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TO: COMPANY ANNOUNCEMENTS OFFICEASX LIMITED

DATE: 14 October 2016

NOTICE OF ANNUAL GENERAL MEETING

The Notice of the Annual General Meeting of SECOS Group Limited to be held on Friday 18 November

2016 together with the accompanying documents have been dispatched to shareholders today. At the

same time the 2016 Annual Report will be sent to shareholders who requested it.

The Notice and accompanying documents are attached.

Rekha Bhambhani

Company Secretary

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2016 SECOS NOTICE OF AGM 1

SECOS GROUP LIMITED(ACN 064 755 237)

NOTICE OF ANNUAL GENERAL MEETING, PROXY FORM AND EXPLANATORYMEMORANDUM

Date of MeetingFriday, 18 November 2016

Time of Meeting10.30 am (AEDT)

Place of MeetingPatersons Securities

Level 15, Board Room, 333 Collins Street, Melbourne VIC 3000

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SECOS GROUP LIMITED(ACN 064 755 237)

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT THE ANNUAL GENERAL MEETING (“AGM”) OF SHAREHOLDERS OFSECOS GROUP LIMITED (ACN 064 755 237) (“SECOS” OR “THE COMPANY”) WILL BE HELD ATPATERSONS SECURITIES, LEVEL 15, BOARD ROOM, 333 COLLINS STREET, MELBOURNE, VICTORIA3000 ON FRIDAY 18 NOVEMBER 2016 AT 10.30AM (AEDT) FOR THE PURPOSES OF TRANSACTING THEFOLLOWING BUSINESS.

The Explanatory Memorandum and Proxy Form accompanying this Notice of Annual General Meeting are herebyincorporated in and comprise part of this Notice of Annual General Meeting.

AGENDA

2016 ANNUAL FINANCIAL REPORT

To receive and consider the Annual Report of the Company for the year ended 30 June 2016, comprising the FinancialReport, the Directors’ Report, and the Independent Auditor’s Report.

NON-BINDING RESOLUTION

To consider, and if thought fit, to pass, with or without amendment, the following non-binding resolution:

RESOLUTION 1: ADOPTION OF REMUNERATION REPORT

“That, for the purposes of section 250R (2) of the Corporations Act 2001(Cth) and for all other purposes, the 2016Remuneration Report ( required by section 300A of the Corporations Act) as included in the Directors’ Report of theAnnual Report of the Company for the year ended 30 June 2016 be adopted.”

Further details in respect of Resolution 1 are set out in the Explanatory Memorandum accompanying this Notice of AnnualGeneral Meeting.

Voting Exclusion StatementThe Company will disregard any votes cast on Resolution 1 by:

(a) a member of the key management personnel for the Company or its subsidiaries whose remuneration details areincluded in the Remuneration Report (or a closely related party of that person), unless that person does so as a proxyappointed by writing that specifies how the proxy is to vote on Resolution 1 and the vote is not cast on behalf of amember of the Key management personnel of the Company or its subsidiaries whose remuneration details areincluded in the Remuneration Report (or a closely related party of that person); and

(b) a member of the key management personnel for the Company or its subsidiaries whose remuneration details are notincluded in the Remuneration Report (or a closely related party of that person) that is appointed as a proxy where theproxy appointment does not specify the way the proxy is to vote on Resolution 1,unless the proxy is the Chairman ofthe meeting at which Resolution 1 is voted on and the proxy appointment expressly authorises the Chairman toexercise the proxy even if Resolution 1 is connected directly or indirectly with the remuneration of a member of thekey management personnel for the Company or its subsidiaries.F

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ORDINARY RESOLUTIONS

To consider, and if thought fit, to pass, with or without amendment, the following ordinary resolutions:

RESOLUTION 2: RE-ELECTION OF DIRECTOR- MR. RICHARD TEGONI

“That Mr. Richard Tegoni, a director retiring by rotation in accordance with ASX Listing Rule 14.5 and Clause 4.3 of theCompany’s Constitution and being eligible, is re-elected as a director of the Company”.


RESOLUTION 3: RE-ELECTION OF DIRECTOR- MR. DONALD HALLER JR.

“That Mr. Donald Haller Jr., a director retiring in accordance with ASX Listing Rule 14.4 and Clause 4.2 of the Company’sConstitution and being eligible, is re-elected as a director of the Company”.


RESOLUTION 4: RATIFICATION OF ISSUE OF SHARES TO PROFESSIONAL AND SOPHISTICATEDINVESTORS

“That for the purpose of ASX Listing Rule 7.4 and for all other purposes, the prior allotment and issue of 10,724,721 fullypaid ordinary shares under the placement announced on 30 March 2016 and on the terms and conditions set out in theExplanatory Memorandum accompanying this Notice, be ratified.”

Voting Exclusion StatementThe Company will disregard any votes cast on the Resolution 4 by:

- a person or persons who participated in the issue and an associate of that person (or those persons).

However, the Company need not disregard a vote cast on Resolution 4 if it is cast by:

a) a person as proxy for a person who is entitled to vote, if the vote is cast in accordance with the directions on the proxyform; or

b) the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction of theproxy form to vote as the proxy decides.

RESOLUTION 5: RATIFICATION OF ISSUE OF SHARES TO PROFESSIONAL AND SOPHISTICATEDINVESTORS

“That for the purpose of ASX Listing Rule 7.4 and for all other purposes, the prior allotment and issue of 13,102,904 fullypaid ordinary shares under the placement announced on 29 August 2016 and on the terms and conditions set out in theExplanatory Memorandum accompanying this Notice, be ratified.”

Voting Exclusion StatementThe Company will disregard any votes cast on the Resolution 5 by:

- a person or persons who participated in the issue and an associate of that person (or those persons).

However, the Company need not disregard a vote cast on Resolution 5 if it is cast by:

a) a person as proxy for a person who is entitled to vote, if the vote is cast in accordance with the directions on the proxyform; or

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b) the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction of theproxy form to vote as the proxy decides.

RESOLUTION 6: ISSUE OF SHARES TO GROUP CHIEF FINANCIAL OFFICER- MR.EDMOND TERN

“That,for the purpose of Rule 10.11 of the Listing Rules of the Australian Securities Exchange and in accordance with aresolution of the Board of Directors, Mr Edmond Tern (or his nominee) be issued fully ordinary shares in the capital of theCompany, up to the value of $50,000 as sign –on fees, on the terms and conditions set out in the Explanatory Memorandumaccompanying this Notice and with such shares to be free from restriction and freely tradeable with effect from the date ofissue.”

Voting Exclusion StatementThe Company will disregard any votes cast in respect of Resolution 6 by Mr. Tern or any associate of Mr. Tern.

However, the Company will not disregard a vote if:

a) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form;or

b) it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a directionon the proxy form to vote as the proxy decides

In addition pursuant to the Corporations Act, the Company’s KMP or closely related person are not permitted to cast avote as a Proxy for a person permitted to vote, unless the Proxy form either:

expressly authorises and directs the way the proxy is to vote on Resolution 6 or expressly authorises the Chairman of the Meeting to exercise the undirected proxy vote.

RESOLUTION 7: ISSUE OF SHARES TO DIRECTOR- MR.RICHARD TEGONI IN LIEU OF DIRECTORREMUNERATION

“That, for the purpose of ASX Listing Rule 10.14 and in accordance with a resolution of the Board of Directors, Mr RichardTegoni (or his nominee) be issued fully ordinary shares in the capital of the Company, under Loan Share Plan, up to thevalue of $50,000 in satisfaction of his part cash remuneration for the 12 months period to September 2017 ,on the terms andconditions set out in the Explanatory Memorandum accompanying this Notice and with such shares to be free from restrictionand freely tradeable with effect from the date of issue.”

Voting Exclusion Statement:The Company will disregard any votes cast on the Resolution by a director of the Company and any associate of thatperson. .

However, the Company will not disregard a vote if it is cast:

a) by any such person and any of his associates as proxy for a person who is entitled to vote, in accordance with thedirections on the proxy form; or

b) by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on theproxy form.



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RESOLUTION 8: ISSUE OF SHARES TO DIRECTOR- MR. STEPHEN WALTERS IN LIEU OF DIRECTORREMUNERATION

“That, for the purpose of ASX Listing Rule 10.14 and in accordance with a resolution of the Board of Directors, Mr StephenWalters (or his nominee) be issued fully ordinary shares in the capital of the Company, under Loan Share Plan, up to thevalue of $100,000 in satisfaction of his part cash remuneration for the 12 months period to September 2017 ,on the termsand conditions set out in the Explanatory Memorandum accompanying this Notice and with such shares to be free fromrestriction and freely tradeable with effect from the date of issue.”

Voting Exclusion Statement:The Company will disregard any votes cast on the Resolution by a director of the Company and any associate of that person..However, the Company will not disregard a vote if it is cast:





RESOLUTION 9: ISSUE OF SHARES TO DIRECTOR- MR. DONALD HALLER JR. IN LIEU OF DIRECTORREMUNERATION

“That, for the purpose of ASX Listing Rule 10.14 and in accordance with a resolution of the Board of Directors, Mr DonaldHaller Jr.(or his nominee) be issued fully ordinary shares in the capital of the Company, under Loan Share Plan, up to thevalue of $15,000 in satisfaction of his part cash remuneration for the 12 months period to September 2017 ,on the terms andconditions set out in the Explanatory Memorandum accompanying this Notice and with such shares to be free from restrictionand freely tradeable with effect from the date of issue.”

Voting Exclusion Statement:The Company will disregard any votes cast on the Resolution by a director of the Company and any associate of that person..However, the Company will not disregard a vote if it is cast:





RESOLUTION 10: ISSUE OF SHARES TO DIRECTOR- MR TREVOR HAINES IN LIEU OF DIRECTORREMUNERATION

“That, for the purpose of ASX Listing Rule 10.14 and in accordance with a resolution of the Board of Directors, Mr TrevorHaines (or his nominee) be issued fully ordinary shares in the capital of the Company, under Loan Share Plan, up to thevalue of $70,000 in satisfaction of his part cash remuneration for the 12 months period to September 2017, on the terms and

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conditions set out in the Explanatory Memorandum accompanying this Notice and with such shares to be free from restrictionand freely tradeable with effect from the date of issue.”

Voting Exclusion Statement:The Company will disregard any votes cast on the Resolution by a director of the Company and any associate of that person.

However, the Company will not disregard a vote if it is cast:





SPECIAL RESOLUTION

To consider, and if thought fit, to pass, with or without amendment, the following special resolution:

RESOLUTION 11: APPROVAL OF 10% PLACEMENT FACILITY

“That, pursuant to and in accordance with Listing Rule 7.1A and for all other purposes, Shareholders approve the issue ofEquity Securities up to 10% of the issued capital of the Company (at the time of the issue) calculated in accordance withthe formula prescribed in Listing Rule 7.1A.2 and on the terms and conditions in the Explanatory Memorandum.”

Voting Exclusion StatementThe Company will disregard any votes cast on this Resolution by a person (and any associates of such a person) whomay participate in the 10% Placement Facility and a person who might obtain a benefit, except a benefit solely in thecapacity of a holder of Shares, if this Resolution is passed.

However, the Company will not disregard a vote if:

a) it is cast by the person as proxy for a person who is entitled to vote, in accordance with directions on the Proxy Form;or

b) it is cast by the Chairman as proxy for a person who is entitled to vote, in accordance with a direction on the ProxyForm to vote as the proxy decides.

PROXIES

Appointing a proxyMembers are entitled to appoint up to two proxies to act generally at the Annual General Meeting on their behalf, and tovote in accordance with their directions on the Proxy Form. A proxy need not be a Member. A personalised Proxy Form isattached to this Notice of Annual General Meeting.

Where two proxies are appointed, each proxy can be appointed to represent a specified proportion or number of the votesof the member. If no number or proportion of votes is specified, each proxy may exercise half of the member’s votes.Neither proxy is entitled to vote on a show of hands if more than one proxy attends the Annual General Meeting.

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If you appoint a proxy, the Company encourages you to direct your proxy how to vote on each resolution by marking theappropriate boxes on the Proxy Form.

Completed Proxy Forms (together with any authority under which the Proxy Form was signed, or a certified copy of theauthority) must be returned by 10.30 am on 16th November 2016.

by mail to Share Registry – Advanced Share Registry, PO Box 1156, Nedlands, Western Australia -6909 personally to Share Registry-Advanced Share Registry,110 Stirling Highway, Nedlands, Western Australia- 6009 by facsimile to + 61 (08) 9262 3723

Further instructions are on the reverse of the Proxy Form.

Undirected Proxies and Voting RestrictionsWhere permitted, the Chairman of the Annual General Meeting will vote undirected proxies in favour of all the resolutions(including Resolutions 1, 6,7,8,9 & 10) .This will be on the basis that the Proxy Form expressly authorises the Chairmanto vote undirected proxies even if the resolution is connected directly or indirectly with the remuneration of the Company’sKey Management Personnel.

If you appoint a Director (other than the Chairman of the meeting),or any of the Company’s other key managementpersonnel or a closely related party of that person ,as your proxy and do not direct your proxy how to vote on Resolutions1,6,7,8,9 &10 the proxy will not be permitted to vote as your proxy on those resolutions. Accordingly, if you want yourvote to be counted on those resolutions, you should direct your proxy how to vote in respect of those resolutions.

Corporate representationA corporation which is a member, or which has been appointed a proxy, may appoint an individual to act as a representativeto vote at the Annual General Meeting. The appointment must comply with section 250D of the Corporation Act. Therepresentative should bring to the Annual General Meeting evidence of his or her appointment unless it has previouslybeen provided to the Share Registry.

VOTING EXCLUSIONWhere a voting exclusion applies, the Company need not disregard a vote if it is cast by a person as a proxy for a personwho is entitled to vote in accordance with the directions on the Proxy Form or it is cast by the person chairing the AnnualGeneral Meeting as proxy for a person who is entitled to vote in accordance with a direction on the Proxy Form to vote asthe proxy decides.

ENTITLEMENT TO ATTEND AND VOTE AT THE ANNUAL GENERAL MEETING

All members may attend the Annual General Meeting. The Directors have determined that for the purposes of voting atthe meeting, shares will be taken to be held by the persons who are registered as the holders of those shares as at 7 pm(AEDT) on 16th November 2016.

By Order of the Board ofSECOS Group Limited

Rekha BhambhaniCompany SecretaryDated: 14 October 2016

The accompanying Explanatory Memorandum and Proxy Form including Voting instructions form part of this Notice ofAnnual General MeetingF

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EXPLANATORY MEMORANDUM TO NOTICE OF ANNUAL GENERAL MEETING

This Explanatory Memorandum accompanies and forms part of the SECOS Group Limited (“SECOS” or “the Company”) Notice ofAnnual General Meeting to be held on 18 November 2016 at 10.30 am (AEDT).The Notice of Annual General Meeting should be readtogether with this explanatory memorandum.

BUSINESS

2016 ANNUAL REPORT

To receive and consider the Annual Financial Report of the Company for the year ended 30 June 2016, comprising the FinancialReport, the Directors’ Report and the Auditor’s Report.

Under the Corporations Act 2001, the directors of a public company that is required to hold an Annual General Meeting must table thefinancial statements and reports of the Company for the previous year for discussion by the members at that annual general meeting.

Shareholders have been provided with all relevant information concerning the Company’s financial statements for the year ended 30June 2016 in the Annual Report.

A Copy of the Annual Report is enclosed with this Notice for those shareholders who have requested it.

Shareholders should note that the sole purpose of tabling the Annual Report of the Company at the Annual General Meeting is toprovide the shareholders with the opportunity to ask questions or discuss matters arising there from at the meeting. At the meeting, arepresentative of the Company’s auditors, William Buck will be available to answer any questions of the members.

It is not the purpose of the meeting that the financial statements be approved, rejected or modified in any way. Further as it is notrequired by the Corporations Act, no resolution to adopt, receive or consider the statements will be put to the meeting.

NON-BINDING RESOLUTION

1. Resolution 1: Adoption of Remuneration Report

1.1 Background

Pursuant to section 250R(2) of the Corporations Act, at the Annual General Meeting, the Company must propose a resolution thatthe Remuneration Report be adopted.

The Remuneration Report is contained within the 2016 Annual Report. You may access the Annual Report by visiting the Company’swebsite www.cardiabioplastics.com or you may order a hard copy of the Annual Report by phoning +61 (0)385666800.TheRemuneration Report :

explains the Board’s policy for determining the nature and amount of remuneration of executive Directors and seniormanagement of the Company;

explains the relationship between the Board’s remuneration policy and the Company’s performance; sets out remuneration details for each Director and the most highly remunerated senior management of the Company;

and details and explains any performance conditions applicable to the remuneration of executive Directors and senior

management of the Company.

The purpose of Resolution 1 is to lay before the shareholders the Company’s Remuneration Report so that shareholders may askquestions about or make comments on the management of the Company in accordance with the requirements of the Corporations Actand vote on a non-binding resolution to adopt the Remuneration Report for the year ended 30 June 2016.

The Chairman will allow a reasonable opportunity for Shareholders as a whole to ask about, or make comments on the RemunerationReport.

Section 250R (3) of the Corporations Act provides that Resolution 1 is advisory only and does not bind the Directors of the Companyof itself, a failure of Shareholders to pass Resolution 1 will not require the Directors to alter any of the arrangements in theRemuneration Report.

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However, the Corporations Act has been amended by the Corporations Amendment (Improving Accountability on Director of theCompany and Executive Remuneration) Act 2011 (Director and Executive Remuneration Act) which received the Royal Assent on27 June 2011 and came into effect on 1 July 2011.

The Director and Executive Remuneration Act introduced new sections 250U and 250Y, amongst others, into the Corporations Act,giving Shareholders the opportunity to remove the Board if the Remuneration Report receives a ‘no’ vote of 25% or more at twoconsecutive annual general meetings (Two Strikes Rule).

Under the Two Strikes Rule, where a resolution on the Remuneration Report receives a ’no’ vote of 25% or more at two consecutiveannual general meetings, the Company will be required to put to shareholders at the second annual general meeting a further resolution(the ‘spill resolution”) on whether another meeting (known as “spill meeting”)should be held (within 90 days) at which all Directors(other than the Managing director and any directors appointed since the applicable Directors’ Report was approved by the Board ) whowere in office at the date of approval of the applicable Directors’ Report must stand for re-election.

If the spill resolution is approved at the annual general meeting by a simple majority of 50% or more of the eligible votes cast, the spillmeeting must be held within 90 days of that second annual general to consider the composition of the Board.

The Company’s 2014 and 2015 Remuneration Reports did not receive a “no” vote of 25% or more when they were tabled at therespective Annual General Meetings.

Shareholders will be given a reasonable opportunity at the Meeting to ask questions about, and make comments on, the RemunerationReport and the Company’s remuneration arrangements.

Where permitted, the Chairman intends to exercise all undirected proxies in favour of Resolution 1.

1.2 Voting exclusion statement

For the purposes of the voting exclusion statement:

(a) the “key management personnel” for the Company and its subsidiaries are those persons having authority and responsibility forplanning, directing and controlling the activities of the Company and its subsidiaries either directly or indirectly. The Keymanagement personnel for the Company and its subsidiaries during the year ended 30 June 2016 are listed in the AnnualFinancial Report of the Company; and

(b) a ‘closely related party’ of a member of the key management personnel for the Company and its subsidiaries means:

(i) a spouse or child of the member;(ii) a child of the member’s spouse;(iii) a dependant of the member or of the member’s spouse;(iv) anyone else who is one of the member’s family and may be expected to influence the member, or be influenced by the

member, in the member’s dealings with the entity; or(v) a company the member controls.

The Company will also apply these voting exclusions to persons appointed as attorney by a member to attend and vote at the meetingunder a power of attorney- on the basis that references to persons attending and voting are read as references to persons attendingand voting and references to an instrument under which the proxy is appointed are read as references to the power of attorney underwhich the attorney is appointed.

1.3 Directors’ Recommendation

The Directors unanimously recommend that members vote in favour of Resolution 1.For

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ORDINARY RESOLUTIONS

2. Resolution 2: Re-election of Director- Mr. Richard Tegoni

2.1 Background

In accordance with ASX Listing Rule 14.5 and Clause 4.3 of the Company’s Constitution, at every Annual General Meeting, one-thirdof the directors (excluding the Managing Director) must retire from office and are eligible for re-election. The directors to retire arethose who have been longest in office since their appointment or last re-appointment, or, if the directors have been in office for anequal length of time, by agreement.

Mr. Richard Tegoni retires in accordance with the Company’s Constitution and being eligible for re-election has consented to be re-elected and presents himself for re-election. He is 48 years of age and was appointed a non-executive director on 21 December 2012,have assumed role of Non-Executive Chairman effective 18 October 2013 and Executive Chairman effective 16 September 2014.

Information about Mr. Tegoni is contained in the 2016 Annual Report.


The Directors (other than Mr. Tegoni) recommend that members vote in favour of Resolution 2.

3. Resolution 3: Re-election of Director- Mr. Donald Haller Jr.

3.1 Background

In accordance with ASX Listing Rule 14.4 and Clause 4.2 of the Company’s Constitution, at every Annual General Meeting eachdirector appointed since the last Annual General Meeting must retire from office and is eligible for re-election.

Mr. Donald Haller Jr. retires in accordance with the Company’s Constitution and being eligible for re-election has consented to be re-elected and presents himself for re-election. He is 69 years of age and was appointed as non-executive Director on 1 September 2016.

Mr. Haller’s qualifications include Bachelor of Commerce and CPA (USA).

Mr. Donald Haller Jr. is a major shareholder in EarthVision Bio Solutions, Inc (“EarthVision”). EarthVision is a key distributor of SECOSproducts in the USA, and the appointment is intended to strengthen the strategic relationship between SECOS and EarthVision as wellas support continued growth in the US market.

