69 million compared to $0.32 million for the December 2014 quarter.

• Cardia Bioplastics and Stellar Films Group merged to SECOS Group to create a leader in sustainable packaging.

• Cardia Bioplastics Limited changed its name to SECOS Group Limited effective 8 April 2015.

• Sales Revenues for the March 2015 quarter were $1.54 million, an increase of 31.2% compared to sales revenues for the March 2014 quarter ($1.17 million), and at same level as for the December 2014 quarter ($1.53 million).

• Under its two-year supply contract with Transpacific Cleanaway, Cardia manufactured and delivered 4.9 million compostable kitchen tidy bags and 31,000 kitchen tidy bins for the rollout of an organics kerbside collection program in Albury and Indigo shire. Production has commenced for additional 4.4 million compostable kitchen tidy bags and 29,000 kitchen tidy bins for the rollout of an organics kerbside collection program in Wodonga and Corowa shire.

• Cardia delivered $300 thousand sales with its Biohybrid™films to its USA market customer during the quarter.

• Cardia and Stellar Films launched sustainable personal care films made from Cardia Biohybrid™technology. Product validation has commenced with first customers.

• Cardia delivered $220 thousand sales with its sustainable dog waste bags to US and European Retailers, received $250 thousand follow up orders and expects this business to grow.

• Cardia delivered initial $70 thousand sales with its Biohybrid™Bag-in-Bag packaging films to the European market.

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Cash at Bank on 31 March 2015

• Consolidated cash position was $0.91 million as at 31 March 2015.

• Net Operating Cash (Out) Flow for the March 2015 quarter was $0.69 million compared to $0.32 million for the December 2014 quarter.

The Group’s collections from sales [Item 1.1 of Appendix-4C] were largely as per the payment terms negotiated.

Cash outflows on other working capital [Item 1.2(e) of Appendix-4C] were commensurate with sales, manufacturing, trading and other operational activities during the quarter.

Corporate Matters

• 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.

• 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

• On 21 April 2015, merger between SECOS Group Limited and Stellar Films Group was completed under the Share Sale Deed dated 26 February 2015.

The Company has issued an aggregate of 51,972,604 ordinary shares in the Company (on a post-consolidation basis) in consideration for all of the Sellers’ shares in Stellar Films Group Pty Ltd and Stellar Films Malaysia Sdn Bhn. The issued shares are subject to a voluntary escrow for a period of 12 months from completion.

• On Completion of 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.

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

Cardia Bioplastics and Stellar Films Group merger

Cardia Bioplastics and Stellar Films Group merged to SECOS Group to create a leader in sustainable packaging. The merger rationale is summarized below:

• Market access and reach in absorbent hygiene products market - $72 billion industry growing 5.5% per annum, and emerging, high growth Bioplastics industry with focus on packaging, waste management products and carrier bags target market segments.

• Unique global product offering to absorbent hygiene products market – environmentally preferred, made from renewable resources, lower carbon foot print, heavy metal free, silicone coated 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.

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• Stellar’s underutilised production assets. Production and supply chain efficiency. Operational savings. 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 the successful implementation of growth strategy in hygiene films and bioplastics products.

Revenues and Sales in March 2015 quarter

• Sales Revenues for the March 2015 quarter were $1.54 million, an increase of 31.2% compared to sales revenues for the March 2014 quarter ($1.17 million), and at same level as for the December 2014 quarter ($1.53 million).

• Revenues were made up of sales from Cardia Bioplastics resins and finished products to its global films & packaging, waste management and carrier bag business segments. No sales were generated in the wholesale trading business during the quarter.

General review of sales and sales developments by sales segment

Films & Packaging

• Cardia Bioplastics and Stellar Films launched sustainable personal care films made from Cardia Biohybrid™technology at Outlook Asia 2014, the world’s premier non-woven personal care products conference in Singapore. The Biohybrid™ film produced on Stellar Films proprietary cast film process exhibits a high performance property profile. It is differentiated through its unique soft touch and warm feel that is ideal for personal care product applications like baby nappies, feminine hygiene and adult incontinence products.

• The Biohybrid™film range is an environmentally friendly extension of Stellar’s product range of high quality cast films for the personal care, hygiene and medical product industries. The Biohybrid™films will also be silicone coated at Stellar’s Akronn joint venture and offered as a unique, renewable resource based release liner to the industry.

• The new Biohybrid™hygiene product films and release liners are in line with the absorbent products industry’s ‘sustainable growth requires environmental sustainability’ initiative. The Biohybrid™products will be aimed at capturing a share of the $72 billion absorbent products industry growing 5.5% a year.[1]

• Cardia delivered $300 thousand sales with its Biohybrid™films to its USA market customer during the March 2015 quarter.

• Cardia and Stellar Films launched sustainable personal care films made from Cardia Biohybrid™technology with their key customers. Product validation of these films has commenced with first customers in their production processes.

