MYECO GROUP LTD — Management Reports 2016

Nov 17, 2016

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ACN: 064755237

CHAIRMAN ADDRESS

When you learn that plastic takes 100s of years to degrade it can be difficult to fathom the long term consequences that this would have on our way of life. What will the major packaging companies have to say in the future when they are asked to clean up the plastic packaging covered by their valuable brand names. What we do know is that there is an urgent need to substitute traditional plastics with more sustainable plastics and SECOS has pursued this major gap in the market with very encouraging results so far.

Throughout the SECOS journey I have seen many large companies and even governments resist the transition to sustainable plastics mainly due to economic factors. I have seen expert reports sponsored by large oil companies publish absurd findings that oil based plastics are more environmentally friendly than organically produced plastics. Some of the world’s largest packaging companies promote these findings in their defence for not switching to more sustainable plastics while at the same time they promote to their customers that they are committed to becoming more environmentally friendly. Consumers are demanding more sustainable packaging however with so much misinformation about sustainable packaging it hasn't made the purchasing decisions easy.

This misinformation has made the SECOS journey a difficult one. However, these conditions have forced SECOS to develop what we believe is some of the world’s highest quality performance sustainable films and finished products in the world. In particular our patented Biohybrid™ films are now highly competitive with traditional films and offer superior product properties such as its soft feel and improved strength. In September alone SECOS delivered ten containers of sustainable dog poo bags to one of North America’s largest pet retailers. Several major global packaging companies are at different stages of trialling Cardia films and resins and many have now made trial orders consisting of multiple film pallets with some beginning full container orders. Marketing plans are being prepared to launch their sustainable product lines and SECOS stands to benefit from strong sales growth in this area during 2017.

Packaging companies are becoming more sustainable and our customers are switching to our sustainable films and products. SECOS’ recent growth in sales suggests that our sustainable films and packaging are here to stay and the tide of misinformation and resistance to environmental products has definitely shifted. We are predicting growth of more than 20% for 2017 with potentially significant growth possible if only one of the several major packaging companies currently trialling our sustainable films reach full Commercial rollout before the end of the financial year.

Strong growth in sales is only half the story. SECOS has developed a global distribution network and manufacturing capability that offers our customers access to some of the world’s

best quality sustainable films and products, competitive pricing and customer service. These qualities are the fundamental prerequisites demanded by packaging companies who operate globally.

The company’s first full year as a merged entity saw gross profit improve on a “like for like” basis as set out in the annual report by $587K, fixed costs reduced by $1,033K and reported net profit from continuing operations improve by $1,322K. Operating cash flows improved throughout the year with cash outflow from operating activities reducing to ($0.9m) Sept 16 compared to ($1.4m) Sept 15. These improvements provide a solid foundation for the company to continue its progress into 2017.

SECOS is perfectly positioned to continue to grow in the sustainable plastics market and aims to be the world’s leader in sustainable plastic packaging through its innovative and patented resins and finished products.

I would like to thank our shareholders for their continued support and patience as we deliver on our vision and implement our business plan

Regards, Richard Tegoni Chairman