As the majority shareholder in EarthVision, Donald is actively engaged in marketing, sales and business development for EarthVision.Prior to his investment in EarthVision, Don had a distinguished background in accounting, management consulting and leadingpractices of professional consultants. Donald was a lead consulting partner with IBM’s Global Business Services Division andPriceWaterhouseCoopers. Donald was formerly CFO of a top 15 US insurance company and an Audit and Consulting Partner in theNew York office of Ernst & Young.

Information about Mr. Haller Jr.is also contained in the 2016 Annual Report.


The Directors (other than Mr. Haller Jr.) recommend that members vote in favour of Resolution 3.

4. Resolution 4: Ratification of Issue of Shares to Professional and Sophisticated Investors

4.1 Background

On 30 March 2016, the Company raised $879,427 (before costs) via placement offer to professional and sophisticated investors. Atotal of 10,724,721 fully paid ordinary shares were issued at 8.2 cents ($0.082) per share. The shares were placed with professionaland sophisticated investors.

These shares were issued under the Company’s 15% placement capacity available pursuant to Listing Rule 7.1

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Funds raised via placement have been used for general working capital requirements of the Company.

4.2 ASX Listing Rule 7.4

ASX Listing Rule 7.1 provides that without the approval of shareholders the Company must not issue or agree to issue more securitiesif such issue, when aggregated with the securities issued by the Company during the previous 12 months, would be an amount thatwould exceed 15% of the issued shares at the commencement of that 12 month period, unless an exception in ASX Listing Rule 7.2applies.

In addition, ASX Listing Rule 7.1A provides that the Company can place a further 10% of its issued capital where it has prior approvalfrom shareholders.

ASX Listing Rule 7.4 further provides that an issue of securities without approval of shareholders under ASX Listing Rule 7.1 is treatedas having been made with approval for the purposes of ASX Listing Rule 7.1 if:

a) the issue of securities did not breach ASX Listing Rule 7.1; andb) holders of ordinary securities subsequently approve the issue.

By Resolution 4, the Company is seeking shareholders’ approval under ASX Listing Rule 7.4 to ratify the prior allotment and issue of10,724,721 fully paid ordinary shares, so as to refresh the Company’s 15% placement capacity pursuant to ASX Listing Rule 7.1.

4.3 Technical information required by ASX Listing Rule 7.5

In compliance with ASX Listing Rule 7.5, the following information is provided:

Number of securities issued or to be pursuant to Resolution 410,724,721 Ordinary shares were issued pursuant to ASX Listing Rule 7.1.

Issue price of securities$0.082 per Share

Terms of securitiesAll Shares were issued as fully paid ordinary shares ranking equally with existing shares.

Names of allottees or the basis on which allottees were determinedThe Shares were issued to professional and sophisticated investors (within the meaning ascribed to those expressions in section708 of the Corporation Act 2001) and no related parties were involved.

It is noted that Mr. Donald Haller Jr had participated in this placement but he has become non-executive Director (related party)of SECOS post placement.

. Intended use of the funds raised

Funds raised have been used for the general working capital requirements of the Company.

Voting Exclusion StatementA voting exclusion statement is included in the Notice accompanying the Explanatory Memorandum.


The Board recommends that members vote in favour of Resolution 4.For

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5. Resolution 5: Ratification of Issue of Shares to Professional and Sophisticated Investors

5.1 Background

On 29 August 2016, the Company announced placement offer to professional and sophisticated investors and raised $1,074,438. Atotal of 13,102,904 fully paid ordinary shares were issued at 8.2 cents ($0.082) per share. The shares were placed with professionaland sophisticated investors. The majority of the investment in the Placement was made by Donald Haller and parties introduced by MrHaller.

Of the total 13,102,904 fully paid ordinary shares issued under the placement referred above, issue of 9,988,068 fully paid ordinaryshares were effected under the Company’s 15% placement capacity (Listing Rule 7.1) and issue of balance 3,114,836 fully paidordinary shares were effected under the Company’s 10% placement capacity (Listing Rule 7.1A).

Funds raised via placement will primarily be used to increase capacity at the Company’s Nanjing plant in China.


ASX Listing Rule 7.1 provides that without the approval of shareholders the Company must not issue or agree to issue more securitiesif such issue, when aggregated with the securities issued by the Company during the previous 12 months, would be an amount thatwould exceed 15% of the issued shares at the commencement of that 12 month period, unless an exception in ASX Listing Rule 7.2applies.

In addition, ASX Listing Rule 7.1A provides that the Company can place a further 10% of its issued capital where it has prior approvalfrom shareholders.

ASX Listing Rule 7.4 further provides that an issue of securities without approval of shareholders under ASX Listing Rule 7.1 or ListingRule 7.1A is treated as having been made with shareholder approval if each of the following applies:

a) the issue of securities did not breach ASX Listing Rule 7.1 or Listing Rule 7.1A; andb) holders of ordinary securities subsequently approve the issue.

By Resolution 5, the Company is seeking shareholders’ approval under ASX Listing Rule 7.4 to ratify the prior allotment and issue of13,102,904 fully paid ordinary shares, so as to minimise the restrictive effect of Listing Rule 7.1 and Listing Rule 7.1A on any furtherissues or agreements to issue by the Company of Equity Securities in the next 12 months.


In compliance with ASX Listing Rule 7.5, the following information is provided:

Number of securities issued or to be pursuant to Resolution 59,988,068 Ordinary shares were issued pursuant to ASX Listing Rule 7.1.3,114,836 Ordinary shares were issued pursuant to ASX Listing Rule 7.1A.

Issue price of securities$0.082 per Share

Terms of securitiesAll Shares were issued as fully paid ordinary shares ranking equally with existing shares.

Names of allottees or the basis on which allottees were determinedThe Shares were issued to professional and sophisticated investors (within the meaning ascribed to those expressions in section708 of the Corporation Act 2001) and no related parties were involved.

It is noted that Mr. Donald Haller Jr had participated in this placement but he has become non-executive Director (related party)of SECOS post placement.

Intended use of the funds raisedFunds raised via placement will primarily be used to increase capacity at the Company’s Nanjing plant in China.

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The Board recommends that members vote in favour of Resolution 5.

6. Resolution 6: Issue of Shares to Group Chief financial officer- Mr. Edmond Tern

6.1 Background

Effective 1 August 2016, Mr. Edmond Tern has been appointed as Group Chief Financial Officer of the Company. As sign –on fees,SECOS Board has resolved to issue shares to Mr. Tern up to the value of $50,000 at discount of 25% to the market price with notrading restrictions or penalties, should Mr Tern terminate his employment during this employment contract period with the Company.It is noted that the Company will not responsible for any taxes which may become payable by Mr.Tern in connection with the issue ofshares to him.

The Board believes that issue of shares to Mr. Tern will align his interests with shareholders of the Company through the sharing of apersonal interest in the future growth and development of the Company as represented in the price of the Company’s ordinary fullypaid shares and will also serve as an encouragement for him to improve the performance of the Company and its total return toShareholders.


ASX Listing Rule 10.11 provides that an entity must not issue or agree to issue equity securities to any of the following persons withoutthe approval of holders of ordinary securities.

a related party a person whose relationship with the entity or a related party is, in ASX’s opinion such that approval should be obtained.

Mr. Tern is not a related party of the Company. But Mr. Tern being a newly appointed Group Chief financial officer of the Company,the resolution to approve the issue of the Shares to Mr Tern is, being put to members for the sake of probity and to comply with theprovisions of Listing Rule 10.11 of the Listing Rules of ASX.


Pursuant to Listing Rule 10.13 the following information regarding Resolution 6 is provided to shareholders:

Number of Securities allotted:Ordinary shares up to the value of $50,000 are to be allotted to Mr. Tern or his nominee.

The price at which the shares are to be allotted:The issue price of the Shares will be 75% of the average market price for Shares traded on the ASX over the consecutive 5 daysimmediately before the day of issue or agreement to issue the Shares;

Terms of the Securities allotted:The securities to be allotted are ordinary shares which rank pari passu with all other ordinary shares on issue from the date ofallotment.

Names of the allottee:The shares will be placed to Mr Tern or nominee as set out in the resolution.

Use of funds raised:$50,000 will be raised and will be used for general working capital purposes.

Date by which the entity will issue the shares:Issue Date will be before 18 December 2016, which is not more than 1 month after the date of the meeting.

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6.4 Director Recommendation

The Board recommends that members vote in favour of Resolution 6.

7. Resolutions 7, 8,9 & 10: Issue of shares to M/s Richard Tegoni, Stephen Walters, Donald Haller and Trevor Haines underLoan Share Plan in lieu of Director Remuneration.

7.1 Background

The merger between Cardia and Stellar has resulted in the Group having more Executives and consequently increased wage bill forthe group.

Directors of the merged group are committed to expand the merged business to the position as a world leader in sustainable packagingbut also mindful of delivering this success in an efficient and effective manner so that shareholders’ wealth through their investment inthe Company is maximised.

To manage cashflows of the merged business, the Directors are seeking shareholders’ approval to have ability for their partremuneration to be paid by issue of shares rather than in cash, at the election of the Board.

As per the current arrangements:

Mr. Tegoni’s remuneration is $100,000 per annum of which he has agreed to accept up to 50% ($50,000) of remuneration to bepaid by issue of shares.

Mr. Walters’ base salary is $195,540 per annum of which he has agreed to accept up to approx. 50% ($100,000) of remunerationto be paid by issue of shares.

Mr. Haller’s remuneration is $30,000 per annum of which he has agreed to accept up to 50% ($15,000) of remuneration to bepaid by issue of shares.

Mr. Haines’ base salary is $139,390 per annum of which he has agreed to accept up to approx. 50% ($70,000) of remunerationto be paid by issue of shares.

To the extent that Shareholders do not approve the issue of shares, Directors’ respective share component of remuneration will bepaid in cash.

The Company has adopted the loan share plan, with shareholders’ approval at its last annual general meeting and seeking to issueshares to the Directors in lieu of their remuneration under the loan share plan.


Whilst the Board can make offers to issue shares to Directors under Loan Share Plan; allotment is not able to proceed until afterShareholder approval is obtained under ASX Listing Rule 10.14.

ASX Listing Rule 10.14 provides that an entity must not permit a director of that entity to acquire securities under an employee incentivescheme without the approval of the members in general meeting, where the Notice of Meeting complies with the requirements of ListingRule 10.15.

By Resolution 7, the Company is seeking shareholders’ approval under ASX Listing Rule 10.14 to issue fully paid ordinary shares toMr. Richard Tegoni, under Loan Share Plan, up to the value of $50,000 by way of salary sacrifice of his part cash remuneration (50%),in accordance with the Resolution of the Board. Shares will be issued at quarterly intervals for the share component of remunerationdue for that particular quarter ($12,500 each quarter).

By Resolution 8, the Company is seeking shareholders’ approval under ASX Listing Rule 10.14 fully paid ordinary shares to Mr.Stephen Walters, under Loan Share Plan, up to the value of $100,000, by way of salary sacrifice of his part cash remuneration (approx.50%), in accordance with the Resolution of the Board. Shares will be issued at quarterly intervals for the share component ofremuneration due for that particular quarter ($25,000 each quarter).

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By Resolution 9, the Company is seeking shareholders’ approval under ASX Listing Rule 10.14 fully paid ordinary shares to Mr. DonaldHaller Jr.under Loan Share Plan, up to the value of $15,000, by way of salary sacrifice of his part cash remuneration (approx.50%), inaccordance with the Resolution of the Board. Shares will be issued at quarterly intervals for the share component of remuneration duefor that particular quarter ($3,750 each quarter).

By Resolution 10, the Company is seeking shareholders’ approval under ASX Listing Rule 10.14 fully paid ordinary shares to Mr.Trevor Haines, under Loan Share Plan, up to the value of $70,000, by way of salary sacrifice of his part cash remuneration(approx.50%), in accordance with the Resolution of the Board. Shares will be issued at quarterly intervals for the share component ofremuneration due for that particular quarter ($17,500 each quarter).


Pursuant to Listing Rule 10.15 the following information regarding Resolutions 7, 8, 9 and 10 is provided to members:

(a) Shares may be offered under the Share Loan Plan to M/s Richard Tegoni, Stephen Walters, Donald Haller Jr and Trevor Haines (theParticipating Directors) or their nominees.

(b) The share component of Directors’ remuneration for the 12 months period ending 30 September 2017 will be as follows:

i) $50,000 to Richard Tegoni (50% of Remuneration)ii) $100,000 to Stephen Walters (approx.50% of Remuneration)iii) $15,000 to Donald Haller Jr (50% of Remuneration)iv) $ 70,000 to Trevor Haines (approx.50% of Remuneration)

(c) The maximum number of shares which may be issued to the Participating Directors is determined by the directors’ remuneration thatthe Company has agreed to pay by issue of shares to the Participating Directors for the 12 months period ending on 30 September2017 ($235,000) divided by the deemed issue price of the shares calculated in accordance with paragraph (d) below. The number ofShares issued each quarter will be a function of the deemed issue price and the proportion of remuneration that the Company decidesto satisfy through issue of Shares;

(d) The Shares will be issued for nil cash consideration as they will be issued in satisfaction of part of the directors’ remuneration agreedto be paid by the Company to the Participating Directors at quarterly intervals. The Shares will be deemed to have an issue price ofno less than the volume weighted average sale price for each quarter of each year, subject to paragraph (c ) above;

(e) For the 12 months ending 30 September 2017, the maximum number of Shares that may be issued to the Participating Directorsassuming a deemed issue price of $0.085 per Share, being the closing share price to 5 October 2016, will be 2,764,706 shares;

(f) The Company had last adopted Loan Share Option Plan in November 2014. The details of shares issued to the Directors under loanshare plan are:

Name of Directors For 12 Months toSeptember 2015

For 12 Months toSeptember 2016

Total Shares Issued

Number of Shares issued(adjusted for 100:1consolidation effect)

Number of Sharesissued

Richard Tegoni 150,000 384,446 534,446Gideon Meltzer 40,000 - 40,000Steven Bendel 40,000 - 40,000Trevor Haines - 384,415 384,415TOTAL 230,000 768,861 998,861

The above shares to the Directors were issued in lieu of their part cash remuneration and issue of shares was approved by theshareholders at the Annual General Meetings held on 28 November 2014 and 17 November 2015.

(g) The Board may, from time to time at its absolute discretion, declare that any Director, Officer of the Company or a subsidiary of theCompany is eligible to be offered to subscribe for Shares under the Loan Share Plan. The Directors in office at the date of preparingthis Notice of Meeting are M/s Richard Tegoni, Donald Haller Jr, Trevor Haines and Stephen Walters who is the Company’s ManagingDirector.

(h) No loan will be provided in respect of the issue of Shares as they are being issued in consideration for Directors’ remuneration whichthe Company has agreed to pay the Participating Directors for 12 months period to 30 September 2017.

(i) The Shares will be issued to the Participating Directors within 12 months from the date of Annual General Meeting and will be issuedon a quarterly basis according to the share component of Directors’ remuneration owing to each of the Participating Director at thattime, except to the extent the Company elects to pay the Directors’ remuneration in cash.

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7.4 Related Party Requirements of Chapter 2E of the Corporations Act 2001

Shareholder approval under Chapter 2E of the Corporations Act- Related Parties is not required because the Shares are being issuedin satisfaction of Directors’ remuneration owed by the Company to the Participating Directors on a quarterly basis. The issue of Sharesconstitutes reasonable remuneration in accordance with Section 211 of the Corporations Act that has been calculated on commercialterms, having regard to the circumstances of the Company.

The issue of the shares to M/s Tegoni, Walters, Haller Jr. and Haines and their willingness to acquire same on the terms set outindicate the Participating Directors’ confidence in the future of the Company.

7.5 Voting Exclusion Statement

A voting exclusion statement is included for each of the resolutions 7, 8, 9 and 10 in the Notice accompanying the ExplanatoryMemorandum.

7.6 Director’s recommendations

The Directors abstain from making any recommendation on Resolutions 7, 8, 9 and 10.

SPECIAL RESOLUTION

8. Resolution 11: Approval of 10% placement facility

8.1 Background

Listing Rule 7.1A came into effect on 1 August 2012 and enables eligible entities to issue Equity Securities up to 10% of its issuedshare capital through placements over a 12 month period after the annual general meeting (10% Placement Facility). The 10%Placement Facility is in addition to the Company’s 15% placement capacity under Listing Rule 7.1.

An eligible entity for the purposes of Listing Rule 7.1A is an entity that is not included in the S&P/ASX 300 Index and has a marketcapitalisation of $300 million or less.

The Company is an eligible entity for the purposes of Listing Rule 7.1A as it is not included in the S&P /ASX 300 Index and has amarket capitalisation of approximately $13.79 million as at 5 October 2016.

The Company is now seeking shareholder approval by way of a special resolution to have the ability to issue Equity Securities underthe 10% Placement Facility.

The exact number of Equity Securities to be issued under the 10% Placement Facility will be determined in accordance with the formulaprescribed in Listing Rule 7.1A.2 (refer to Section 8.2(c) below).

The effect of Resolution 11 will be to allow the Directors to issue the Equity Securities under Listing Rule 7.1A during the period up to12 months after the Meeting without subsequent Shareholder approval and without using the Company’s 15% placement capacityunder Listing Rule 7.1.

Resolution 11 is a special resolution and therefore requires approval of 75% of the votes cast by Shareholders’ present and eligible tovote (in person, by proxy, by attorney or, in the case of a corporate Shareholder, by a corporate representative).

8.2 ASX Listing Rule 7.1A

a) Shareholder approvalThe ability to issue Equity Securities under the 10% Placement Facility is subject to shareholder approval by way of a specialresolution at an annual general meeting.

b) Equity SecuritiesAny Equity Securities issued under the 10% Placement Facility must be in the same class as an existing quoted class of EquitySecurities of the Company.

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The Company as at the date of the Notice has only fully paid ordinary shares on issue.

c) Formula for calculating 10% Placement FacilityListing Rule 7.1A.2 provides that eligible entities which have obtained shareholder approval at an annual general meeting mayissue or agree to issue, during the 12 month period after the date of the annual general meeting, a number of Equity Securitiescalculated in accordance with the following formula:

(A X D)

A is the number of shares on issue 12 months before the date of issue or agreement:

A) plus the number of fully paid shares issued in the 12 months under an exception in Listing Rule 7.2;B) plus the number of partly paid shares that became fully paid in the 12 months;C) plus the number of fully paid shares issued in the 12 months with approval of holders of shares under Listing Rules 7.1 and 7.4.

This does not include an issue of fully paid shares under the entity’s 15% placement capacity without shareholder approval;D) less the number of fully paid shares cancelled in the 12 months.

Note that A has the same meaning in Listing Rule 7.1 when calculating an entity’s 15% placement capacity.

D is 10%

E is the number of Equity Securities under or agreed to be issued under Listing Rule 7.1A.2 in the 12 months before the date of theissue or agreement to issue that are not issued with the approval of shareholders under Listing Rules 7.1 or 7.4.

d) Listing Rule 7.1 and Listing Rule 7.1AThe ability of an entity to issue Equity Securities under Listing Rule 7.1A is in addition to the entity’s 15% placement capacityunder Listing Rule 7.1.

At the date of this Notice, the Company has on issue 162,184,857 ordinary shares and has a capacity to issue:

(i) 24,327,729 equity securities under Listing Rule 7.1 subject to shareholders’ approval being obtained under Resolutions 4 & 5 ;and

(ii) subject to Shareholders’ approval being obtained under Resolutions 4,5 and 11, 16,218,485 equity securities under ListingRule 7.1A.

The actual number of Equity Securities that the Company will have capacity to issue under Listing Rule 7.1A will be calculated at thedate of issue of the Equity Securities in accordance with the formula prescribed in Listing Rule 7.1A.2 (refer to 8.2(c) above).

e) Minimum Issue PriceThe issue price of Equity Securities issued under Listing Rule 7.1A must be not less than 75% of the volume weighted averageprice of Equity Securities in the same class calculated over the 15 ASX trading days immediately before:

(i) the date on which the price at which the Equity Securities are to be issued is agreed; or(ii) if the Equity Securities are not issued within 5 ASX trading days of the date in paragraph (i) above, the date on which the

Equity Securities are issued.

f) 10% Placement PeriodShareholder approval of the 10% Placement Facility under Listing Rule 7.1A is valid from the date of the annual general meetingat which the approval is obtained and expires on the earlier to occur of:

(i) the date that is 12 months after the date of the annual general meeting at which the approval is obtained; or(ii) the date of the approval by shareholders of a transaction under Listing Rules 11.1.2 (a significant change to the nature or

scale of activities) or 11.2 (disposal of main undertaking),

or such longer period if allowed by ASX (10% Placement Period).

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8.3 Information required by ASX Listing Rule 7.3A

ASX Listing Rule 7.3A sets out a number of matters which must be included in a notice of meeting seeking an approval under ASXListing Rule 7.1A.The following information is provided for the purposes of Listing Rule 7.3A:

a) The Equity Securities will be issued at an issue price of not less than 75% of the volume weighted average price for the Company’sEquity Securities over the 15 ASX trading days immediately before:

(i) the date on which the price at which the Equity Securities are to be issued is agreed; or(ii) if the Equity Securities are not issued within 5 ASX trading days of the date in paragraph (i) above ,the date on which the Equity

Securities are issued.

b) If Resolution 11 is approved by Shareholders and the Company issues Equity Securities under the 10% Placement Facility, theexisting Shareholders’ voting power in the Company will be diluted as shown in the table below. There is a risk that:

(i) the market price for the Equity Securities may be significantly lower on the date of the issue of the Equity Securities than on thedate of the Meeting; and

(ii) the Equity Securities may be issued at a price that is at a discount to the market price for the Equity Securities on the issuedate,

which may have an effect on the amount of funds raised by the issue of the Equity Securities.