• Following four years of rigorous quality and performance testing, a leading German Consumer Goods Company chose Cardia Biohybrid™technology for their product packaging. Cardia Biohybrid™technology was validated in a stringent approval process for high performance rigid packaging applications including – quality, performance, price, environmental claims, intellectual property position and freedom to operate. The Cardia Biohybrid™technology had to satisfy full food safety compliance as well as deliver superior packaging performance through the product life cycle. Cardia delivered initial resin sales to the German Consumer Goods Company which will go ahead with its market launch.

• Cardia Bioplastics developed innovative Biohybrid™films technology for bag-in-bag water packaging and delivered initial sales of $70 thousand for its bag-in-bag packaging films to a large European water distribution business. This major water distribution company has committed to installing several bag-in-bag water packaging production lines and expects that their Biohybrid™film demand will significantly grow.

• Following on from its successful market launch of its new PakNatural[®] Biodegradable Cushion Bags, Sealed Air, the leading global protective packaging manufacturer, placed first container orders of Cardia Compostable film to ramp up

1 Edana Outlook Asia 2014 Conference, P&G presentation

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supply to its customers. Securing product supply to such a major company like Sealed Air provides Cardia with the opportunity to grow along with this very large organisation.

Waste Management Products

• Cardia Bioplastics has established itself as a provider of organic waste management products and solutions to the government and council sector, commercial and industrial, as well as the retail market. Diversion of organic waste from landfill to composting is promoting the use of certified compostable waste bags. Reducing the carbon footprint of waste management products encourages the use of Biohybrid™technology.

• Under its two-year supply contract with Transpacific Cleanaway, Cardia manufactured and delivered 4.9 million compostable kitchen tidy bags and 31,000 kitchen tidy bins for the rollout of an organics kerbside collection program in Albury and Indigo shire. Production has commenced for additional 4.4 million compostable kitchen tidy bags and 29,000 kitchen tidy bins for the rollout of an organics kerbside collection program in Wodonga and Corowa shire.

• Globally diverting organic waste from landfills represents a large business opportunity for Cardia. Landfills are filling up, landfilling costs are constantly increasing, and organic material can be utilised to create quality compost. Diversion programs like the Cleanaway one in Albury, Wodonga and the major towns of Corowa and Indigo make both good environmental and business sense. Cardia offers certified compostable products through its organic waste management business, which is involved in a multitude of organic waste diversion programs and already delivers sales in China, Australia, New Zealand, Malaysia, Canada, USA, Brazil and the UK.

• Cardia delivered $220 thousand sales with its sustainable dog waste bags to US and European Retailers, received $250 thousand follow up orders. The dog waste bags are being produced in Cardia’s expanded film extrusion and bag making operations. These initial orders have been placed by the major US and European Retailers to validate Cardia’s manufacturing capability and capacity to supply large quantity of its proprietary Biohybrid™dog waste bags. If Cardia passes this validation process and a comprehensive supply chain and quality assurance review, these retailers are expected to place regular orders and fully utilise Cardia’s current small bag making capacity of over 250 million bags per year.

Carrier Bags

• Cardia partnered up with Malaysia’s BiotechCorp and set up their BioShoppe as distributor of both Cardia Compostable and Biohybrid™products to the Malaysian Government and market. BiotechCorp placed initial orders for Cardia products and will market them through its BioShoppe programme. BioShoppe is a key approach taken by BiotechCorp to enhance market access for local biotech products. BioShoppe’s goal is to put together high quality products produced by BioNexus companies and market them under strategic marketing programmes. Cardia Bioplastics is the only bioplastics company registered with the Malaysian BiotechCorp and bestowed the BioNexus Status. The Cardia Biohybrid™and Compostable bags will be listed in the MyHijau Green Directory as environmentally preferred products after undergoing extensive product validation.

Wholesale materials trading business

• No sales were generated in the wholesale trading business during the March 2015 quarter.

Manufacturing and Technology Summary

• Cardia operated its resin production, film extrusion and bag making at its new purpose built factory in Nanjing, China during the March 2015 quarter. 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.

• In line with Cardia’s business strategy to establish a finished products division with own dedicated resources and manufacturing capability, Cardia’s China film and bag production was doubled in capacity to over 250 million Biohybrid™ and Compostable bags per year, to meet further increased orders from major USA and European retailers for organic

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waste management bags. With increasing number of Councils around the globe using Cardia compostable waste management products the new factory has been running to full capacity from the start.

• Cardia secured patent protection for its Cardia Compostable and Biohybrid™resin and finished products from the Australian Patent and Trademark Office during the March 2015 Quarter. Three new patents were granted for Cardia’s unique and innovative bioplastics resin formulations and production processes. These new patents expand Cardia Bioplastics growing intellectual property portfolio of 11 patent families, with 22 patents so far granted in USA, Australia, China, Japan, New Zealand and South Africa. The patents protect the composition formulation and manufacturing process invented by Cardia’s R&D team.