The table below also shows the dilution of existing Shareholders on the basis of the current market price of Shares and the currentnumber of ordinary securities for variable “A” calculated in accordance with the formula in Listing Rule 7.1A (2) as at the date of thisNotice.

The table also shows:

(i) two examples where variable “A” has increased, by 50% and 100%.Variable “A” is based on the number of ordinary securitiesthe Company has on issue. The number of ordinary securities on issue may increase as a result of issues of ordinary securitiesthat do not require Shareholder approval (for example, a pro rata entitlements issue or scrip issued under a takeover offer) orfuture specific placement under Listing Rule 7.1 that are approved at a future Shareholders’ meeting; and

(ii) two examples of where the issue price of ordinary securities has decreased by 50% and increased by 100% as against thecurrent market price.

Variable “A” in Listing Rule 7.1A.2Dilution

50% decrease inCurrent Issue Price

$0.042

Current IssuePrice

$0.085

100% increase inCurrent Issue Price

$0.17

162,184,857

Current Variable “ A”

10% Votingdilution

16,218,486Ordinary Shares



Funds raised $681,176 $1,378,571 $2,757,143

243,277,286

50% increase in current Variable“A”

10% Votingdilution




Funds raised $1,021,765 $2,067,857 $4,135,714

324,369,714

100% increase in current Variable“A”

10% Votingdilution




Funds raised $1,362,353 $2,757,143 $5,514,285

The table has been prepared on the following assumptions:

(i) The current issue price is $0.085, being the closing price of the Company’s Shares on ASX on 5 October 2016.(ii) The Company issues the maximum number of Equity Securities available under the 10% Placement Facility.

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(iii) The 10% dilution reflects the aggregate percentage dilution against the issued share capital at the time of issue. This iswhy the voting dilution is shown in each example as 10%.

(iv) The table shows only the effect of issues of Equity Securities under Listing Rule 7.1A, not under the 15% placementcapacity under Listing Rule 7.1.

(v) The issue of Equity Securities under the 10% Placement Facility consists only of Ordinary shares. If the issue of EquitySecurities includes Listed Options, it is assumed that those Listed Options are exercised into Shares for the purpose ofcalculating the voting dilution effect on existing Shareholders.

c) The Company will only issue and allot the Equity Securities during the 10% Placement Period. The approval under Resolution 11for the issue of the Equity Securities will cease to be valid in the event that Shareholders approve a transaction under Listing Rule11.1.2 (a significant change to the nature or scale of activities) or Listing Rule 11.2 (disposal of main undertaking).

d) The Company seeks to issue the Equity Securities for the following purposes:

- for cash consideration in which case the Company intends to use the funds raised for working capital purposes mainly to coverfor

(i) marketing and distribution expenses of the Company’s products;(ii) research and development of existing and new product applications;(iii) maintenance of intellectual property;(iv) staff and office costs, audit and compliance expenses, and ASX fees;(v) for general working capital float to maintain minimum levels of inventories and cash liquidity in the business.

e) The Company’s allocation policy is dependent on the prevailing market conditions at the time of any proposed issue pursuant tothe 10% Placement Facility. The identity of the allotees of the Equity Securities will be determined on a case-by-case basis havingregard to the factors including but not limited to the following:

(i) the purpose of the issue;(ii) alternative methods of raising funds that are available to the Company, including but not limited to, rights issue or other

issue in which existing security holders can participate;(iii) the effect of the issue of the Equity Securities on the control of the Company;(iv) the circumstances of the Company, including ,but not limited to, the financial situation and solvency of the Company; and(v) advice from corporate, financial and broking advisers (if applicable).

The allottees under the 10% Placement Facility have not been determined as at the date of this Notice but may include existingsubstantial Shareholders and/or new Shareholders who are not related parties or associates of a related party of the Company.

f) For the purposes of Listing Rule 7.3A.6 the following information is provided.

The Company obtained Shareholder approval for the 10% Placement Capacity at its 2015 Annual General Meeting.

The table below shows the total number of equity securities issued in the past 12 months preceding the date of the Annual GeneralMeeting and the percentages those issues represent of the total number of equity securities on the issue at the commencement of the12 month period.

Equity securities issued in the prior 12 month period 37,961,439 ordinary sharesOf the above ordinary shares issued, 3,114,836 ordinary shares

were issued under 10% placement capacity.Percentage previous issues represent of total number ofequity securities on issue at commencement of 12 monthperiod 30.56%

The table below along with notes set out specific details for each issue of equity securities that have taken place in the 12 month periodpreceding the date of the Annual General Meeting.F

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Note Date

Number of EquitySecurities Issued Class of Equity

Securities IssuedName of Person to Whom Equity

Securities were issued toIssue Price

DiscountCash Consideration & Use/Intended Use of

Funds

1 30/3/2016 10,724,721 Ordinary SharesProfessional and Sophisticated

Investors $0.082/Share 20% $897,427-For Working Capital

2 4/4/2016 13,364,953 Ordinary Shares Eligible Shareholders $0.082/Share 20%$1,095,926-For Working Capital and Nanjing

Expansion

3 4/4/2016 255,680 Ordinary SharesIssued to Directors in lieu of

remuneration $0.10/ Share NIL $25,568

4 5/7/2016 241,208 Ordinary SharesIssued to Directors in lieu of

remuneration $0.106/Share NIL $25,568

5 31/8/2016 12,720,562 Ordinary SharesProfessional and Sophisticated

Investors $0.082/Share 7.5%$1,043,086-For Working Capital and Nanjing

Expansion

6 14/9/2016 382,342 Ordinary SharesProfessional and Sophisticated

Investor $0.082/Share 7.5% $31,352-For Working Capital and Nanjing Expansion

7 6/10/2016 271,973 Ordinary sharesIssued to Directors in lieu of

remuneration $0.088/Share NIL $24,027

Notes:1. 10,724,721 Ordinary shares were issued to Professional & Sophisticated Investors utilising Company’s placement capacity under listing Rule 7.1.Ordinary Shares issued are fully paid ordinary shares in the capital of the

Company with full entitlements to participate in dividends and to vote in meetings.2. The funds were raised via a share purchase plan offered to the shareholders at an issue price of $0.082/share. Ordinary Shares issued under share purchase plan are fully paid ordinary shares in the capital of the Company

with full entitlements to participate in dividends and to vote in meetings.3. A total of 255,680 ordinary shares were issued to Directors-M/s Richard Tegoni and Trevor Haines in lieu of their part cash remuneration for the quarter ending 31 March 2016. Issue of shares to Directors was approved by

the shareholders at the annual general meeting held on 17 November 2015.4. A total of 241,208 ordinary shares were issued to Directors-M/s Richard Tegoni and Trevor Haines in lieu of their part cash remuneration for the quarter ending 30 June 2016. Issue of shares to Directors was approved by the

shareholders at the annual general meeting held on 17 November 2015.5. 12,720,562 Ordinary shares were issued to Professional & Sophisticated Investors utilising Company’s placement capacities under listing Rule 7.1 and 7.1A.Ordinary Shares issued are fully paid ordinary shares in the capital

of the Company with full entitlements to participate in dividends and to vote in meetings.

6. 382,342 Ordinary shares were issued to Professional & Sophisticated Investors utilising Company’s placement capacity under listing Rule 7.1A. Ordinary Shares issued are fully paid ordinary shares in the capital of theCompany with full entitlements to participate in dividends and to vote in meetings.

7. A total of 271,973 ordinary shares were issued to Directors-M/s Richard Tegoni and Trevor Haines in lieu of their part cash remuneration for the quarter ending 30 September 2016. Issue of shares to Directors was approvedby the shareholders at the annual general meeting held on 17 November 2015.F

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8.4 Information required by ASX Listing Rule 7.3A.7 (Voting Exclusion)

A voting exclusion statement is included in the Notice. At the date of the Notice, the Company has not approached any particularexisting shareholder or security holder or an identifiable class of existing security holder to participate in the issue of the EquitySecurities. No existing shareholder’s votes will therefore be excluded under the voting exclusion in the Notice.


The Directors recommend that members vote in favour of Resolution 11.

OTHER MATTERS

The Directors are not aware of any other information that:

(a) is reasonably required by members in order to decide whether or not it is in the Company’s interests to pass each of the proposedresolutions; and,

(b) is known to the Company or to any of its directors;

that has not previously been disclosed either direct to members or generally to the market in accordance with the Company’s continuingdisclosure obligations under the Listing Rules of ASX.

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GLOSSARY

In this Notice and the Explanatory Memorandum:

a) $ means Australian Dollarsb) 10% Placement Facility has the meaning given in Section 8.1c) 10% Placement Period has the meaning given in Section 8.2d) AEDT means Australian Eastern Daylight Saving Time, being the time in Melbourne, Victoria, Australia.e) Annual Report means the Directors’ Report, the Financial Report and the Auditor’s Report in respect to the financial year

ended 30 June 2016.f) ASIC means Australian Securities and Investments Commission.g) Associate has the same meaning as in the Corporation Act.h) ASX means ASX Limited or the Australian Securities Exchange, as the context requires.i) ASX Listing Rules and Listing Rules means the listing rules of the ASX.j) Auditor means the auditor of the Company.k) Auditor’s Report means the auditor’s report on the Financial Report.l) Board means the Directors of the Company as at the date of this Notice of Meeting.m) Chair and Chairman means the person appointed to chair the Meeting.n) SECOS and Company means SECOS Group Limited (ACN 064 755 237).o) Closely Related Party has the meaning given in section 9 of the Corporations Act.p) Constitution means the constitution of the Company as at the commencement of the Meeting.q) Corporations Act means the Corporations Act 2001 (Cth).r) Director means a director of the Company.s) Equity Securities has the meaning as in the ASX Listing Rules.t) Explanatory Memorandum means the explanatory memorandum to the Notice of Meeting.u) Financial Report means the annual financial report prepared under chapter 2M of the Corporations Act for the Company

and its controlled entities.v) Key Management Personnel or KMP means key management personnel as identified in the Remuneration Report for

the financial year ended 30 June 2016.w) Loan Share Plan means share plan as adopted by the Company at 2014 Annual General Meeting.x) Managing Director means the Managing Director of the Company.y) Option means an option which entitles the holder to subscribe for a Share in the Company.z) Notice or Notice of Meeting means this notice of Annual General Meeting.aa) Proxy Form means the proxy form attached to the Notice of Meeting.bb) Remuneration Report means the remuneration report contained in the Company’s 2016 Annual Report.cc) Resolution means a resolution contained in this Notice of Meeting.dd) Trading Day means a day determined by ASX to be a trading day in accordance with the Listing Rules.ee) Share means fully paid ordinary share in the capital of the Company.ff) Shareholder means a shareholder of the Company.

In this Notice and the Explanatory Memorandum words importing the singular include the plural and vice versa.

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SECOS GROUP LIMITED All Registry communication to

(ACN 064755237) Advanced Share Registry LtdPO Box 1156

Mr Sam Sample Nedlands WA 6909

Flat 123123 Sample Street Telephone: (08) 93898033

Sampleville VIC 3030 Facsimile: (08) 92623723

Sequence No: 1234567890

PROXY FORMSTEP 1- Appointment of ProxyI /We being a member/s of SECOS Group Limited and entitled to attend and vote hereby appoint

the Chairman of the Meeting(mark with an “X”) OR

If you are not appointing the Chairman of the Meeting as yourproxy please write here the full name of the individual or bodycorporate (excluding the registered Security holder) you areappointing as your proxy.

Or failing the individual or body corporate named, or if no individual or body corporate is named, the Chairman of the meeting, as my/our proxy at the AnnualGeneral Meeting of SECOS Group Limited to be held at Patersons Securities, Level 15,Board Room,333 Collins Street, Melbourne 3000 on 18 November 2016at 10.30 am (AEDT) and at any adjournment of that meeting, to act on my/our behalf and to vote in accordance with the following directions or if no directions havebeen given, as the proxy sees fit unless I/We have appointed a Director, or any of the Company’s other key management personnel or a closely related party ofthat person, as our proxy.Chairman authorised to exercise undirected proxies on remuneration related resolutions: Where I/we have appointed the Chairman of the Meeting asmy/our proxy(or the Chairman becomes my/our proxy by default), I/we expressly authorise the Chairman to exercise my/our proxy on Resolutions 1,6,7,8,9 and10 (except where I/we have indicated a different voting intention below) even though Resolutions 1,6,7,8,9 and 10 are connected directly or indirectly with theremuneration of a member of key management personnel, which includes the Chairman. The Chairman intends to vote undirected proxies in favour of all theResolutions.

Important Note: If the Chairman of the Meeting is (or becomes) your proxy you can direct the Chairman to vote for or against or abstain from voting on Resolutions1,6,7,8,9 and 10 by marking the appropriate box in step 2 below.

STEP 2- Voting directions to your Proxy-please mark to indicate your directionsFor Against Abstain *

Resolution 1 To adopt Remuneration Report

Resolution 2 Re-election of Director- Mr. Richard Tegoni

Resolution 3 Re-election of Director- Mr. Donald Haller Jr.

Resolution 4 Ratification of Issue of shares to Sophisticated and Professional Investors

Resolution 5 Ratification of Issue of shares to Sophisticated and Professional Investors

Resolution 6 Issue of Shares to Group Chief Financial Officer- Mr. Edmond Tern

Resolution 7 Issue of Shares to Mr. Richard Tegoni in lieu of Director Remuneration

Resolution 8 Issue of Shares to Mr. Stephen Walters in lieu of Director Remuneration

Resolution 9 Issue of Shares to Mr. Donald Haller Jr. in lieu of Director Remuneration

Resolution 10 Issue of Shares to Mr. Trevor Haines in lieu of Director Remuneration

Resolution 11 Approval of 10% placement facility*If you mark the Abstain box for a particular item, you are directing your proxy not to vote on your behalf on a show of hands or on a poll and your voteswill not be counted in computing the required majority on a poll.

STEP 3- PLEASE SIGN HERE this section must be signed in accordance with the instructions overleaf to enable yourdirections to be implemented.Individual or Security holder 1 Security holder 2 Security holder 3

Sole Director and Company Secretary Director Director/Company Secretary

Contact Name ---------------------------- Contact Daytime Telephone -------------------- Date / / 2016

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Voting and Instructions for Appointment of Proxy:

YOUR VOTE IS IMPORTANTFOR YOUR VOTE TO BE EFFECTIVE IT MUST BE RECORDED BEFORE 10.30 AM (AEDT) ON 16 NOVEMBER 2016.

TO VOTE BY COMPLETING THE PROXY FORM

STEP 1 : Appointment of ProxyIndicate here who you want to appoint as your ProxyIf you wish to appoint the Chairman of the meeting as your proxy, mark the box. If you wish to appoint someone other than the Chairman of the meetingas your proxy please write the full name of that individual or body corporate. If you leave this section blank, or your named proxy does not attend themeeting, the Chairman of the meeting will be your proxy. A proxy need not be a member of the Company. Do not write the name of the issuer companyor the registered member in the space.

Proxy which is a Body CorporateWhere a body corporate is appointed as your proxy, the representative of that body corporate attending the meeting must provide evidence of his orher appointment by providing an “Appointment of Corporate Representative” form prior to admission. An Appointment of Corporate Representativeform can be obtained from the company’s Share Registry.

Appointment of a Second ProxyYou are entitled to appoint up to two proxies to attend the meeting and vote on a poll. If you wish to appoint a second proxy, an additional Proxy Formmay be obtained by telephoning the company’s Share Registry or you may copy this form.

To appoint a second proxy you must:(a) complete two Proxy Forms. On each Proxy Form state the percentage of your voting rights or the number of securities applicable to that

form. If the appointments do not specify the percentage or number of votes that each proxy may exercise, each proxy may exercise halfyour votes. Fractions of votes will be disregarded.

(b) return both forms together in the same envelope.

STEP 2 : Voting Directions to your ProxyYou can tell your Proxy how to voteTo direct your proxy how to vote, place a mark in one of the boxes opposite each item of business. All your securities will be voted in accordance withsuch directions unless you indicate only a portion of voting rights are to be voted on any item by inserting the percentage or number of securities you wishto vote in the appropriate box or boxes. If you do not mark any of the boxes on a given item, your proxy may vote as he or she chooses unless you haveappointed a Director, or any of the Company’s other key management personnel or a closely related party of that person, as your proxy. If you mark morethan one box on an item your vote on that item will be invalid. Where permitted, the Chairman of the meeting will vote undirected proxies in favour of allthe items of business. This will be on the basis that the Proxy Form expressly authorises the Chairman to vote all undirected proxies even if the resolutionis connected directly or indirectly with the remuneration of a member of key management personnel, which includes the Chairman.

If you appoint a Director (other than the Chairman of the meeting), or any of the Company’s other key management personnel or a closely related partyof that person, as your proxy and you do not direct your proxy how to vote on Resolutions 1,6,7,8,9 & 10, the proxy will not be permitted to vote yourproxy on those resolutions. Accordingly, if you want your vote to be counted on those resolutions, you should direct your proxy how to vote in respect ofit.

STEP 3: Sign the FormThe form must be signed as follows:Individual: This form is to be signed by the member.Joint Holding: Where the holding is in more than one name, all the members must sign.Power of Attorney: to sign under a Power of Attorney, you must have already lodged it with the registry. Alternatively, attach a certified photocopy of thePower of Attorney to this form when you return it.Companies: this form must be signed by a Director jointly with either another Director or a Company Secretary. Where the company has a Sole Directorwho is also the Sole Company Secretary, this form must be signed by that person. Please indicate the office held by signing in the appropriate place.

STEP 4: Lodgement of a ProxyThis Proxy Form (and any Power of Attorney under which it is signed) must be received at an address given below not later than 48 hours before thecommencement of the meeting at 10.30 a.m (AEDT) on 16 November 2016. Any Proxy Form received after that time will not be valid for the scheduledmeeting. Proxies may be lodged with the Company’s registry in any one of the following ways:

BY MAIL – Advanced Share Registry LimitedPO Box 1156,Nedlands,Western Australia- 6909

BY FAX- +61 (08) 92623723IN PERSON – Advanced Share Registry Limited

110 Stirling Highway,NedlandsWestern Australia -6009

Attending the Meeting: If you wish to attend the meeting please bring this form with you to assist registration.

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Changing the World of Packaging stellarfilmsgroup.comcardiabioplastics.comcardiabioproducts.cominfo@secosgroup.com.au

GROUP

GROUP

SECOS Group Limited and Its Controlled Entities

ACN 064 755 237SECOS Group LimitedSuite 6,205-211 Forster Road, Mt. Waverley VIC 3149+61 3 8566 6800 Cardia BioplasticsAustraliaSuite 6,205-211 Forster Road, Mt. Waverley VIC 3149+61 3 8566 6800 North AmericaPMB 122, 1124 Fir Avenue,Blaine,Washington 98230U.S.A.+1 888 605 1488 ChinaRoom 1402-140366 Qinhuai Lu,Jiangning Qu, Nanjing Shi, Jiangsu Sheng, China, 211100+86 25 5272 8473 Stellar Films GroupAustraliaSuite 6,205-211 Forster Road, Mt. Waverley VIC 3149+61 3 8566 6800 Australia6 Tilburn Road,Deer Park, VIC 3023 Australia+61 3 9361 8260 MalaysiaStellar Films (M) Sdn Bhd10, Jalan Sultan Muhamed,4 Kawasan Selat Klang Utara,42000 Pelabuhan Klang, Selangor Darul Ehsan,Malaysia+60 3 3176 3419 F

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SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

Resin Production Finished Goods Sales Offices Distributors

SECOS GROUP COMPANIES

Renewable

Earth Friendly

Sustainable

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2016

DIREC

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CORPOR

ECOMMERCE

CORPORS

CONTENTS

Page No

5 CORPORATE DIRECTORY

6 CHAIRMAN’S REPORT

7 DIRECTORS’ REPORT

28 AUDITOR’S INDEPENDENCE DECLARATION

29-77 FINANCIAL STATEMENTS

29 STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

31 STATEMENT OF FINANCIAL POSITION

32 STATEMENT OF CHANGES IN EQUITY

33 STATEMENT OF CASH FLOWS

34 NOTES TO THE FINANCIAL STATEMENTS

78 DIRECTORS’ DECLARATION

79 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS

81 SHAREHOLDERS’ INFORMATION

CONTENTS

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2016CORPORATEDIRECTORYDIRECTORS: Mr Richard Tegoni (Chairman) Mr Stephen Walters (Managing Director) Mr Trevor Haines (Executive Director -

Corporate Development) Mr Donald Haller Jr. (Non- Executive Director) COMPANY SECRETARY: Ms Rekha Bhambhani REGISTERED OFFICE: Suite 6, Level 2, 205-211 Forster Road Mount Waverley Victoria 3149 Telephone: +61 3 8566 6800 Email: [email protected] SHARE REGISTRY: Advanced Share Registry Limited 110 Stirling Highway, NEDLANDS W.A. 6009 Telephone: +61 8 9389 8033 Facsimile: +61 8 9262 3723 BANKERS: Bank of Melbourne Level 8, 530 Collins Street, MELBOURNE VIC 3000 AUDITORS: William Buck Level 20, 181 William Street, MELBOURNE, VIC 3000 Telephone: +61 3 9286 8000 LAWYERS: CBW Partners Level 1, 159 Dorcas Street, South Melbourne, VIC 3205 STOCK EXCHANGE: Australian Securities Exchange Level 45 South Tower, Rialto 525 Collins Street Melbourne Vic 3000

ASX Code: SES WEBSITE: Corporate: www.secosgroup.com.au E-commerce: www.cardiabioproducts.com

CORPRATE GOVERNANCE The Corporate Governance statement was STATEMENT: approved by the Board of Directors on 27 September 2016 and can be found on Invertors page at www.secosgroup.com.au

CORPORATE DIRECTORY

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2016CHAIRMAN’SREPORTDear Shareholders,

On behalf of the Board of SECOS Group Ltd (“SECOS” or the Company”) I am very pleased to present the Audited Annual Report for the year ending 30 June 2016. 2016 was the group’s first full year of trading as a combined entity since the merger of Stellar Films Group and Cardia Bioplastics Ltd. The year was characterised as a period of consolidation and operational restructuring which established a solid foundation for the group’s future growth in the emerging market of sustainable plastics. In particular, SECOS divested non-core assets such as Akronn joint venture interest, expanded manufacturing capacity in the key product segments of waste diversion and bio-hybrid™ films, appointed new distributors and sales staff within key markets, and consolidated operating overhead across the group’s main operating subsidiaries. All of these measures have yielded improvements in manufacturing performance and capacity, product quality, price competitiveness and operational effectiveness. The impact of these improvements on the company can best be measured in view of the group’s like by like financial performance for the period together with the quarter by quarter reduction of operating cash outflows throughout the year.

Net profit result improved on a like by like basis with a loss before income tax of $4.3m in 2016 from $5.4m in 2015. This represents an improvement in trading of $1.1m in the company’s first year. Improvements were achieved despite the significant focus, resources and investment needed to achieve the merger synergies together with the advancement of the group’s environmental technologies in key market segments and with customers globally. Operating cash outflow reduced throughout the year from $1.43m in Q1 to $0.25m in Q4. The Company has not yet achieved a positive trading profile however improvements in operating overheads and growth in sales and margin has established a good runway for the group to become profitable if it can deliver on its business plan in 2017.

New demand for SECOS’s sustainability products has been strongest for pet waste bags and council waste diversion products throughout the year with growth expected to continue in these areas. The group also expanded film sales into the Middle East and continued to supply key customers in Japan, USA, Malaysia, China and Europe as part of its core business. The combined sales of the group were $20.95m with a gross margin of $1.43m. Sales are expected to grow in 2017 which will significantly assist to achieve a profitable trading profile and will enhance needed improvements in cash flows.

The group’s sustainable product portfolio provides a world class suite of environmental solutions and will assist governments, corporations and consumers achieve their environmental improvement objectives which are fast becoming a priority for many organisations and individuals around the world. Legislation and consumer sentiment is continuing to demand improvements in environmental packaging and is expected to drive a wide range of packaging opportunities for SECOS as a world leader in sustainable packaging. Niche product segments such as dog waste bags, council and corporate waste diversion bags, coffee packaging and hygiene films are showing signs of very strong demand and are expected to play a prominent role in the group’s sales mix during the coming year. The application of sustainable films and resins continues to expand into a broad range of applications and will ensure the group is well placed as a leading plastics manufacturer with a compelling competitive advantage in the plastics industry. I would like to thank all shareholders for their support during the critical consolidation and foundation period of the Company’s life cycle and look forward to sharing the success of the Company as it becomes a prominent player in the sustainable plastics industry.

Richard TegoniChairman

CHAIRMAN’SREPORT

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2016DIRECTORS’REPORTThe Directors present their report on the consolidated entity consisting of SECOS Group Limited (“SECOS” or the “Company”) and the entities it controlled (“the Group”) at the end of, or during, the year ended 30 June 2016.

DIRECTORSThe following persons were Directors of SECOS during the financial year and up to the date of this report:

Richard Tegoni (Chairman)Stephen Walters (Managing Director) Frank Glatz (Chief Executive Officer, Resigned 29 July 2016)Trevor Haines (Executive Director, Corporate Development, CFO until 1 August 2016) Gideon Meltzer (Non-Executive Director, Appointed 7 November 2013,

Resigned 24 August 2015)Donald Haller Jr. (Non-Executive Director, Appointed 1 September 2016)

COMPANY SECRETARYThe Company Secretary is Rekha Bhambhani, B.Com, ACIS, ASA, ACA (ICAI), DISA (ICAI) who was appointed to the position on 10 August 2010. Miss Rekha Bhambhani had been Chief Financial Officer of SECOS prior to merger and has also worked as an assistant with the previous Company Secretary- Mr. John Wilson on company secretarial matters. Prior to that, she has worked in accounting and finance positions in India for more than 8 years.

PRINCIPAL ACTIVITIESDuring the year, activities were directed towards the development of the bioplastics business and with acquisition of Stellar Group Companies in the prior year, the Company has worked towards exploitation of expected synergies of merger with Stellar.

OPERATING RESULTSOn 21 April 2015, the Company completed its legal acquisition of 100% of shares in Stellar Group Companies. The acquisition was treated as a “reverse acquisition” in accordance with AASB 3 ”Business Combinations” whereby Stellar was deemed to be the accounting acquirer of the consolidated Group. Accordingly, within the financial statements and for analysis of the below results, it should be noted that the comparatives information in the preliminary consolidated statement of Profit or Loss and other comprehensive income for the year ended 30 June 2015 represent results of Stellar for the period from 1 July 2014 to 30 June 2015 and the results of Cardia for the period 22 April 2015 to 30 June 2015.For the year ended 30 June 2016, the financial statements and below results present the activities of the merged group for full 12 months period to June 2016.

The consolidated loss for the year attributable to the members of the Group was:

2016 2015 $ $

Loss for the year after income tax (4,951,804) (4,279,803)Profit attributable to non-controlling interests 6,358 -Net Loss attributable to members of the Company (4,958,162) (4,279,803)

To assist the interpretation of the underlying performance of the group, a pro forma statement on a “like for like” basis (with the previous corresponding period including Cardia’s full year trading results) has been prepared to facilitate a more meaningful analysis of the Group’s operating results.

DIRECTORS’REPORT

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2016DIRECTOR’SREPORTDIRECTORS’REPORT

Proforma Statement of Profit or Loss (12 months’ of Cardia and Stellar)

2016 2015 $ $

Sales from main operations 19,679,126 23,755,466Wholesale Material Trading Sales 1,275,542 284,383 20,954,668 24,039,849 Cost of sales (main operations) 18,558,262 23,363,497Cost of Purchase (Wholesale Material) 1,263,817 279,285 19,822,079 23,642,782 Other Trading income 296,393 445,345 Gross profit 1,428,982 842,412 Other income 281,126 299,801 Administrative expenses (1,041,969) (1,216,068)Employment benefits (2,509,267) (2,203,877)Marketing & Distribution expenses (317,825) (551,860)Research & Development expenses & Patent costs (649,327) (786,606)Depreciation & amortisation (352,364) (394,274)Borrowing costs (393,943) (321,186)Net foreign exchange (losses)/gains (191,041) (27,078)Other expenses (462,448) (47,707)Impairments (32,515) (1,066,350)Merger transaction costs (15,073) (459,134)Loss on sale of financial assets (75,120) -Gain on Acquisition - 500,000 Total Expenditure (6,040,892) (6,574,140) Loss before income tax (4,330,784) (5,431,927)Income tax expense (279,704) - Loss for the period from continuing operations (4,610,488) (5,431,927)Discontinued Operations (Equity Interest in Akronn Joint Venture) (341,316) (877,925)Discontinued Operations ( Brazilian Operations) - (1,048,138) Loss for the period (4,951,804) (7,357,990)

DIVIDENDSThe Directors do not recommend the payment of a dividend and no dividends have been paid or declared since the end of the last financial year.

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2016DIRECTORS’REPORT

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DIRECTORS’REPORT

REVIEW OF OPERATIONS:

SECOS is now 12 months further on as a merged entity and are starting to realise some of the synergies that under pinned the rationale for the merger between Cardia Bioplastics and Stellar businesses.

Some of the key successes include: • Improvementinturnoverby$3,670,274 • Improvementingrossprofitby$1,110,212 • Reductioninoperatinglossesonalikebylikebasisby$1.1million • DivestmentoftheholdinginAkronnIndustriesSdnBhd • Definedcorporatestrategyandimplementationplanandrecognitionofgrowthopportunities • Organisationreviewconductedandrecommendedchangesbeingimplemented • Greaterfocusandpurposefromthemanagementteam • GreaterexposureandparticipationinWasteDiversionindustryconferencesandseminars • ImprovedmanufacturingefficiencyattheNanjingplant • ExpansionoftheNanjingplantonthebackofarapidlyexpandingdogbagmarket • Stellar’splantinAustraliarampingupproductiontoanewsustainablelevel • Consolidation of Cardia BioplasticsMalaysia under StellarMalaysia Films to support local ban of single use non

degradable bags • SustainedgrowthinStellarFilmsMalaysiasaleswithre-engagementofseveralcustomers • ExtensiveproducttestingofBiohybrid™hygienefilmbyseveralmanufacturersacrosstheglobe • Patent,R&DandIntellectualpropertypositionenhanced • ExpansionoffilmsalesintotheMiddleEast

SALES REVIEW BY STRATEGIC BUSINESS UNIT

Cardia Bioplastics posted revenues of $5,474,445 for the financial year FY2015/16 compared to full year revenues of $6,552,605 for the financial year FY2014/15. The main reason for the decrease in revenue is no sales to its former plant in Brazil ($387k in 2014/2015) and the reduction of very low margin government business in China ($800k in 2014/2015).

A review of less strategic, low margin markets and customers was undertaken which has resulted in a renewed focus on the now core markets of Waste Diversion as well as Films and Packaging.

The dog bag market, which was previously not regarded as an important product sector, has now emerged as a major opportunity for the business with customers in the USA, China and Australia requesting more of the product. A business case to expand production was approved and saw increased production capacity of dog bags become available in August/September. Further growth in this segment is expected as demand for Cardia’s high quality products continues to grow.

Cardia continued its traction in global commercialisation during FY2015/16 converting a number of its product developments into global sales. These sales are the culmination of a lengthy and rigorous sales development process. This process validates the environmental offering of Cardia products, their cost-competitiveness and that they meet the specific requirements of customers’ product applications. With a growing list of long-term customers, the Company is making significant headway towards establishing itself as a global manufacturer and supplier of renewable resins and finished products to the plastics and packaging industries.

Stellar Films Australia posted revenues of $5,536,360 for the financial year FY2015/16 compared to revenues of $3,390,173 for the financial year FY2014/15 which represents a 66% increase in revenue. The increase reflects the Stellar Films business strategy to keep open the Australian manufacturing facilities and build on the in-house environmentally preferred Biohybrid™ film IP that has been exclusively developed.

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DIRECTORS’REPORT

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2016

The Biohybrid™ film range is well suited to the hygiene industry and extensive trial material has been supplied to several strategic convertors of hygiene products throughout the world.

In addition to the Biohybrid™ film developments a considerable amount of effort has gone in to re-establishing its supply position back in to the Middle East markets. Strong interest has been shown by several long time customers of Stellar Films which should see sales start back up again in the 2016/2017 year.

Australian domestic sales remain at similar levels to what they were prior to last year’s merger with the Cardia Bioplastics business. The weakening of the Australian Dollar has further strengthened Stellar’s competiveness in its targeted export markets.

Stellar Films Malaysia posted revenues of $10,240,256 for the financial year FY2015/16 compared to revenues of $13,332,168 for the financial year FY2014/15 which represents a 23% decline in revenue. The decline in revenue was mainly due to inconsistent and off spec polymer supply to Malaysian plant that in turn caused production downtime. The issue has been now resolved by securing supply from alternative and reliable supplier.

The business has successfully secured business in to several export markets (accounting for 90% of all sales) servicing the hygiene and pet care markets throughout Asia.

The recent drop in the cost of polymer resins coupled with the depreciation of the Malaysian Ringgit has seen the business gain significant sales momentum across all categories.

Taking all of these aspects into consideration, the business now has a good platform to further strengthen and grow its sales portfolio as well as review several capital expansion projects.

MARKET SEGMENT REVIEW SECOS Group is focused on leveraging its expertise and positioning in its target markets of Films & Packaging and Waste Management Solutions. Below is a review of the key sales activities and achievements of FY2015/16.

FILMS & PACKAGINGThe global plastics packaging market is estimated to be a $200 billion market. 1

Sustainable and renewable Bioplastics packaging is < 1% of the plastics packaging market with exponential growth potential .2

SECOS’ key target segments of the packaging market are personal care and hygiene, protective and food packaging.

SECOS Group is well positioned to benefit from the trend towards sustainable packaging, offering customers a broad range of high quality Stellar cast films and the choice of sustainable Cardia Biohybrid™ or compostable resin technology for their packaging or plastic product solutions.

Stellar Films is an international manufacturer of high quality cast films tailored to their customer requirements, including films for the disposable nappy, feminine hygiene, incontinence and medical disposable markets.

Cardia Biohybrid™ proprietary technology combines renewable thermoplastics with polyolefin material to reduce dependence on finite oil resources and lower carbon footprint. Biohybrid™ films produced on Stellar Films proprietary cast film process are differentiated through their unique soft touch, warm feel and quietness in handling that is ideal for personal care product applications. Environmentally preferred and body friendly, containing GMO free renewable plant based material, Biohybrid™ films contain less oil, have a lower carbon footprint and are heavy metal free, ideal attributes for the growing personal care and hygiene product applications.

1 Packagingtoday.com, Packaging industry overview (2011)2 European Bioplastics Industry Report 2010,

www.european-bioplastics.org/market/

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The absorbent hygiene products market is a $72 billion industry growing 5.5% a year, with growth being driven by demographics and economic development across both developed and developing markets. Factors such as, births increasing across Asia, ageing populations, female population growth and increasing middle classes with higher disposable income are driving demand for quality disposable personal hygiene products including baby nappies, feminine hygiene products and adult incontinence products.

Brand owners and consumers are demanding more environmentally friendly, sustainable and non-toxic solutions for disposable personal hygiene products. Cardia Biohybrid™ hygiene films deliver on all requirements - environmentally friendly, sustainable, heavy metal free and body friendly with soft touch and warm feel. The new Biohybrid™ hygiene films are both a more sustainable and a healthier choice.

During FY2015/16 SECOS Group successfully scaled up production at Stellar Films Australian operations of its Cardia Biohybrid™ films tailored for the global personal care and hygiene product markets. Since its inception, SECOS has received product requests and specifications for its Biohybrid™ hygiene films from several potential customers for in-house validation and product performance testing. Stellar Films Australian manufacturing plant has the capacity to produce up to 6,000 tonnes of high quality hygiene films per annum.

The following commercial and business communiques were delivered to the market in FY2015/16: Kenyan manufacturer places initial orders with Stellar Films for expanding personal care and hygiene marketStellar Films Group receives initial container orders for its high grade hygiene films for expanding Kenyan personal care and hygiene market. Hygiene films manufactured by Stellar Films Malaysia business which is achieving high sales growth. Stellar Films Malaysian manufacturing plant has the capacity to produce up to 9,000 tonnes of high quality hygiene films per annum.

SECOS Group successfully scales up production of Biohybrid™ films for global hygiene marketSECOS successfully scales up production of environmentally friendly, high quality and cost competitive Biohybrid™ films tailored for the global personal care and hygiene product markets. SECOS has received product requests and specifications for its Biohybrid™ hygiene films from ten potential customers for in-house validation and product performance testing. Stellar Films Australian manufacturing plant has the capacity to produce up to 6,000 tonnes of high quality hygiene films per annum.

Cardia secures European patent protection for its bioplastics technology European Patent Office grants cornerstone patent for Cardia Compostable resin and process technology.

Cardia Bioplastics expands patent portfolio to twenty-eight registered patents protecting its bioplastics technologies with thirty-nine more patents pending registration.

Cardia’s proprietary innovation in compostable, Biohybrid™ and PPC-starch technologies validated through international patents.

Cardia capitalises on growth of bioplastics with leading brand owners and government bodies where strong intellectual property position is a key requirement for commercial success.

Cardia Bioplastics launches new Cardia Bioproducts website New Cardia Bioproducts website launched, retailing & wholesaling Cardia Bioproducts range.Website makes Cardia Bioproducts Compostable and Biohybrid™ bag range available to households, businesses and councils.

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Stellar Films Australia - Investor UpdateThe Board of SECOS Group Ltd (SES) is delighted to provide an investor update with regard to the progress of Stellar Australia’s Cast Film Plant since the merger of Cardia Bioplastics and Stellar Films Group.

Since the reopening of Stellar’s plant in April 2015, the business has secured sales worth approx. $400,000 per month representing annualised sales revenue of $4,800,000 per annum.

SECOS increases sales of bioplastics bag products to major US and European RetailersMonthly orders of Biohybrid™ and Compostable dog waste bags to major US and European Retailers have now increased to over $100,000 per month, a 60% increase on sales in the last 12 months.

Expansion of film and bag production at the Company’s Nanjing, China plant has driven production efficiency.

Bag making capacity now exceeds 250 million Biohybrid™ and Compostable bags per year.

Current extrusion and bag making capacity at the Nanjing plant is fully utilised.

Approximately $300,000 of proceeds from the recently announced Share Purchase Plan earmarked to further expand production capacity to meet anticipated further growth in global demand.

SECOS expands US patent position United States Patent and Trademark Office grants patent for Cardia Biohybrid™ resin in foam applications.

Cardia expands patent portfolio to twenty patents granted with fourty one more pending registration.

Intellectual Property underpins commercially successful Cardia Compostable and Biohybrid™ product ranges.

Cardia capitalises on growth of bioplastics with leading brand owners where strong intellectual property position is a key requirement.

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WASTE MANAGEMENT SOLUTIONSOrganic waste is a component of the waste stream from plant or animal sources that is readily biodegradable. It forms a significant proportion of waste generated, and an even more significant portion of waste sent to landfill. Degradation of organics in landfill generates the potent greenhouse gas methane, and also produces potentially polluting leachate. In 2011, around 14 million tonnes of organic waste was generated in Australia alone.3 Separating organic waste at household level and diverting it from landfill is being implemented by many councils around the world. Biohybrid™ and compostable waste management products can significantly contribute to efficient organic waste management through organics recycling. It is expected that Cardia’s sustainable waste management products will benefit from the regulatory changes that are being implemented by many governments around the world.4

SECOS Group is developing the sustainable waste management products market with a particular emphasis on organic waste recycling through its Cardia Bioplastics business. Cardia’s key sales regions for its environmentally preferred waste management products were China, USA, Europe and Australia during FY2015/16 with the expectation of increasing sales going forward.

Cardia conducted a strategic review of the global waste management products market and decided to focus on the organic waste management market with a particular focus on organics recycling bags and pet care products. Cardia has established a fully integrated resin, film and bag making facility at its factory in Nanjing, China to service this particular growth market with a Biohybrid™ and Compostable bag making capacity of over 250 million bags per year. Cardia launched its new Compostable and Biohybrid™ product ranges in response to growing market demand for bioplastics packaging during FY2015/16 and with the Board of Directors approval will further grow its investment in to the dog waste bag market with sanction to expand capacity by 50% during Q1 of FY2016/17. The new Cardia Bioproducts Compostable and Biohybrid™ bag range offers businesses and households the opportunity to make a quality sustainable choice. Cardia Compostable bags are now available for retailers, councils, businesses and households enable greater diversion of organic waste from landfills.

In order to further extend its market reach, Cardia launched its Cardia Bioproducts website where consumers, businesses or councils can now buy bags directly from Cardia (www.cardiabioproducts.com). The Cardia Bioproducts website sells compostable bags ranging from produce bags, kitchen tidy bags, various sizes of household waste bags, shopping bags, garden bags, nappy bags to dog waste bags.

Over the last five years, Cardia Bioplastics has closely cooperated with Australian Councils, waste management companies, waste bin manufacturers and industrial composters to validate and optimise the product offering of its compostable kitchen tidy bags and kitchen tidy bins, from household use to waste collection and composting. With many local and overseas governments and councils accelerating organic waste diversion programmes, Cardia continues to work with them and industry advisory groups to ensure that the business is well positioned to take advantage of an increased awareness of the need to have a better waste management solution. Key staff members within the organisation are active members of key industry groups including the Australian Organics Recyclers Association, Waste Management Association of Australia & are committee members of the Australian Bioplastics Association.

Since successfully delivering the organics diversion programme, Cardia has secured orders from four additional councils in the State of Victoria for large scale organics diversion programmes. Kitchen organic waste collection using Cardia Compostable bags will expand and cover approximately 100,000 households representing 5% of households in the State of Victoria with further growth expected in Victoria, Australia and internationally.

Since the launch of the Cardia range of Compostable and Biohybrid™ dog waste bags at Interzoo 2014 in Germany, the business continues to build on the initial success and has been successful in securing orders from several councils and pet store chains which was supported by the investment in additional dog bag manufacturing assets. It is anticipated that the additional capacity will be fully utilised during 2016 that will then require further investment in dog bag manufacturing assets.

3 http://www.environment.gov.au/system/files/resources/0a517ed7-74cb-418b-9319-7624491e4921/files/overview-organics_0.pdf4 European Commission, DG Environment, http://ec.europa.eu/environment/waste/compost/index.htm

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TECHNOLOGY REVIEWDuring the financial year 2015/16, SECOS Group through its Cardia Bioplastics business made further developments in its bioplastics technology, strengthening its Intellectual Property position. Cardia now owns an intellectual property portfolio of eleven patent families, with the number of registered patents increasing to thirty-five so far granted in Europe, USA, Australia, China, Japan, New Zealand and South Africa, and forty-nine more patents pending registration. The patents protect the composition formulations, manufacturing processes and application technology invented by Cardia’s Research & Development team.