• The continual expansion of Cardia’s patent portfolio validates Cardia’s technical capabilities and unique formulation. With rapid global growth of bioplastics use in diverse product applications, Cardia’s patent portfolio capitalizes on the demand of leading brand owners where strong intellectual property position is a key requirement.

Appendix 4C follows.

Richard Tegoni Chairman

Please direct any enquires to

Richard Tegoni Chairman M: +61 411 110 901 E: r.tegoni@cardiabioplastics.com

About SECOS Group

SECOS Group Limited (ASX CODE: SES) is a leading player in sustainable packaging and was formed through the merger of Cardia Bioplastics and Stellar Films Group in April 2015. It develops, manufactures and markets its proprietary high quality cast films and patented renewable resource-based materials and finished products derived from its proprietary Cardia technology for the global packaging and plastic products industries. The company holds a strong patent portfolio and its growth is fuelled by the global trend towards sustainable packaging. Established in Australia in 2002, the company Headquarters and Global Application Development Centre is in Melbourne, Australia. Cardia Bioplastics’ Product Development Centre and manufacturing plant for resins and finished products is in Nanjing, China. Stellar Films manufacturing plants for high quality cast films are in Melbourne, Australia and Kuala Lumpur, Malaysia. Its Akronn joint venture production plant for silicone coated products is in Kuala Lumpur, Malaysia. Further sales offices are in Australia, Malaysia, China, USA, Brazil and a network of leading distributors across the Americas, Asia and Europe. Visit www.cardiabioplastics.com and www.stellarfilmsgroup.com

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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

SECOS Group Limited

ABN 89 064 755 237

Quarter ended (“current quarter”) 31 March 2015

Consolidated statement of cash flows

Consolidated statement of cash flows
Cash flows related to operating activities 1.1 Receipts from customers 1.2 Payments for (a) staff costs (b) advertising and marketing (c) research and development (d) leased assets (e) other working capital 1.3 Dividends received 1.4 Interest and other items of a similar nature received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Other (provide details if material) Net operating cash flows	Current quarter $A’000	Year to date (9 months) $A’000
	1,193 (526) (21) (99) (14) (1,120) - 4 - - (105)	6,082 (1,506) (82) (349) (175) (5,980) - 20 - - (257)
	(688)	(2,247)
1.8 Net operating cash flows (carried forward)	(688)	(2,247)
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 (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 1.14 Total operating and investing cash flows	- - - (66) - - - - - (393) 305 -	- - - (552) - - - - - (393) 305 -
	(154)	(640)
	(842)	(2,887)
Cash flows related to financing activities 1.15 Proceeds from issues of shares, options, etc. 1.16 Proceeds from sale of forfeited shares	(64) -	987 -

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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	- - - -	23 (2) - -
	(64)	1,008
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	(906) 1,797 20	(1,879) 2,698 92
	911	911

Notes:

Note to 1.7

The amount of $105K are acquisition- related costs incurred in relation to merger with Stellar Films Group.

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
			$118
			-
1.26		Explanation necessaryfor an understandingof the transactions
		Item 1.24 Dr F Glatz was paid a salary of $54,350 inclusive of superannuation for the quarter Mr Chen Yi was paid a salary of $24,323 inclusive of society insurance premium for the quarter. Directors’ fees totalling $22,000 (Ex GST) were paid during the quarter as detailed below:  COB Pty Ltd (a company controlled by Mr. Richard Tegoni)- $10,000 (Ex GST)  Bendel Partners Pty Ltd (a company controlled by Mr. Steve Bendel)-$6,000 (Ex GST)  GM Legal & Corporate Advisory (a company controlled by Mr. Gideon Meltzer-$6,000 (Ex GST) During the Quarter, amount of $17,720 (Ex GST) was paid to GM Legal & Corporate Advisory (a company controlled by Mr. Gideon Meltzer for providing consultancy services to the Company. On 6 January 2015, the Company has issued11,500,000fully 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 issue of these shares to Directors was approved by shareholders at the Annual General Meeting held on 28 November 2014 (Resolutions 7, 8 &9).The shares were issued at an issue price of $0.002/share. The share issue price has been determined based on volume weighted average sale price of SECOS (Cardia) shares for 2014 DecemberQuarter. This beingnon cash transaction,the amount in not included in the above cash flow.

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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

• N/A

• 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

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
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 4.6 Funds in Transit	875	1,797
	-	-
	-	-
	-	-
	-	-
	36	-
Total: cash at end of quarter(item 1.23)	911	1,797

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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: ...................................................... Date : 29 April 2015. (Company Secretary) Print name: Rekha Bhambhani

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

5. 9.4 - itemised disclosure relating to disposals

6. 12.1(a) - policy for classification of cash items

7. 12.3 - disclosure of restrictions on use of cash  13.1 - comparative information

8. 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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