Intellectual Property underpins the technical differentiation of Cardia’s Compostable and Biohybrid™ product range. Cardia capitalises on growth of bioplastics with leading brand owners and government bodies where strong intellectual property position is a key requirement for commercial success.

See relevant patent announcements in the films and packaging summary.

MANUFACTURING REVIEW BY STRATEGIC BUSINESS UNIT SECOS Group has developed proprietary manufacturing processes for its bioplastic resin, high quality cast films and finished products derived from renewable resources. SECOS Group manufacturing plants are located in Melbourne, Australia, Kuala Lumpur, Malaysia and Nanjing, China. SECOS annual production capacity is 7,200 tonnes of bioplastics resins and c. 15,000 tonnes of cast film and 2,000 tonnes of blown film and finished products with cost effective capacity expansion options. The Company has set up fully integrated product supply from bioplastic resin to certified compostable and Biohybrid™ films and bags that ensures product quality and cost competiveness. All operations are quality systems ISO9001 certified.

Cardia Bioplastics manufactures its bioplastic resins, films and finished products derived from renewable resources at its Nanjing, China manufacturing plant.The plant 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. The plant has low operating costs and has spent significant time (this year) spent improving its efficiency and production recording.In line with its business strategy and improved manufacturing efficiencies the business will expand its dog bag manufacturing capacity to take advantage of its customers increasing demand for these products in the USA. As production has stabilised and progresses towards high utilisation, the business has managed to lower its relative production cost with a positive effect on product margins and profitability of the business.

Stellar Films Australia produces co-extruded high quality cast films for the hygiene, pet care and medical markets at its Melbourne, Australia manufacturing plant. This plant has the capacity to produce up to 6,000 tonnes of high quality hygiene cast film per annum. The plant is regarded as one of the most efficient plants of its type in the world and enjoys enviable product quality and efficiency rates. The production plant is differentiated through its co-extrusion capability and embossing technology. Ideal for applications such as nappy back sheets and sanitary napkins and manufacturing the newly developed Biohybrid™ range of films.

During the FY2015/16 the Stellar Films Australia and Cardia Bioplastics technical teams have successfully scaled-up production of its environmentally friendly, high quality and cost competitive Biohybrid™ films tailored for the global personal care and hygiene product markets. The company now manufactures a broad range of Biohybrid™ hygiene films at its Stellar Films Australian cast film manufacturing plant to meet customer demand. The Biohybrid™ films produced on Stellar Films proprietary cast film process exhibits a high performance property profile (softer and stronger) and delivers product innovation for a rapidly changing market.

The Stellar Films Australia plant continues to be one of the major suppliers of film for indoor pet waste pads to Japan. With around 60% of spare capacity available there has been a significant push in to the Middle East & India markets to re-establish the position it once enjoyed.

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Stellar Films Malaysia produces its high quality cast films for the hygiene, pet care and medical markets at its Kuala Lumpur, Malaysia manufacturing plant. This plant has the capacity to produce up to 9,000 tonnes of high quality hygiene cast film per annum. The production plant is differentiated through its multiple cast film lines, embossing, printing and lamination capability. It can efficiently produce a broad range of hygiene cast films tailored to its specific customer processes. The business is located in a government approved manufacturing zone with the facility being within close proximity of Malaysia’s major shipping port. Malaysia is centrally located in the high growth Asian market.

The Stellar Films Malaysia business further strengthened its position by leveraging the Cardia Bioplastics technology & establishing Cardia Bioplastics Malaysia. It has also appointed a stand-alone General manager to look after all aspects of the business including strategic development.

Cardia Bioplastics Malaysia will supply the local plastics industry with resins as well as converted bag products to support the Malaysian federal governments initiative to ban polyethylene single use bags.

The Stellar Films Malaysia Production team runs a very efficient operation with a strong focus on quality management. The combination of product quality, cost structure, efficiency of supply, central geographic location differentiates Stellar Films Malaysia plant as a preferred supplier to their ‘Just in Time’ supply driven customers located in the high growth Asian region.

During the FY2015/16 the Stellar Films Malaysia production team focused on further enhancing their quality operation to meet and exceed their customers’ requirements and increasing orders. Plant efficiency could have been better had it not been for a supply of off specification polymer.

In order to further enhance its market position and more closely align with its Japanese customers ‘Just in Time’ manufacturing and supply chain requirements, Stellar Films Malaysia has successfully implemented a Kaizen 5S workplace organization programme.

See relevant patent announcements in the Films and Packaging summary.

EmployeesSECOS Group has a total of 163 employees of which 70 are located in China, 77 in Malaysia, 15 in Australia and 1 in the USA.

Investments On 6 October 2015, SECOS sold its investment in Bioglobal Limited (ACN 091 488 505) (Bioglobal) for consideration of $488,280. SECOS held 18.78 million ordinary shares in Bioglobal representing 2.97% equity interest in that company. Bioglobal is a developer and manufacturer of integrated insect management products and services. The sale of the investment resulted in a loss of $75,120 on the carrying book value of this investment, and a profit of $244,140 on the investment’s cost base.

The Company held other investments which were immaterial in value and/or were inactive during the year.

Patents and Trade MarksThe Company continued to invest funds into securing and expanding its IP position and now owns a portfolio of 11 patent families with 35 patents granted and an additional 49 applications at various stages of the granting process.

The patents cover Bioplastics formulations, processes and applications for global packaging products.

SECOS patent families (11) are held in the name of Tristano Pty Ltd. The CO2 Starch patents are held in the name of CO2 Starch Pty Ltd. Both are wholly owned subsidiary companies of SECOS Group Ltd.

SECOS also holds 4 trademarks.

FINANCIAL POSITIONThe net assets of the consolidated entity were $4.8 million, as at 30 June 2016 compared to $7.9 million as at 30 June 2015,

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a decrease of $3.1million. This decrease has resulted primarily due to the operating losses during the year:

$ (In Millions) Capital Raising (net of costs) 1.93Loss from Operating Activities for the year (4.95)Foreign currency translation differences for foreign operations (0.09)

The Directors consider the group to be in a stable financial position.

EARNINGS (LOSS) PER SHARE

2016 2015 $ $

Basic Loss Per Share (cents per share) (0.038) (0.070)

Weighted average number of ordinary shares used in the calculation of basic loss per share 130,143,555 61,336,204

SIGNIFICANT CHANGES IN STATE OF AFFAIRSThe following significant changes in the state of affairs of the Group occurred during the year.

1. On 6 October 2015, SECOS sold its investment in Bioglobal Limited (Bioglobal) for consideration of $488,280. SECOS held 18.78 million ordinary shares in Bioglobal representing 2.97% equity interest in that company.

2. On 4 April 2016, a total of 13,364,953 new ordinary shares were issued as a result of the Share Purchase Plan (SPP). SPP was announced on 9 March 2016 to provide eligible shareholders the opportunity to acquire up to A$15,000 worth of SECOS shares at A$0.082 per share.

3. On 30 March 2016, the Company successfully raised $879,427 via a placement to professional and sophisticated investors. The Share Placement was made at the same price of A $0.082 per share that was offered to existing shareholders under the SPP. A total of 10,724,721 new ordinary shares were issued as a result of the share placement. New Shares were issued under the Company’s 15% placement capacity pursuant to Listing Rule 7.1.

4. On 4 April 2016, the Company issued 255,680 fully paid ordinary shares under the Loan Share Plan to two of its directors- M/s Tegoni and Haines, in lieu of the part payment of their respective remuneration for the quarter ending 31 March 2016.

5. On 21 June 2016, SECOS completed the disposal of its 50.8% equity interest in Akronn Industries Sdn Bhd to Itasa Servicios Generales SL and received of the first tranche (50%) of cash consideration- $101,714.

EVENTS AFTER THE REPORTING DATE Other than the matters discussed below, there has not arisen in the interval between the end of the financial year and the date of this report, any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company to affect the operations of the consolidated entity, the results of these operations or the state of affairs of the consolidated entity in subsequent years.

− Effective 29 July 2016, Dr.Frank Glatz has resigned as a Director of SECOS Group and CEO of Cardia Bioplastics. Frank’s role as CEO of Cardia Bioplastics will be absorbed by Stephen Walters, SECOS Group’s Managing Director.

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− Effective 1 August 2016, Mr Edmond Tern has been appointed as Chief Financial Officer of the Company. Edmond will replace current CFO Trevor Haines. Trevor has transitioned to a Corporate Development role charged with expanding sales of the Company’s sustainable bioplastic technology to key customers and will continue to serve on the Board.

− On 5 July 2016, the Company issued 241,208 fully paid ordinary shares under the Loan Share Plan to two of its directors- M/s Tegoni and Haines, in lieu of the part payment of their respective remuneration for the quarter ending 30 June 2016. The issue of these shares to Directors was approved by shareholders at the Annual General Meeting held on 17 November 2015 (Resolutions 6 & 9). The shares were issued at an issue price of $0.106/share, which was determined based on the volume weighted average sale price of SECOS shares for June’16 Quarter.

− Effective 1 September 2016, Mr Donald F. Haller Jr has been appointed as a Non-executive Director of the Company. Don Haller is a major shareholder in EarthVision Bio Solutions, Inc (“EarthVision”). EarthVision is a key distributor of SECOS products in the USA, and the appointment is intended to strengthen the strategic relationship between SECOS and EarthVision as well as support continued growth in the US market.

− On 31 August 2016, SECOS completed placement of 12,720,562 ordinary shares and raised $1,043,086. The majority of the investment in the Placement was made by Don Haller and parties introduced by Mr Haller. The shares under the Placement were issued pursuant to the Company’s 15% and 10% placement capacities.

− On 14 September 2016, SECOS issued 382,342 shares and raised further $31,352 under the placement. The shares under the Placement were issued pursuant to the Company’s 10% placement capacity.

FUTURE DEVELOPMENTS SECOS will continue to focus on its principal business activities with its sustainable packaging strategy and waste management solutions.

ENVIRONMENTAL REGULATIONS The Group’s operations are not subject to any significant environmental regulations under the law of the Commonwealth or the States.

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Richard TegoniMBA (AGSM), Diploma in Financial Markets (SIA)

Stephen WaltersB.Busi (Marketing)

Dr Frank Peter GlatzPh. D, M.Sc,MBA

Trevor HainesB.Com, FCPA

Gideon MeltzerB.Eco ,LLB, Graduate Diploma in Taxation Law

Donald Haller Jr.CPA

Experience:

Special Responsibilities:

Interest in Shares & Options: Directorships held in Other Listed Entities:

Experience :



Experience:


Interest in Shares & Options: Directorships held in other Listed Entities

Experience :

Special Responsibilities


Experience :Special Responsibilities:Interest in Shares & Options: Directorships held in Other Listed Entities:

Experience:Special Responsibilities: Interest in Shares & Options: Directorships held in other Listed Entities:

Appointed Non-Executive Director 21 December 2012Non-Executive Chairman effective 18 October 2013Executive Chairman effective 16 September 2014Background in Finance & Banking and Sales & MarketingExecutive ChairmanCorporate Strategy and Capital Raisings Member of Audit and Compliance committee6,216,320 Ordinary SharesHas not held a directorship in any other listed entity over the last 3 years

Appointed Managing Director -21 April 2015More than 20 years in the plastics and packaging industries in general management, commercial and sales roles with Borden Chemical, ICI Australia and Orica.As Managing Director is responsible for the general management of the Company.28,664,835 Ordinary SharesHas not held a directorship in any other listed entity over the last 3 years

Appointed 1 May 2009Resigned 29 July 2016Background in the Fast Moving Consumer Goods (FMCG) companies, plastic industry with particular emphasis on development of new technologies and packaging applications.As Chief Executive Officer was responsible for the development and international marketing of Bioplastics business. 219,530 Ordinary SharesHas not held a directorship in any other listed entity over the last 3 years.

Appointed Chief Financial Officer -21 April 2015More than 20 years in senior accounting and financial management roles in various divisions of ICI Australia, AVC and Orica.As Chief Financial Officer was responsible for the financial management of the Company. Effective 1 August 2016, he has assumed role of Corporate Development Director.29,072,309 Ordinary SharesHas not held a directorship in any other listed entity over the last 3 years

Appointed 7 November 2013 Resigned 24 August 2015 Experienced Corporate ExecutiveNon-Executive DirectorCorporate Governance196,193 Ordinary Shares. Has not held a directorship in other listed entity the last 3 years

Appointed 1 September 2016 Distinguished background in accounting, management consulting and leading practices of professional consultantsNon-Executive Director11,353,199 Ordinary SharesHas not held a directorship in any other listed entity over the last 3 years.

INFORMATION ON DIRECTORS

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2016

REMUNERATION REPORT (AUDITED)

Remuneration PolicyThe Group’s policy for determining the nature and amount of remuneration of board members and senior executives of the Group is as follows:

• The remunerationstructure forexecutiveofficers, includingexecutivedirectors, isbasedonanumberof factors,including length of service and particular experience of the individual concerned.

• All keymanagementpersonnel receiveabase salaryandsuperannuationand/orequivalent.FringeBenefitsandperformance incentives are negotiated with the employees depending upon their duties and responsibilities and their area of expertise.

• Performance Incentives are generally paid once predetermined key performance indicators have been met.Predetermined key performance indicators include achievement of quarterly revenue targets set by the Board coupled with achievement of gross margin targets.

• Incentivesarepaidintheformofabonusasapercentageofbasesalary. Key management personnel receive a superannuation guarantee contribution/social security payments when required by the government of the respective region and do not receive any other retirement benefits.

Upon retirement, key management personnel are paid employee benefit entitlements accrued to the date of retirement. Termination payments are generally not payable on resignation or dismissal for serious misconduct. Termination payments cannot exceed more than 1 year’s base salary as required by Corporations Act 2001.

All remuneration paid to key management personnel is valued at the cost to the Company and expensed.

The Company has not used services of remuneration consultants during the year.

The Board’s policy is to remunerate non-executive directors at market rates for time, commitment and responsibilities. The Board collectively determines payments to the non-executive directors and reviews their remuneration annually, based on market practice, and duties and accountability. Independent external advice is sought when required. No such advice was sought during the year.

DIRECTORS’ MEETINGS

The number of meetings of the Company’s Board of Directors and the Audit and Compliance Committee held during the year ended 30 June 2016 and the number of meetings attended by each Director.

DIRECTOR BOARD MEETINGS AUDIT & COMPLIANCE COMMITTEE Number eligible Number Number eligible Number to attend attended to attend attended R Tegoni 13 13 2 2 S Walters 13 13 - - F P Glatz 13 11 - - T Haines 13 12 - - G Meltzer 2 2 - -

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2016

REMUNERATION REPORT (CONTINUED)

ASX listing rules require the aggregate non-executive directors remuneration be determined periodically by a general meeting. The most recent determination was at the General Meeting held on 7 July 2009, where the shareholders approved an aggregate remuneration of $220,000.

Although no executive options are currently on issue, any options issued in the future and not exercised before or on the date of termination will automatically lapse.

Performance-based RemunerationThe Group seeks to emphasise reward incentives for results and continued commitment to the Group through the provision of incentive payments based on the achievement of revenue targets return linked with profitability targets. The performance-related proportions of remuneration based on these targets are included below. The objective of the reward schemes is to both reinforce the short and long-term goals of the Group and provide a common interest between management and shareholders.

Company Performance, Shareholder Wealth and Directors’ and Executives’ RemunerationThe remuneration policy has been tailored to increase goal congruence between shareholders, directors and executives. To achieve this aim, performance based bonus incentives based on key performance indicators have been introduced. For FY2016, remuneration of few key management personnel was linked with performance, details are provided in the table below. It is not possible to assess shareholder wealth against key management remuneration in the current year as the group has operated as merged entity only for 14 months since the merger transaction was completed last year.

With the focus of the company’s business activities being to expand the new merged business, the Company believes that this policy is effective.

Performance in relation to the KPIs is assessed annually, with bonus incentives being awarded depending on the number and deemed difficulty of the KPIs achieved. Following the assessment, the KPIs are reviewed by the Board in light of desired and actual outcomes, and their efficiency is assessed in relation to the Group’s goals and shareholder wealth, before the KPIs are set for the following year.

No Executive was paid performance based remuneration or incentives during the year as revenue targets and profitability targets set for performance based remuneration have not been met.

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The key management personnel of the Group consisted of the following persons:

Terms of employment require that the relevant group entity provide the contracted person with a minimum period of notice (one to three months) prior to termination of contract. Similarly a contracted person has to provide minimum period notice (one to three months) prior to the termination of their contract. In the instance of serious misconduct the Company can terminate employment at any time.

Group Key Management

Personnel

Position held as at 30 June 2016 and any change during the year

Contract Details(Duration &

Termination)

Proportions of remuneration

packagerelated to

performance

Proportions of remuneration

packagenot related to performance

Executive Directors

Richard Tegoni Executive Chairman effective 16 September 2014Non-Executive Chairman effective 18 October 2013Appointed Non-Executive Director-21 December 2012

No Fixed TermAppointed 21 December 2012

- 100%

Stephen Walters Appointed Managing Director effective 21 April 2015

2 years from 21 April 2015 - 100%

Frank Glatz Managing Director until 20 April 2015, assumed role as Chief Executive Officer effective 21 April 2015.

No Fixed TermResigned 29 July 2016

20% 80%

Trevor Haines Appointed Chief Financial Officer effective 21 April 2015. He has assumed role of Corporate Development Director, effective 1 August 2016.

2 years from 21 April 2015

- 100%

Non-Executive Directors

Gideon Meltzer Non-Executive DirectorResigned as Non Executive Director effective 24 August 2015.

No Fixed TermAppointed 7 November 2013Resigned 24 August 2015 - 100%

Other Key Management Personnel

Rekha Bhambhani Company Secretary No Fixed TermAppointed 10 August 2010 - 100%

Robert Morgan Appointed as Group Manufacturing Director effective 21 April 2015

2 years from 21 April 2015- 100%

Ong Kean Hwa Executive Director of Stellar Films (Malaysia) Sdn Bhd.

No Fixed TermAppointed 1 July 2003 - 100%

Peter Symons Appointed as Manufacturing Manager effective 21 April 2015

No Fixed TermCeased to be KMP effective 21 April 2015 - 100%

Chen Yi Managing Director of Biograde (Nanjing) Pty Ltd

No Fixed Term20% 80%

Chen Chan Ping Technical Director, China Operations No Fixed TermAppointed 1 May 2009 - 100%

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2016

Changes in Directors and Executives subsequent to year-end


− Effective 1 August 2016, Mr Edmond Tern has been appointed as Chief Financial Officer of the Company. Edmond has replaced current CFO Trevor Haines. Trevor has transitioned to a Corporate Development role charged with expanding sales of the Company’s sustainable bioplastic technology to key customers and will continue to serve on the Board.


Other than the above, there were no changes in Directors and Executives subsequent to year-end.

Remuneration Details The remuneration disclosures for the Key management personnel contained in the following tables are as follows:

- The 2016 disclosures represent 12 months remuneration of the key management personnel of Group’s Key management personnel.

- The 2015 disclosures represent 2 months remuneration (the period from 22 April 2015 to 30 June 2015) of the Group’s Key management personnel and 10 months remuneration (the period from 1 July 2014 to 21 April 2015) of the key management personnel of Stellar Films Group Pty Ltd.

2016

Name Short term BenefitsPost-

EmploymentLong –term

benefits

Equity-settled share-based payments1

Total

Salary and Fees

Non-monetary benefits

Superannuation or Equivalent

Long Service Leave

Shares

$ $ $ $ $ $

R.Tegoni 75,000 - - - 25,000 100,000

S. Walters 195,540 4,707 18,576 3,570 - 222,393

F. Glatz 198,540 - 18,861 3,625 - 221,026

T.Haines 148,104 - 16,553 3,181 26,136 193,974

G.Meltzer 6,667 - - - - 6,667

R.Bhambhani 100,000 - 9,500 1,825 - 111,325

R.Morgan 174,720 6,165 16,598 3,190 - 200,673

O.Kean Hwa 118,491 - 14,219 - - 132,710

Yi.Chen 82,641 - 34,239 - - 116,880

C. Chen 68,289 - - - - 68,289

Total 1,167,992 10,872 128,546 15,391 51,136 1,373,937

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1Share based payment are shares issued in lieu of cash remuneration and were not based on performance. Details of the share issues are provided below:

− On 4 April 2016, the Company issued 255,680 fully paid ordinary shares under the Loan Share Plan to two of its directors- M/s Tegoni and Haines, in lieu of the part payment of their respective remuneration for the quarter ending 31 March 2016. Mr. Tegoni had agreed to accept 50% of his March16 Quarter remuneration ($12,500) to be paid in Shares and Mr. Haines had agreed to accept 30% of his March16 Quarter remuneration ($13,068) to be paid in Shares.

The shares are issued at an issue price of $0.10/share. The share issue price has been determined based on volume weighted average sale price of SECOS shares for March’16 Quarter.

− On 5 July 2016, the Company issued 241,208 fully paid ordinary shares under the Loan Share Plan to two of its directors- M/s Tegoni and Haines, in lieu of the part payment of their respective remuneration for the quarter ending 30 June 2016.

Mr. Tegoni had agreed to accept 50% of his June 16 Quarter remuneration ($12,500) to be paid in Shares and Mr. Haines had agreed to accept 30% of his June16 Quarter remuneration ($13,068) to be paid in Shares.

The shares were issued at an issue price of $0.106/share, which was determined based on the volume weighted average sale price of SECOS shares for June’16 Quarter.

The issue of these shares to Directors was approved by shareholders at the Annual General Meeting held on 17 November 2015 (Resolutions 6 & 9).

2015



benefits

Equity-settled share-based payments*

Total

Salary and Fees



Long Service Leave

Shares

$ $ $ $ $ $

R.Tegoni 16,667 - - - - 16,667

S. Walters 116,980 53,385 3,096 1,902 - 175,363

F. Glatz 33,090 - 3,144 - - 36,234

T.Haines 95,467 58,148 2,759 1,541 - 157,915

G.Meltzer 6,667 - - - - 6,667

R.Bhambhani 16,667 - 1,583 - - 18,250

R.Morgan 101,130 65,678 2,766 1,685 - 171,259

P.Symons 72,158 33,300 - 1,174 - 106,632

O. Kean Hwa 142,681 - 17,124 - - 159,805

Yi.Chen 11,527 - 4,957 - - 16,484

C.Chen 7,531 - 3,238 - - 10,769

Total 620,565 210,511 38,667 6,302 - 876,045

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In addition to the above two tables, the Corporation Act 2001 requires the remuneration of the directors and other key management personnel of the Company, prior to the merger with Stellar Films Group Pty Ltd to be disclosed. Cardia Bioplastics paid remuneration for the period 1 July 2014 to 21 April 2015 which is as follows:

2015

*Share based payment are shares issued in lieu of cash remuneration and were not based on performance. Details of the share issues are provided below:

• On6January2015,11,500,000fullypaidordinarysharesunderLoanSharePlantothreeofitsdirectorsinlieuofthepart payment of their respective remuneration for the quarter ending 31 December 2014. The shares are issued at an issue price of $0.002/share. The share issue price has been determined based on volume weighted average sale price of Cardia shares for 2014 December Quarter.

• On23April 2015,115,000 fullypaidordinary sharesunder LoanSharePlan to threeof itsdirectors in lieuof thepart payment of their respective remuneration for the quarter ending 31 March 2015. 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).

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). Cash Bonuses, Performance-related BonusesThere was no performance related remuneration paid during the year.

Options Issued as part of remuneration for the year ended 30 June 2016.No options were issued during the year as part of remuneration. For Shares and Options held by Key Management Personnel, please refer to tables below:

a. Option Holdings

Number of Options Held by Key Management Personnel (Direct and Indirect Interest)

2016

There were no Options on issue during the year.



benefits

Equity-settled share-based payments*

Total

Salary and Fees



Long Service Leave

Shares

$ $ $ $ $ $

R. Tegoni 32,083 - - - 30,000 62,083

F. Glatz 156,317 - 14,850 1,902 - 171,167

S .Bendel 17,125 - - - 8,000 25,125

G .Meltzer 18,458 - - 1,541 8,000 26,458

Yi.Chen 52,920 - 22,756 - - 75,676

C.Chen 34,574 - 14,867 - - 49,440

R.Bhambhani 81,667 - 7,758 1,685 - 89,425

Total 393,144 - 60,231 1,174 46,000 499,374

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2015

b. Share Holdings (Direct and Indirect)

2016

Balance 1.7.2014

Granted as

Compensation

Options Exercised

Net Change Other (I)

Balance 30.6.2015

Options Expiring 30 June 2015 (Adjusted for capital consolidation effect on 100:1 Basis)

F Glatz 14,906 - - (14,906) - Options Expiring 15 July 2014 S Bendel 10,000,000 - - (10,000,000) - Options Expiring 31 December 2014

R Tegoni 11,776,888 - - (11,776,888) - S Bendel 2,000,000 - - (2,000,000) - G Meltzer 1,111,111 - - (1,111,111) -

Balance 1.7.2014

Granted as Compensation

Options Exercised

Net ChangeOther (I)

Balance30.6.2015

Options Expiring 30 June 2015

(Adjusted for capital consolidation effect on 100:1 Basis)

F Glatz 14,906 - - (14,906)

Options Expiring 15 July 2014

S Bendel 10,000,000 - - (10,000,000)

Options Expiring 31 December 2014

R Tegoni 11,776,888 - - (11,776,888)

S Bendel 2,000,000 - - (2,000,000)

G Meltzer 1,111,111 - - (1,111,111)

(I) Net Change Other in Options refers to unexercised options lapsed upon their expiry.

Balance 1.7.2015

Received asCompensation

Net ChangeOther (II)

Balance30.6.2016

R.Tegoni 5,607,541 125,000 365,854 6,098,395

S Walters 28,584,931 - 79,904 28,664,835

F Glatz 219,530 - - 219,530

T.Haines 28,584,931 130,680 233,415 28,ß949,026

R.Morgan 28,584,931 - - 28,584,931

G. Meltzer 196,193 - (196,193)* -

R Bhambhani 15,000 - - 15,000

Yi.Chen 185,000 - - 185,000

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2015

Balance 1.7.2014

Received asCompensa-

tion

Options Exer-cised

Issued as consideration for merger *

Net ChangeOther (II)

Balance30.6.2015

R.Tegoni 2,635,442 150,000 - - 2,822,099 5,607,541

S Walters - - - 28,584,931 - 28,584,931

F Glatz 219,530 - - - 219,530

T.Haines - - - 28,584,931 - 28,584,931

R.Morgan - - - 28,584,931 - 28,584,931

S Bendel 460,000 40,000 - - - 500,000

G Meltzer 113,334 40,000 - - 42,859 196,193

R Bhambhani 15,000 - - - - 15,000

Yi.Chen 185,000 - - - - 185,000

*Includes indirect interest held by S.Walters, T.Haines and R. Morgan via shareholdings of Stellar Developments Pty Ltd in SECOS Group Limited.

(II) Net Change Other in Shares refers to shares purchased and /or sold during the financial year. These shares were purchased on market or subscribed to the entitlement issue offers of the Company during the year.

Other Transactions with Key Management PersonnelStellar Directors related entities have advanced amounts to that Company for working capital purposes. As part of merger negotiations, on 31 March 2015, these entities have entered into respective loan agreements with Stellar for the amounts advanced. Pursuant to the loan agreements, loan amount advanced are on an unsecured basis and will be repayable after 2 years after the merger completion date i.e. 21 April 2017, with SECOS having further discretion to extend the loan term for a further 12 months period. Loans will attract interest at bank market rates for the term. Any early repayment of these loans is at the discretion of SECOS Board.

The following balances are outstanding at the reporting date in relation to above loans from the related parties:

2016$

2015$

Stephen Walters 89,389 105,388

Trevor Haines 123,902 139,356

Robert Morgan 72,763 72,763

Peter Symons 76,117 77,865

TOTAL 362,171 395,372

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OPTIONSAt the date of this report there were no unissued ordinary shares of the Company under option and no shares were issued on exercise of options or up to the date of this report.

INDEMNIFICATION AND INSURANCE OF DIRECTORS & OFFICERSThe Company has agreed to indemnify all the current Directors and Officers of the Company and of its controlled entities against all liabilities to another person (other than the Company or a related body corporate) that may arise from their position as Directors and Officers of the Company and its controlled entities, except where the liability arises out of conduct involving a lack of good faith. The Company agrees to meet the full amount of any such liabilities, including costs and expenses.

The Company has paid an annual premium to insure the Directors’ and Officers against liabilities incurred in their respective capacities. Under the policy, details of the premium are confidential.

INDEMNITY AND INSURANCE OF AUDITORThe Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the company or any related entity against a liability incurred by the auditor.

During the financial year, the company has not paid a premium in respect of a contract to insure the auditor of the company or any related entity.

PROCEEDINGS ON BEHALF OF THE COMPANYNo person has applied for leave of court to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings.

NON-AUDIT SERVICESDuring the year the Company did not employ its auditor on assignments additional to their statutory audit duties.

AUDITOR’S INDEPENDENCE DECLARATIONThe lead Auditor’s Independence Declaration for the year ended 30 June 2016 has been received and can be found on page 28.

This report of the Directors incorporating the Remuneration Report is signed in accordance with a Resolution of the Board of Directors.

Richard TegoniDirector27 September 2016Mount Waverley, Victoria F

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2016FINANCIALSTATEMENTS

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2016

Economic Entity Notes 2016 2015 $ $ Sales from main operations 19,679,126 17,284,394Wholesale Material Trading Sales 1,275,542 - 3 20,954,668 17,284,394 Cost of Sales (main operations) (18,558,262) (17,410,969)Cost of Purchase (Wholesale Material) (1,263,817) - (19,822,079) (17,410,969) Trading Income 3 296,393 445,345 Gross Profit 1,428,982 318,770 Other Income 3 281,126 228,062 Administrative Expenses (1,041,969) (875,386)Employment Benefits (2,509,267) (978,745)Marketing & Distribution Expenses (317,825) (87,355)Research & Development Expenses & Patent Costs (649,327) (201,347)Depreciation & Amortisation (352,364) (327,766)Finance costs (393,943) (321,186)Net Foreign Exchange (Losses)/Gains (191,041) (233,571)Other Expenses (477,521) (47,558)Impairment-Trade & Other Receivables (32,515) (989,786)Impairment-Inventories - (76,564)Merger Transaction Costs - (309,446)Gain on Acquisition - 500,000Loss on sale of financial assets (75,120) -Loss before income tax (4,330,784) (3,401,878)Income Tax Expense 5 (279,704) -Loss for the period from continuing operations (4,610,488) (3,401,878)Loss for the year from discontinued operations after Tax 6 (341,316) (877,925)Loss for the year after tax 4 (4,951,804) (4,279,803) Items that may be reclassified subsequently to profit or loss Foreign currency translation differences for foreign operations (88,094) 395,540Share of other comprehensive income of joint venture - 23,021Total comprehensive income for the year (5,039,898) (3,861,720)(Loss)/Profit attributable to: Members of the Company (4,958,162) (4,279,803)Non Controlling Interest 6,358 -Loss for the year after tax (4,951,804) (4,279,803) Total comprehensive income attributable to: Members of the Company (5,046,256) (3,861,720)Non-Controlling Interest 6,358 -Total comprehensive income for the year (5,039,898) (3,861,720)

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STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2016

Economic Entity Notes 2016 2015 $ $ Loss per share 9 From continuing and discontinued operations -Basic loss per share (0.038) (0.070) From continuing operations -Basic loss per share (0.035) (0.056) From discontinuing operations -Basic loss per share (0.003) (0.014)

As set out in Note 1, basis of preparation, to these financial statements, as a result of the reverse acquisition of Cardia Bioplastics Limited and its controlled entities (“Cardia”) by Stellar Films Group (“Stellar”), the comparative information for the year ended 30 June 2015 represent the results of Stellar for the period from 1 July 2014 to 30 June 2015 and the results of Cardia for the period 22 April 2015 to 30 June 2015. For the year ended 30 June 2016, the financial statements and above results present the activities of the merged group for full 12 months period to 30 June 2016.

The accompanying notes form part of these financial Statements.

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STATEMENT OF FINANCIAL POSITION AT 30 JUNE 2016 Economic Entity Notes 2016 2015 $ $ Current Assets Cash and cash equivalents 10 1,343,293 2,627,392Trade and other receivables 11 2,898,616 3,508,535Research & Development Tax Refund Receivable 198,329 -Inventories 12 2,606,413 2,940,902Assets held for sale 6 - -Total Current Assets 7,046,651 9,076,829Non-Current Assets Trade and other receivables 11 116,729 -Advances for Plant & Equipment 76,536 -Financial Assets 13 - 563,400Deferred Tax Assets 5 - 251,861Plant and Equipment 14 2,798,736 3,632,208Intangible Assets 15 3,532,345 3,532,345Total Non-Current Assets 6,524,346 7,979,814Total Assets 13,570,997 17,056,643Current Liabilities Trade and other payables 16 4,151,854 4,942,205Borrowings 17 3,006,931 2,934,430Short term provisions 18 925,777 717,861Total Current Liabilities 8,084,562 8,594,496Non-Current Liabilities Borrowings 17 594,737 483,898Long term provisions 19 67,957 44,330Total Non-Current Liabilities 662,694 528,228Total Liabilities 8,747,256 9,122,724Net Assets 4,823,741 7,933,919Equity Issued Capital 20 12,479,444 10,549,724Reserves 21 (48,892) 39,202Accumulated Losses (7,651,228) (2,693,066)Parent Entity Interest 4,779,324 7,895,860Non Controlling Interest 44,417 38,059Total Equity 4,823,741 7,933,919

The accompanying notes form part of these financial Statements as at the reporting date.

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STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2016

IssuedShare

Capital

AccumulatedLosses

ForeignCurrency

TranslationReserve

Parent Entity

Interest

Non- Controlling

Interests

TotalEquity

$ $ $ $ $ $

Balance at 1.7.2015 10,549,724 (2,693,066) 39,202 7,895,860 38,059 7,933,919

(Loss)/Profit for the Year - (4,958,162) - (4,958,162) 6,358 (4,951,804)

Other Comprehensive income/(deficit) for the year - - (88,094) (88,094) - (88,094)

Total comprehensive income/(deficit) for the year - (4,958,162) (88,094) (5,046,256) 6,358 (5,039,898)

Transactions with owners in their capacity as owners

Shares/Options issued during the year 2,000,917 - - - - 2,000,917

Cost of Capital (71,197) - - - - (71,197)

Balance at 30.06.2016 12,479,444 (7,651,228) (48,892) 4,779,324 44,417 4,823,741

Balance at 1.7.2014 400,004 1,586,737 (378,881) 1,607,860 - 1,607,860

(Loss)/Profit for the Year - (4,279,803) - (4,279,803) - (4,279,803)

Other Comprehensive income/(deficit) for the year - - 418,083 418,083 - 418,083

Total comprehensive income/(deficit) for the year - (4,279,803) 418,083 (3,861,720) - (3,861,720)

Recognition of non-controlling interest of Natural Pharmacy Ltd on merger - - - - 38,059 38,059

Transactions with owners in their capacity as owners

Shares issued pursuant to merger 6,378,456 - - 6,378,456 - 6,378,456

Shares/Options issued since completion of merger 4,145,767 - - 4,145,767 - 4,145,767

Cost of Capital (374,503) - - (374,503) - (374,503)

Balance at 30.06.2015 10,549,724 (2,693,066) 39,202 7,895,860 38,059 7,933,919

The accompanying notes form part of these financial Statements as at the reporting date.For

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STATEMENT OF CASH FLOWS Economic EntityFor the year ended 30 June 2016 Notes 2016 2015 $ $ Cash Flows from Operating Activities Receipts from customers (inclusive of goods and services tax) 21,440,688 18,426,015Payments to suppliers and employees (inclusive of goods and services tax) (24,516,694) (19,665,803)Interest received 13,649 1,563Finance Costs (373,083) (321,186)Research & Development Tax Credits received - 218,458Net Cash Outflow from Operating Activities 28 (3,435,440) (1,340,953)Cash Flows from Investing Activities Purchase of plant and equipment (100,493) (11,230)Advance payment for purchase of plant and equipment (76,537) -Proceeds from sale of plant and equipment - 6,962Loans to related parties (443,030) (274,633)Proceeds on disposal of Equity Interest in Joint Venture 101,714 -Proceeds from sale of financial assets 488,280 -Cash Balance on business acquisition - 834,807Net Cash Outflow from Investing Activities (30,066) 555,906Cash Flows from Financing Activities Proceeds from Borrowings 620,682 262,771Repayment of Borrowings (987,779) (600,197)Proceeds from issues of ordinary shares and options 1,975,347 4,145,767Payment of share and options issue costs (71,197) (374,503)Repayment of finance lease liability (10,570) (11,644)Proceeds from/(repayments) to trade and debtor finance facilities 949,891 -Net Cash Inflow from Financing Activities 2,476,374 3,362,194Net Decrease in Cash and Cash Equivalents Held (989,132) 2,577,147Cash and Cash Equivalents at the Beginning of the Financial Year 2,177,043 (418,960)Effect of exchange rates on cash holding in foreign currencies 22,763 18,856Cash and Cash Equivalents at the End of the Financial Year 10 1,210,674 2,177,043

As set out in Note 1, basis of preparation, to these financial statements, as a result of the reverse acquisition of Cardia Bioplastics Limited and its controlled entities (“Cardia”) by Stellar Films Group (“Stellar”), the comparative information for the year ended 30 June 2015 represent the results of Stellar Group Companies for the period from 1 July 2014 to 30 June 2015 and the results of Cardia for the period 22 April 2015 to 30 June 2015. For the year ended 30 June 2016, the financial statements and above results present the activities of the merged group for full 12 months period to June 2016.The accompanying notes form part of these financial Statements.

The accompanying notes form part of these financial Statements.

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2016

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PREPARATIONThese general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (‘AASB’) and the Corporations Act 2001, as appropriate for for-profit oriented entities.

These financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board (‘IASB’).

The financial statements cover the economic entity of SECOS Group Limited and its controlled entities.

SECOS Group Limited is a listed public company, incorporated and domiciled in Australia. The Company is for-profit entity for accounting purposes.

The Financial statements were authorised for issue on 27 September 2016 by the Board of Directors.

Reverse acquisitionOn 21 April 2015, SECOS Group Limited (formerly Cardia Bioplastics Limited), acquired 100% of the issued securities of Stellar Group Companies (“Stellar”). For accounting purposes, the business combination was treated as a reverse acquisition. Accordingly,

- the comparative information in Statement of Profit or Loss and Other comprehensive income for the year ended 30 June 2015 represent the results of Stellar for the period from 1 July 2014 to 30 June 2015 and the results of Cardia for the period 22 April 2015 to 30 June 2015. For the year ended 30 June 2016, the financial statements and above results present the activities of the merged group for full 12 month period to 30 June 2016.

- the comparative information in Statement of Cash Flows for the year ended 30 June 2015 represent the results of Stellar Group Companies for the period from 1 July 2014 to 30 June 2015 and the results of Cardia for the period 22 April 2015 to 30 June 2015.For the year ended 30 June 2016, the financial statements and above results present the activities of the merged group for full 12 month period to June 2016.

Refer to the “Business Combinations” accounting policy in Note 1(x) for further details.

The following is a summary of the material accounting policies adopted by the economic entity in the preparation of the financial statements. The accounting policies have been consistently applied, unless otherwise stated.

New, revised or amending Accounting Standards and Interpretations adoptedThe economic entity has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (‘AASB’) that are mandatory for the current reporting period. Reporting Basis and ConventionsThe financial statements have been prepared on an accruals basis and are based on historical costs modified by the revaluation of selected non-current assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied.

Going Concern Assumption

The Consolidated Group’s revenue from sales has been insufficient to cover operational costs of the business and hence the company has incurred net loss of ($4,951,804) during the year ended 30 June 2016 (2015: Loss $4,279,803) and also experienced net cash outflows from operating activities of ($3,435,440) during the year ended 30 June 2016. (2014: $1,340,953).The Company’s continuing viability, its ability to continue as a going concern and to meet its debts and commitments as they fall due, are subject to the company being successful in:

•Accessing additional capital/debt - The Company has a track record of raising capital; during 12 months to June 2016, the Company has successfully raised approx. $2.0 million through share purchase plan and share placements.

•Continuing to develop profitable cash flows fromcurrent activities - The Group has been working on a number of development projects with global brand owners and international packaging companies. Some of these projects are in commercial negotiations and others have advanced to “in-market trials” stages. While no assurances can be given, it is expected that on successful outcomes, these development projects can significantly contribute positively to the group’s cash flows. The Group has already been successful in converting some of these development projects to commercial orders, the details of which have been communicated via the Company’s ASX announcements.

NOTES TO THE FINANCIAL STATEMENTS

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2016NOTES TO THE FINANCIAL STATEMENTS

Moreover, SECOS’ Board is continuously seeking and have put in measures in place to redirect resources to activities that are cash-flow positive in the short-term.

•Controllingcosts - The Group will continue to look for avenues to reduce costs as it develops its operations.

•Ability to divest non-core assets to increase cashposition - The Group may consider divesting some of its non-core assets, the proceeds of which would yield a net inflow to future cash flows. The Group managed to sell its equity interest in Biogloabl Limited and Akronn joint venture during the year.

The Directors are seeking to raise funds via capital raising and/or debt and in line with the above matters have prepared the financial report on a going concern basis. At this time the Directors are of the opinion that no asset is likely to be realised for an amount less than the amount at which it is recorded in the Report.

These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that may be necessary should the Group be unable to continue as a going concern.

a. Principles of ConsolidationThe consolidated financial statements incorporate the assets and liabilities of all subsidiaries of SECOS Group Limited (‘company’ or ‘parent entity’) as at 30 June 2016 and the results of all subsidiaries for the year then ended. SECOS Group Limited and its subsidiaries together are referred to in these financial statements as the ‘economic entity’.

Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an entity when the economic entity is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated entity. They are de-consolidated from the date that control ceases.

Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the consolidated entity.The acquisition of subsidiaries is accounted for using the

acquisition method of accounting. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent.

Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or loss and other comprehensive income, statement of financial position and statement of changes in equity of the consolidated entity. Losses incurred by the consolidated entity are attributed to the non-controlling interest in full, even if that results in a deficit balance.

Where the economic entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The consolidated entity recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss. A list of controlled entities is contained in Note 24 to the financial statements.

b. Parent entity informationIn accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only. Supplementary information about the parent entity is disclosed in note 2.

c. Operating segmentsOperating segments are presented using the ‘management approach’, where the information presented is on the same basis as the internal reports provided to the Chief Operating Decision Makers (‘CODM’). The CODM is responsible for the allocation of resources to operating segments and assessing their performance.

d. GoodwillGoodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually for impairment, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss and are not subsequently reversed.

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Goodwill is allocated to the Group’s cash-generating units or groups of cash-generating units, representing the lowest level at which goodwill is monitored not larger than an operating segment. Gains and losses on the disposal of an entity include the carrying amount of goodwill related to the entity disposed of.Changes in the ownership interests in a subsidiary that do not result in a change in control are accounted for as equity transactions and do not affect the carrying values of goodwill.

e. Income TaxThe charge for current income tax expense is based on the profit for the year adjusted for any non-assessable or disallowed items. It is calculated using tax rates that have been enacted or are substantially enacted at the end of the reporting period.

Deferred tax is accounted for using the liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the statement of comprehensive income except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the economic entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

f. Discontinued operationsA discontinued operation is a component of the consolidated entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately on the face of the statement of profit

or loss and other comprehensive income.

Current and non-current classificationAssets and liabilities are presented in the statement of financial position based on current and non-current classification

An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current.

A liability is classified as current when: it is either expected to be settled in normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current.

g. InventoriesInventories are measured at the lower of cost and net realisable value. The cost of manufactured products includes direct materials, direct labour and an appropriate portion of variable and fixed overheads. Overheads are applied on the basis of normal operating capacity. Costs are assigned on the basis of weighted average costs.

h. Property, Plant and Equipment Land and buildings are shown at cost, less subsequent depreciation and impairment for buildings. Plant and equipment are measured on the cost basis less accumulated depreciation and accumulated impairment losses.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the statement of profit or loss and other comprehensive income during the financial period in which they are incurred.

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DepreciationThe depreciable amount of all fixed assets is depreciated on a straight line basis over their useful lives to the economic entity commencing from the time the asset is held ready for use.

The depreciation rates used for each class of depreciable assets are:

Class of Fixed Asset Depreciation RateBuilding 2.00%Plant and Machinery 10% to 33%Office Equipment 10% to 40%Motor Vehicle 10% to 20%Furniture & Fixtures 7.5% to 10%Leasehold Improvements 2.50%Computer Software 20.00%

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the statement profit or loss and other comprehensive income.

i. LeasesThe determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to the ownership of leased assets, and operating leases, under which the lessor effectively retains substantially all such risks and benefits.

Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if lower, the present value of minimum lease payments. Lease payments are allocated between the principal component of the lease liability and the finance costs, so as to achieve a constant rate of interest on the remaining balance of the liability.

Leased assets acquired under a finance lease are depreciated over the asset’s useful life or over the shorter of the asset’s useful life and the lease term if there is no reasonable

certainty that the consolidated entity will obtain ownership at the end of the lease term.

Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line basis over the term of the lease.

j. Financial Instruments

Initial recognition and measurementFinancial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions to the instrument. For financial assets, this is equivalent to the date that the group commits itself to either the purchase or sale of the asset. (i.e. trade date accounting is adopted).

Financial instruments are initially measured at fair value plus transaction costs.

Classification and subsequent measurementFinancial instruments are subsequently measured at either of fair value, amortised cost using the effective interest rate method, or cost. Fair value represents the amount for which an asset could be exchanged or a liability settled, between knowledgeable, willing parties. Where available, quoted prices in an active market are used to determine fair value. In other circumstances, valuation techniques are adopted.

Amortised cost is calculated as:a. the amount at which the financial asset or financial

liability is measured at initial recognition;b. less principal repayments;c. plus or minus the cumulative amortisation of the

difference, if any, between the amount initially recognised and the maturity amount calculated using the effective interest method;

d. less any reduction for impairment.

The effective interest method is used to allocate interest income or interest expense over the relevant period and is equivalent to the rate that exactly discounts estimated future cash payments or receipts (including fees, transaction contractual term) of the financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected future net cash flows will necessitate an adjustment to the carrying value with a consequential recognition of an income or expense in profit or loss.

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The Group does not designate any interests in subsidiaries, associates or joint venture entities as being subject to the requirements of accounting standards specifically applicable to financial instruments.

i) Loans and receivablesLoans and receivable are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are stated at amortised cost using the effective interest rate method.

ii) Available-for-sale financial assetsAvailable for sale financial assets include any financial assets not included in the above categories. Available-for-sale financial assets are reflected at fair value. Unrealised gains and losses arising from changes in fair value are taken directly to equity.

iii) Financial LiabilitiesNon-derivative financial liabilities compromising trade and other payables are recognised at amortised cost, comprising original debt less principal payments and amortisation.

ImpairmentAt the end of each reporting period, the group assess whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a significant or prolonged decline in the value of the instrument is considered to determine whether impairment has arisen. Impairment losses are recognised in the statement of profit or loss including the cumulative losses that had been recognised directly in equity. Receivables are impaired after taking into account the recent sales experience, the ageing of receivables, historical collection rates and specific knowledge of the individual debtors financial position.

DerecognitionFinancial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferred to another party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised where the related obligations are discharged, cancelled or expired. The difference between the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss.

k. Impairments of AssetsAt the end of each reporting period, the group reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset being the higher of the asset’s fair value less costs to sell and value in use, is compared to the assets carrying value. Any excess of the assets carrying value over its recoverable amount is expensed to the statement of profit or loss.

Impairment testing is performed annually for goodwill and intangible assets with indefinite lives.Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

l. Intangibles

Patents and trademarksCosts incurred in relation to registration and maintenance of patents and trademarks are expensed as and when incurred.

Research and developmentExpenditure during the research phase of a project is recognised as an expense when incurred. Development costs are capitalised only when technical feasibility studies identify that the project will deliver future economic benefits and these benefits can be measured reliably.

m. Foreign Currency Transactions and Balances

Functional and presentation currencyThe functional currency of each of the group’s entities is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity’s functional and presentation currency.

Transaction and balancesForeign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.

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Exchange differences arising on the translation of monetary items are recognised in the statement of profit or loss.

Exchange differences arising on the translation of non-monetary items are recognised directly in other comprehensive income to the extent that the gain or loss is directly recognised in other comprehensive income; otherwise the exchange difference is recognised in the statement of profit or loss.

Group companiesThe financial results and position of foreign operations whose functional currency is different from the group’s presentation currency are translated as follows:

- Assets and liabilities are translated at year-end exchange rates prevailing at the end of reporting period.

- Income and expenses are translated at average exchange rates for the period. The average rate is only used where the rate approximates the rate at the date of transaction.

- Retained profits are translated at the exchange rates prevailing at the date of the transaction.

Exchange differences arising on translation of foreign operations are transferred directly to the group’s foreign currency translation reserve in the statement of financial position. These differences are recognised in the statement of profit or loss in the period in which the operation is disposed.

n. BorrowingsLoans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are subsequently measured at amortised cost using the effective interest method.

o. Finance costsFinance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the period in which they are incurred.

p. Employee Benefits

Short-term employee benefitsLiabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be wholly settled within 12 months of the reporting date are recognised in current liabilities in respect of employees’ services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.Other long-term employee benefitsThe liability for annual leave and long service leave not

expected to be wholly settled within 12 months of the reporting date are recognised in non-current liabilities, provided there is an unconditional right to defer settlement of the liability. The liability is measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on high quality corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

Defined contribution superannuation expenseContributions to defined contribution superannuation plans are expensed in the period in which they are incurred.

Share-based paymentsEquity-settled, share-based compensation benefits are provided to employees.

Equity-settled transactions are awards of shares that are provided to employees in lieu of cash remuneration.

The cost of equity-settled transactions are measured at fair value on grant date which basically is calculated on volume weighted average price of shares granted over the vesting period.

The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting period.

q. ProvisionsProvisions are recognised when the consolidated entity has a present (legal or constructive) obligation as a result of a past event, it is probable the consolidated entity will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value of money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the provision resulting from the passage of time is recognised as a finance cost.

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r. Cash and Cash EquivalentsCash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. For the statement of cash flows presentation purposes, cash and cash equivalents also includes bank overdrafts, which are shown within borrowings in current liabilities on the statement of financial position.

s. RevenueRevenue from the sale of goods is recognised upon transfer of significant risks and rewards of ownership of goods to customers which normally occurs on the delivery of goods to customers.

Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets.

R&D Tax Credits in respect of qualified research and development expenditure are recognised as revenue in the year once where there is reasonable assurance that the R&D Tax Credits will be received and all qualifying conditions are met.

t. Goods and Services Tax (GST) and other similar taxesRevenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of financial position.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.

u. Derivative financial instrumentsDerivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date. The accounting for subsequent changes in fair value depends

on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.

v. Non-current assets or disposal groups classified as held for saleNon-current assets and assets of disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continued use. They are measured at the lower of their carrying amount and fair value less costs of disposal. For non-current assets or assets of disposal groups to be classified as held for sale, they must be available for immediate sale in their present condition and their sale must be highly probable

An impairment loss is recognised for any initial or subsequent write down of the non-current assets and assets of disposal groups to fair value less costs of disposal. A gain is recognised for any subsequent increases in fair value less costs of disposal of a non-current assets and assets of disposal groups, but not in excess of any cumulative impairment loss previously recognised.

Non-current assets are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of assets held for sale continue to be recognised.

Non-current assets classified as held for sale and the assets of disposal groups classified as held for sale are presented separately on the face of the statement of financial position, in current assets. The liabilities of disposal groups classified as held for sale are presented separately on the face of the statement of financial position, in current liabilities.

w. AssociatesAssociates are entities over which the consolidated entity has significant influence but not control or joint control. Investments in associates are accounted for using the equity method. Under the equity method, the share of the profits or losses of the associate is recognised in profit or loss and the share of the movements in equity is recognised in other comprehensive income. Investments in associates are carried in the statement of financial position at cost plus post-acquisition changes in the consolidated entity’s share of net assets of the associate. Goodwill relating to the associate is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment. Dividends received or receivable from associates reduce the carrying amount of the investment.

When the consolidated entity’s share of losses in an associate equals or exceeds its interest in the associate, including any

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unsecured long-term receivables, the consolidated entity does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

The consolidated entity discontinues the use of the equity method upon the loss of significant influence over the associate and recognises any retained investment at its fair value. Any difference between the associate’s carrying amount, fair value of the retained investment and proceeds from disposal is recognised in profit or loss.

x. Business combinationsThe acquisition method of accounting is used to account for business combinations regardless of whether equity instruments or other assets are acquired.

The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest in the acquiree. For each business combination, the non-controlling interest in the acquiree is measured at either fair value or at the proportionate share of the acquiree’s identifiable net assets. All acquisition costs are expensed as incurred to profit or loss.

On the acquisition of a business, the consolidated entity assesses the financial assets acquired and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic conditions, the consolidated entity’s operating or accounting policies and other pertinent conditions in existence at the acquisition-date.

Where the business combination is achieved in stages, the consolidated entity remeasures its previously held equity interest in the acquiree at the acquisition-date fair value and the difference between the fair value and the previous carrying amount is recognised in profit or loss.

Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent changes in the fair value of the contingent consideration classified as an asset or liability is recognised in profit or loss. Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity.

The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling interest in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment in the acquiree is recognised as goodwill.

If the consideration transferred and the pre-existing fair value is less than the fair value of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a gain directly in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification and measurement of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred and the acquirer’s previously held equity interest in Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional amounts recognised and also recognises additional assets or liabilities during the measurement period, based on new information obtained about the facts and circumstances that existed at the acquisition-date. The measurement period ends on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the information possible to determine fair value.

y. Loss per shareBasic loss per shareBasic loss per share is calculated by dividing the profit attributable to the owners of SECOS Group Limited, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year

Diluted loss per shareDiluted loss per share adjusts the figures used in the determination of basic loss per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

z. Comparative FiguresWhen required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. The statement of profit or loss and other comprehensive income for 30 June 2015 represents results Stellar for the period from 1 July 2014 to 30 June 2015 and the results of Cardia for the period 22 April 2015 to 30 June 2015 and the comparative information in Statement of Cash Flows for the year ended 30 June 2015 represent the results of Stellar Group Companies for the period from 1 July 2014 to 30 June 2015 and the results of Cardia for the period 22 April 2015 to 30 June 2015.

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aa. Critical Accounting Estimates,Judgements and AssumptionsThe preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed below.

Provision for impairment of receivablesThe provision for impairment of receivables assessment requires a degree of estimation and judgement. The level of provision is assessed by taking into account the recent sales experience, the ageing of receivables, historical collection rates and specific knowledge of the individual debtors financial position.

Provision for impairment of inventoriesThe provision for impairment of inventories assessment requires a degree of estimation and judgement. The level of the provision is assessed by taking into account the recent sales experience, the ageing of inventories and other factors that affect inventory obsolescence. No provision for impairment has been recorded during the year.

Fair value measurement hierarchyThe economic entity is required to classify all assets and liabilities, measured at fair value, using a three level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date; Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and Level 3: Unobservable inputs for the asset or liability. Considerable judgement is required to determine what is significant to fair value and therefore which category the asset or liability is placed in can be subjective.

The fair value of assets and liabilities classified as level 3 is determined by the use of valuation models. These include discounted cash flow analysis or the use of observable inputs that require significant adjustments based on unobservable inputs.

Estimation of useful lives of assetsThe economic entity determines the estimated useful lives and related depreciation and amortisation charges for its property, plant and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical innovations or some other event. The depreciation and amortisation charge will increase where the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down.

Goodwill and other indefinite life intangible assetsThe economic entity tests annually, or more frequently if events or changes in circumstances indicate impairment, whether goodwill and other indefinite life intangible assets have suffered any impairment, in accordance with the accounting policy stated in note 1. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of assumptions, including estimated discount rates based on the current cost of capital and growth rates of the estimated future cash flows.

Income taxThe economic entity is subject to income taxes in the jurisdictions in which it operates. Significant judgement is required in determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The economic entity recognises liabilities for anticipated tax audit issues based on the economic entity’s current understanding of the tax law. Where the final tax outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in which such determination is made.

Employee benefits provisionThe liability for employee benefits expected to be settled more than 12 months from the reporting date are recognised and measured at the present value of the estimated future cash flows to be made in respect of all employees at the reporting date. In determining the present value of the liability, estimates of attrition rates and pay increases through promotion and inflation have been taken into account.

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Lease make good provisionA provision has been made for the present value of anticipated costs for future restoration of leased premises. The provision includes future cost estimates associated with closure of the premises. The calculation of this provision requires assumptions such as application of closure dates and cost estimates. The provision recognised for each site is periodically reviewed and updated based on the facts and circumstances available at the time. Changes to the estimated future costs for sites are recognised in the statement of financial position by adjusting the asset and the provision. Reductions in the provision that exceed the carrying amount of the asset will be recognised in profit or loss.

bb. New Accounting Standards and interpretations issued for Application in Future Periods

i) Changes in accounting policy and disclosuresSECOS has adopted all of the new,revised or amending Accounting Standards and Interpretations issued by the Australian Accounting Standards (AASB) that are mandatory for the current reporting period.

ii) Accounting standards and interpretations issued but not yet effective

Standard

Mandatory date for annual reporting

periods beginning on or after)

Reporting period standard adopted

by the company

AASB 9 Financial Instruments and related standards 1 January 2018 1 July 2018

AASB 2014-4 Clarification of Acceptable Methods of Depreciation and Amortisation

1 January 2016 1 July 2016

AASB 15 Revenue from Contracts with Customers and AASB 2014-5 Amendments to Australian. Accounting Standards arising from AASB 15


AASB 2014-9 Equity method in separate financial statements 1 January 2016 1 July 2016

AASB 2015-1 Annual improvements 2012 – 2014 cycle 1 January 2016 1 July 2016

AASB 2015-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 101


AASB 2015-9 Amendments to Australian Accounting Standards 1 January 2016 1 July 2016

AASB 16 - Leases 1 January 2019 1 July 2019

Management are currently assessing the impact of these new standards on the Group. However, the impact of these new standards is not expected to be material.

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NOTE 2 - PARENT ENTITYThe following information has been extracted from the books and records of the parent and has been prepared in a ccordance with Australian Accounting Standards.

STATEMENT OF FINANCIAL POSITION

2016 2015 $ $ ASSETS Current assets 674,493 2,428,572Non-current assets 26,259,966 23,589,906TOTAL ASSETS 26,934,459 26,018,478 LIABILITIES Current liabilities 873,582 259,495Non-current liabilities - 31,623TOTAL LIABILITIES 873,582 291,118 EQUITY Issued capital 61,494,732 59,565,013Accumulated losses (35,433,855) (34,156,913)Financial Asset Reserve - 319,260TOTAL EQUITY 26,060,877 25,727,360

STATEMENT OF COMPREHENSIVE INCOME Loss for the year after tax (1,276,942) (1,063,898)Total comprehensive income (1,276,942) (1,063,898)

GuaranteesSECOS Group Limited has provided guarantees to third parties in relation to the performance and obligations of controlled entities in respect to banking & finance facilities and credit facilities. The guarantees are for the terms of the facilities. The period covered by guarantees range from 3 to 5 years are up to amounts of $2,017,000 (2015: NIL)

Contingent liabilitiesSECOS Group Limited had no contingent liabilities as at 30 June 2016. (2015: NIL).

Contractual commitmentsAt 30 June 2016, SECOS Group Limited had not entered into any contractual commitments for the acquisition of property, plant and equipment (2015: NIL).

Significant accounting policiesThe accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 1, except for the following:•Investmentsinsubsidiariesareaccountedforatcost,lessanyimpairment,intheparententity.•Investmentsinassociatesareaccountedforatcost,lessanyimpairment,intheparententity.

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NOTE 3 - REVENUE

NOTE 4 - LOSS FOR THE YEAR

Economic Entity 2016 2015 $ $ Revenue Sales Sales from main operations 19,679,126 17,284,394Wholesale material trading sales 1,275,542 -Trading Income 296,393 445,345Total 21,251,061 17,729,739Other Income Interest 13,923 1,563Research & Development Tax Credits 198,329 219,677Other Income 68,874 6,822Total 281,126 228,062Total Revenue 21,532,187 17,957,801

Economic Entity 2016 2015 $ $ The Loss before income tax includes the following items of expenses Expenses Depreciation & Amortisation 352,364 327,766Rental expenses relating to operating leases 355,489 166,801Research, development, and patent costs 649,327 193,880Amounts written off as bad debts 91,928 6,342

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NOTE 5 - INCOME TAX EXPENSE

2016 2015 $ $ a) The prima facie tax credit on loss before income tax is reconciled

to the income tax credit as follows : Prima facie tax credit provided on loss before income tax at 30% (2015: 30%) - Economic Entity (1,401,630) (1,283,941) (1,401,630) (1,283,941) - Adjustment for foreign tax rates 215,523 80,533- Non assessable-Research & Development Tax Offset (59,499) (65,537)- Other Non assessable income items (17,188) (19,154)- Non –deductible expenses 663,345 513,601- Non –deductible expenses (prior year) 15,590 -- Other deductible expenses (47,167) (4,915)- Share of loss in Joint Venture Entity 102,395 263,378- Acquisition Gain recognized on business acquisition - (150,000)- Losses on merger with SECOS Group Limited - (5,774,725)- Tax losses lapsed during the year (Biograde Nanjing) 1 597,661 -- Deferred Tax Assets Reversed 2 (251,861) - (182,831) (6,440,760) Deferred income tax assets not recognised 154,988 6,440,760Income tax expense 2 (27,843) -b) The Directors estimate that the potential deferred income tax

assets at 30 June 2016 in respect of tax losses not brought to account is : 7,355,031 7,200,043

Deferred tax assets have not been brought to account as it is not currently considered probable that future taxable profits will be available against which such assets could be utilised.

1 Tax losses in China are allowed to be carried forward up to 5 years only, starting from the end of the year they are incurred.

2 Income tax expenses ($279,704) disclosed in Statement of Profit or Loss and Other Comprehensive Income comprise of tax provision of the year for ($27,843) and reversal of deferred tax assets of ($251,861).

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Economic Entity 2016 2015 $ $ The financial performance of the discontinued operation to the date of sale, which is included in loss from discontinued operations per the statement of comprehensive income, is as follows: Share in Loss of Joint Venture (443,030) (877,925)Loss before income tax (443,030) (877,925)Income tax expense - -Loss attributable to members of the parent entity (443,030) (877,925) Gain on disposal of Joint Venture before income tax 203,428 -Provision for Warranties (101,714) -Income tax expense - -Gain (loss) on sale after income tax 101,714 -Total loss after tax attributable to the discontinued operation (341,316) (877,925) Gain on disposal of the division included in gain from discontinued operations per the statement of comprehensive income.

The interest in joint venture entity had been accounted for in the consolidated statements using the equity method of accounting. Details of movements in Equity Accounted Investment in Joint Venture up to date of disposal is set below:

NOTE 6 - DISCONTINUED OPERATIONS

A controlled entity, Stellar Films (Malaysia) Sdn Bhd had a 50.8% equity interest Joint venture entity- Akronn Industries. Akronn Industries is incorporated in Malaysia and its principal activity is manufacture and distribution of silicone coated paper and film products.

Effective 6 October 2015, the consolidated group announced its decision to dispose of its equity interest in Akronn Joint Venture, thereby discontinuing its operations in this business segment.

Investment in Joint Venture Entity had been classified as an “Asset Held for Sale” since 6 October 2015.

This announcement was made subsequent to approval by the Group’s management.

The disposal of equity interest in Akronn Joint Venture was completed on 21 June 2016.

The interest in joint venture entity has been accounted for in the consolidated statements using the equity method of accounting.

Financial information relating to the discontinued operation to the date of disposal is set out below:

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NOTE 6 - DISCONTINUED OPERATIONS (continued)

2016 2015 $ $ a. Movements during the year in Equity Accounted

Investment in Joint Venture Entity Balance at beginning of the financial year - 488,011Add Increase in Investments during the year 443,030 366,893 Share of joint venture entity’s loss after income tax (443,030) (877,925) Share of joint venture entity’s other comprehensive income/ (deficit) - 23,021 Balance at end of the financial year - - b. Equity accounted losses of joint venture entity are broken down as follows: Share of joint venture’s loss before income tax expense (443,030) (877,925) Less Share of joint venture’s income tax expense - - Share of joint venture’s loss after income tax (443,030) (877,925) c. Summarised presentation of aggregate assets, liabilities and performance of joint venture entity Current assets 852,570 863,004 Non-current assets 2,500,291 2,917,822 Total assets 3,352,861 3,780,826 Current liabilities 3,491,515 3,378,663 Non-current liabilities 2,152,321 1,705,211 Total liabilities 5,643,836 5,083,874 Net assets (2,290,975) (1,303,048) Revenues 1,290,527 1,671,880 Loss after income tax of joint venture entity (1,089,889) (1,728,200)

Loan advanced to Akronn Industries have been accounted for as net investment in Joint Venture Entity.

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NOTE 7 - KEY MANAGEMENT PERSONNEL COMPENSATION

Names and positions held of economic and parent entity key management personnel in office at any time during the financial year are included in the “REMUNERATION REPORT”.

Key management personnel remuneration details have been included in the Remuneration Report section of the Directors Report.

2016 2015 $ $

Short-term employee benefits 1,178,864 547,212Post-employment benefits 128,545 11,765Long-term benefits 15,392 5,128Termination payments - -Share based payment 51,136 - 1,373,937 564,105

2016 2015 $ $

Remuneration of the auditor of the parent entity for - auditing or reviewing the financial statements 72,000 69,000Remuneration of other auditors of subsidiaries for : - auditing or reviewing the financial statements of subsidiaries 7,017 7,697 79,017 76,697

2016 2015 $ $

a) Reconciliation of losses used to calculate earnings per share Loss for the year from continuing & discontinuing operations (4,958,162) (4,279,803) Profit attributable to non-controlling interest 6,358 - Loss used to calculate basic/diluted EPS (4,951,804) (4,279,803) b) Reconciliation of losses used to calculate earnings per share Loss for the year from continuing operations (4,616,846) (3,401,878) Profit attributable to non-controlling interest 6,358 - Loss used to calculate basic/diluted EPS (4,610,488) (3,401,878) c) Reconciliation of losses used to calculate earnings per share Loss for the year from discontinuing operations (341,316) (877,925) (Loss)/Profit attributable to non-controlling interest - - Loss used to calculate basic/diluted EPS (341,316) (877,925) Number Numberd) Weighted average number of ordinary shares used in the calculation of basic loss per share 130,143,555 61,336,204

NOTE 8 - REMUNERATION OF AUDITORS

NOTE 9 - LOSS PER SHARE

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2016 2015 $ $

Cash at bank and on hand 1,343,293 2,627,392 1,343,293 2,627,392

Reconciliation of cashCash at the end of the financial year as shown in the statement of cash flows is reconciled to items in the statement of financial position as follows:

2016 2015 $ $

Current Trade Receivables 2,605,594 2,941,974Less: provision for impairment (178,447) (146,753) 2,427,147 2,795,221Prepayments 114,923 213,253Other receivables 356,546 500,061 2,898,616 3,508,535Non Current Other Receivables 116,729 -Amount receivable from related parties - 969,786Less: Provision for impairment - (969,786) 116,729 -

Provision for Impairment of ReceivablesCurrent trade receivables are non-interest bearing and are generally on 30-day terms. A provision for impairment is recog-nized when there is objective evidence that an individual trade receivable is impaired. These amounts have been disclosed as a separate line item in Statement of Profit or loss and comprehensive income. Receivables that are impaired aged more than 365 days.

On the above basis, the Directors have made key judgement in impairing trade receivables by further $31,694 (2015- $20,000) at the reporting date.

Break up of impaired receivables as at 30 June 2016, on geographical basis, is provided below:

NOTE 10 - CASH AND CASH EQUIVALENTS

NOTE 11 - TRADE AND OTHER RECEIVABLES

2016 2015 $ $

Australia - -Americas - -Asia 178,447 146,753Others - -Total 178,447 146,753

Note 2016 2015 $ $ Cash and cash equivalents 1,343,293 2,627,392Bank Overdrafts 17 (132,619) (450,349) 1,210,674 2,177,043

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Page 51.

NOTE 11 - TRADE AND OTHER RECEIVABLES (continued)

Movement in the provision for impairment of receivables is as follows:

2016

OpeningBalance1.7.2015

$

Charge for the Year

$

Amounts Written Off

$

ClosingBalance

30.06.2016$

Economic EntityCurrent Trade & Other Receivables 146,753 123,622 (91,928) 178,447

146,753 123,622 (91,928) 178,447

2015

OpeningBalance1.7.2014

$

Charge for the Year

$

Amounts Written Off

$

ClosingBalance

30.06.2015$

Economic Entity

Provision on Business acquisition - 126,753 - 126,753

Current Trade & Other Receivables - 26,342 (6,342) 20,000

- 153,095 (6,342) 146,753

Credit Risk- Trade and Other ReceivablesThe Group has no significant concentration of credit risk with respect to any single counter party or group of counter parties other than receivables specifically provided for and mentioned within this Note. The class of assets described as Trade and Other Receivables is considered to be the main source of credit risk related to the Group.

On a geographical basis, the Group has significant credit risk exposures in Australia, Americas and Asia given the substantial operations in those regions. The Group’s exposure to credit risk for receivables at the end of reporting period in those regions is as follows:

The following table details the Group’s trade and other receivables exposed to credit risk with ageing analysis and impairment provided for thereon. Amounts are considered as ‘past due’ when the debt has not been settled, with the terms and conditions agreed between the Group and the customer or counter party to the transaction. Receivables that are past due are assessed for impairment by ascertaining solvency of the debtors and provided for where there are specific circumstances indicating that the debt may not be fully repaid to the Group.

The balances of receivables that remain within initial terms (as detailed in the table) are considered to be of high credit quality.

The carrying amount of receivables is considered a reasonable approximation to fair values.

2016 2015 $ $

Australia 276,720 338,039Americas 163,710 180,226Asia 2,408,900 2,777,017Others 51,093 -Total 2,900,423 3,295,282

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Page 52.

NOTE 11 - TRADE AND OTHER RECEIVABLES (continued)

NOTE 12 - INVENTORIES

2016 2015 $ $

Current Raw materials and stores 967,296 1,058,760Work in progress 155,831 195,249Finished goods 1,483,286 1,686,893TOTAL 2,606,413 2,940,902

NOTE 13 - FINANCIAL ASSETS

2016 2015 $ $

Non-Current Available-for-sale financial assets Unlisted Investments, at fair value - 563,400

Available-for-sale financial assets consisted of 18,780,000 ordinary shares in Bioglobal Limited (“Bioglobal”). On 6 October 2015, SECOS sold its investment in Bioglobal for consideration of $488,280. The sale of the investment resulted in a loss of $75,120 on the carrying book value of this investment, and a profit of $244,140 on the investment’s cost base.

Gross Amount

Past due and Impaired

Past due but not impaired(days overdue)

Within initial trade

terms

<30 31-60 61-90 >90

2016

Trade Receivables 2,427,147 178,447 399,028 253,733 244,165 82,021 1,448,200

Other Receivables 473,276 - 1,278 608 2,847 37,493 431,050

Total 2,900,423 178,447 400,306 254,341 247,012 119,514 1,879,250

2015

Trade Receivables 2,941,974 146,753 749,176 288,402 167,620 130,251 1,459,772

Other Receivables 500,061 - 18,428 138,259 12,494 52,688 278,192

Total 3,442,035 146,753 767,604 426,661 180,114 182,939 1,737,964

Neither the Group nor parent entity holds any financial assets with terms that have been renegotiated, but which would otherwise be past due or impaired.

Collateral PledgedA security over trade receivables has been provided for certain debt. Refer to Note 17 for further details.

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Page 53.

NOTE 14 - PLANT AND EQUIPMENT

2016 2015 $ $

Land and Buildings Leasehold Land (99 years) At cost 252,105 264,412Total Land 252,105 264,412 Building At cost 2,143,968 2,218,441Accumulated depreciation (733,158) (713,936)Total Buildings 1,410,810 1,504,505 Total Land and Buildings 1,622,915 1,768,920 Plant & Machinery At cost 10,348,275 10,787,989Accumulated depreciation (9,508,940) (9,251,522) 839,335 1,536,467Office Equipments At cost 541,046 554,098Accumulated depreciation (484,097) (482,316) 56,949 71,782Motor Vehicles At cost 170,733 176,525Accumulated depreciation (133,597) (117,955) 37,136 58,570Furniture & Fixtures At cost 61,361 65,190Accumulated depreciation (46,573) (52,386) 14,788 12,804Leasehold Improvements At cost 182,680 153,800Accumulated depreciation (8,070) (6,281) 174,610 147,519Computer Software At cost 93,702 93,702Accumulated depreciation (80,699) (57,559) 13,003 36,143 Total Cost of Assets 13,793,870 14,314,157Total Accumulated Depreciation (10,995,134) (10,681,949) Written down value of assets 2,798,736 3,632,208

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Economic Entity

2016 Leasehold Land Building Plant &

MachineryOffice

EquipmentMotor

VehiclesFurniture &

FixturesLeasehold Improve-

mentsComputer Software Total

$ $ $ $ $ $ $ $ $

Balance at 1 July 2015 264,412 1,504,506 1,536,470 71,782 58,570 12,805 147,520 36,143 3,632,208

Additions during the year - - 17,745 15,200 - 5,854 61,695 - 100,494

Disposals during the year - - - - - - (28,076) - (28,076)

Foreign Exchange Rate Variations (12,307) (50,713) (83,858) (1,168) (1,741) (110) 1,595 - (148,302)

Depreciation Expenses - (42,983) (225,798) (28,865) (19,693) (3,761) (8,124) (23,140) (352,364)

Depreciation included in Cost of goods sold - - (405,224) - - - - - (405,224)

Balance at 30 June 2016 252,105 1,410,810 839,335 56,952 37,136 14,788 174,610 13,003 2,798,736

2015 Leasehold Land Building Plant &

MachineryOffice

EquipmentMotor

VehiclesFurniture &

FixturesLeasehold Improve-

mentsComputer Software Total

$ $ $ $ $ $ $ $ $

Balance at 1 July 2014 255,815 1,478,969 1,380,348 58,466 57,457 5,375 - 59,220 3,295,650

Additions during the year - - 8,763 2,467 - - - - 11,230

Additions through acquisition/merger - - 640,523 42,693 52,174 9,630 149,622 - 894,642

Disposals during the year - - (8,772) (1,295) (45,519) - - - (55,586)

Foreign Exchange Rate Variations 8,597 70,442 94,328 1,709 2,277 267 3,746 - 181,366

Depreciation Expenses - (44,905) (211,392) (32,258) (7,819) (2,467) (5,848) (23,077) (327,766)

Depreciation included in Cost of goods sold - - (367,328) - - - - (367,328)

Balance at 30 June 2015 264,412 1,504,506 1,536,470 71,782 58,570 12,805 147,520 36,143 3,632,208

NOTE 14 - PLANT AND EQUIPMENT

Movement in Carrying AmountsReconciliations of the carrying amounts of plant and equipment at the beginning and end of the current and previous financial year are set out below.

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Economic Entity 2016 2015 $ $

Goodwill 3,532,345 3,532,345Net carrying value 3,532,345 3,532,345

Impairment Disclosures

All Goodwill is allocated to the Company’s distribution division, being a cash generating unit.

The recoverable amount of the cash-generating unit is determined based on value-in-use calculations. Value-in-use is calculated based on the present value of cash flow projections for the next three years. The cash flows are discounted using estimated discount rate based on Capital Asset Pricing Model adjusted to incorporate risks associated with a particular segment.

Management has based the value-in-use calculations on three year budget forecasts of Bioplastics business. Revenue has been projected on the below mentioned assumptions. Costs are calculated taking into account historical gross margins as well as estimated weighted inflation rates over the period which is consistent with inflation rates applicable to the locations in which the unit operates. Discount rates are pre-tax and reflect risks associated with the distribution division.

The following assumptions were used in the value-in-use-calculations:

a. Revenue is premised on a “zero based budget” approach whereby each customer, or potential customer, has been specifically assessed having regard to current indications of demand, customer contacts or as assessed by the relevant sales manager. Revenue Growth of 65% has been assumed for FY17.

Long term contracts typically include expenditure “rise and fall” clauses. Accordingly, Revenue is forecast to alter in line with relevant changes to the Company’s direct manufacturing costs.

b. Projected cash flows have been discounted using discount rate of 12% (2015: 14%).c. Gross profit margins are forecast to be in a range of 20%-30% dependent upon product and each geographic region.

(2015: 20%-45%)d. The annual growth rate of 2% has been estimated in the calculation of terminal value following industry guidelines.

Based on the above assumptions, the recoverable amount of the cash generating unit has been determined to exceed its carrying amount as at 30 June 2016 and accordingly; no impairment loss has been recognised.

Senstivity to changes in assumptions

Gross Profit Margin Assumption- Management has considered the possibility of lower gross margins than those budgeted, on the assumption that should raw material price increases beyond the budgeted raw material price inflation and the Group be not able to pass on additional costs to the customers or absorb through efficiency improvements. If budgeted gross profits for the forecasted period decrease by 4%, it would result in an impairment charge.Discount Rate Assumption: If the estimated cost of capital used in determining the pre-tax discount for the CGU had been 1% higher than management’s estimates (13% instead of 12%), the recoverable amount of the cash generating unit has been determined to exceed its carrying amount as at 30 June 2016.Revenue Forecasts Assumption: Management has considered the possibility of not achieving revenue forecasts than those budgeted, If budgeted gross revenue for the forecasted period decreases by 20%, it would result in an impairment charge.

NOTE 15 - INTANGIBLE ASSETS

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NOTE 16 - TRADE AND OTHER PAYABLES

2016 2015 $ $

Current Unsecured Liabilities Trade Payables 3,126,655 4,046,285Deposits from customers 71,483 187,431Sundry payables and accrued expenses 953,716 708,489 4,151,854 4,942,205

Note 2016 2015 $ $

Current Secured Liabilities Bank Overdrafts 10 132,619 450,349Bank Loans 1,132,268 2,196,652Foreign Currency Trade Loan 650,443 174,645Debtor Finance Facility 474,093 -Software License Finance 16,250 12,784 2,405,673 2,834,430Unsecured Liabilities Unsecured Loan (Shareholder) 100,000 100,000Unsecured Loan (Third Party) 139,087 -Unsecured Loans (Related Parties) 362,171 - 601,258 100,000 3,006,931 2,934,430Non Current Secured Liabilities Software License Finance 19,491 33,526Loan (Shareholder) - 55,000Bank Loans 575,246 - 594,737 88,526Unsecured Liabilities Unsecured Loans (Related Parties) - 395,372 - 395,372 594,737 483,898 3,601,668 3,418,328

NOTE 17 - BORROWINGS

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Note 2016 2015 $ $

Total Facilities Bank Overdrafts 166,830 497,119Bank Loans 1,707,514 2,209,254Multi-Option Line that includes Bank Guarantee Facility 130,127 134,648Letter of Credit Facility 12,888 49,398Foreign Currency Trade Loan 650,443 174,645Debtor Finance Facility 2,050,000 - 4,717,802 3,065,064 Used at the reporting date Bank Overdrafts 132,619 450,349Bank Loans 1,707,514 2,196,652Multi-Option Line that includes Bank Guarantee Facility 25 130,127 134,648Letter of Credit Facility 25 - 49,398Foreign Currency Trade Loan 650,443 174,645Debtor Finance Facility 474,093 - 3,094,796 3,005,692 Unused at the reporting date Bank Overdrafts 34,211 46,770Bank Loans - 12,602Multi-Option Line that includes Bank Guarantee Facility - -Letter of Credit Facility 12,888 -Foreign Currency Trade Loan - -Debtor Finance Facility 1,575,907 1,623,006 59,372

Bank OverdraftsThe overdraft facilities comprise separate facilities for both Stellar Films Group Pty Ltd and Stellar Films (Malaysia) Sdn Bhd of NIL (2015: $ 324,494) and $132,619 (2015: $125,855) respectively, both facilities being utilised for working capital purposes.

Bank LoansBank loans comprise:Term loans totaling $940,514 (2015: $1,750,154) for Stellar Films (Malaysia) Sdn Bhd which have utilised in funding the acquisition of plant and equipment as well as funding ongoing working capital requirements. Year on year changes in the structure of the facilities comprised the refinancing of Stellar Films (Malaysia) Sdn Bhd’s foreign currency trade loans as a term loan and is included in the above disclosed amount.

NOTE 17 - BORROWINGS (continued)

Details of financing arrangements are set out as below:

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NOTE 17 - BORROWINGS (continued)

Stellar Films Group Pty Ltd’s outstanding overdraft facility and market rate facilities as at 30 June 2015 (totalling $770,992) have been combined into a new market rate facility of $767,000 with term of 4 years effective 23 September 2015. The new market rate facility will have an interest only term of 1 year and then amortising over the following 3 years.

Debtor Financing FacilityDuring the year, the Group has established Debtor Financing Facility with Scottish Pacific (SP). The facility is for a limit of $2.05million available to its Australian subsidiaries- Stellar Films Group Pty Ltd and Cardia Bioplastics (Australia) Pty Ltd.

Collateral ProvidedSecurity provided in support of banking facilities in respect of the consolidated entities are as follows:

Stellar Films (Malaysia) Sdn Bhd:• Generaldebenturecreatingfixedandfloatingchargesovertheassetsandundertakingsofthecompanytothe

combined value of MYR 9,200,000 (AUD$3,176,300).• Negativepledgesdated2June2005and31May2012.• Lettersofcomfort/awarenesstothecombinedvalueofMYR7,300,000(AUD$2,520,325)providedbyStellarFilms

Group Pty Ltd.

Stellar Films Group Pty Ltd:• GeneralsecurityagreementsovertheassetsandundertakingsofStellarFilmsGroupPtyLtd.• GuaranteesandindemnitiesprovidedbythedirectorsofStellarFilmsGroupPtyLtd.• GuaranteeandindemnityprovidedbyStellarDevelopmentsPtyLtdastrusteefortheStellarUnitTrustsupportedbya

general security agreement over the assets and undertakings of that entity.• GuaranteeandIndemnityfor$1,342,000givenbySECOSGroupLimited.

With respect to Debtor Financing Facility available with SP, the Company has provided SP security over the assets of Cardia Bioplastics (Australia) Pty Ltd and Deed of priority to rank SP first on debtors and second on all other assets in respect to Stellar Films Group Pty Ltd.

2016 2015 $ $

Provision for Warranties 50,857 -Employee benefits 17,100 44,330 67,957 44,330

NOTE 19 - LONG TERM PROVISIONS

2016 2015 $ $

Employee benefits 804,920 647,861Provision for Warranties 50,857 -Lease make good provision 70,000 70,000 925,777 717,861

NOTE 18 - SHORT TERM PROVISIONS

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2016 2015 $ $

Total Facilities Ordinary - fully paid shares 12,479,444 10,549,724

NOTE 20 - ISSUED CAPITAL

(A) Share Capital

(B) Movements in Ordinary Share Capital

Date Number of Shares Issue Price Amount

$ $

1 July 2014 Balance * 51,972,604 400,004

21 April 2015 Shares on Issue in SECOS (Cardia) prior to merger

42,523,299 6,378,456

23 April 2015 Issue of shares to Directors in lieu of accrued remuneration of the March’15 Quarter

115,000 -

15 May 2015 Placement of Shares 7,827,144 0.14 1,095,800

26 June 2015 Rights Issue 17,072,355 0.14 2,390,145

30 June 2015 Placement of Shares 4,713,016 0.14 659,822

Cost of Capital (374,503)

30 June 2015 Balance 124,223,418 10,549,724

31 March 2016 Placement of Shares 10,724,721 0.082 879,427

4 April 2016 Shares issued pursuant to Share Purchase Plan 13,364,953 0.082 1,095,922

Cost of Capital (71,197)

4 April 2016 Issue of shares to Directors in lieu of remuneration for the March’16 Quarter

255,680 0.100 25,568

30 June 2016 Balance 148,568,772 12,479,444

* As a result of the reverse acquisition, the number of shares are based on Stellar Films Group (Australia) Pty Ltd on issue, converted at the exchange ratio of 129.93 Shares to 1.

(C) Ordinary SharesOrdinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held.

On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.

Ordinary Shares have no par value, and the company does not have a limited amount of authorised share capital.

(D) Capital ManagementManagement controls the capital of the group in order to maintain sufficient liquidity to cover the group’s working capital requirements, to meet any new investment opportunities as they arise and to safeguard the company’s ability to continue as a going concern.

The group’s debt and capital includes ordinary share capital and financial liabilities supported by financial assets.

There are no externally imposed capital requirements.

Management effectively manages the group’s capital by regularly monitoring its current and expected liquidity requirements and by assessing the group’s financial risks, rather than using debt/equity ratio analyses. The group’s capital structure is adjusted in response to the changes in liquidity requirements and financial risks. These responses include the management of debt levels and share issues.

There have been no changes in the strategy adopted by man-agement to control the capital of the group since the prior year.

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NOTE 21 - RESERVES

Nature and Purpose of Reserves

Foreign Currency Translation ReserveThe foreign currency translation reserve records exchange differences arising on translation of a foreign controlled sub-sidiary as described in Note 1(m).

Parent (Stellar) 2016 2015 $ $

The amount of the franking credits available for subsequent reporting periods are: Opening Balance (460,155) (460,155)Income Tax Liability offset for the 2015 financial year - -Declared Dividends - -Closing Balance (460,155) (460,155)

The above amounts represent the balance of the franking account as at the end of the financial year available to Stellar Films (Group) Pty Ltd.

NOTE 23 - SHARE BASED PAYMENTS

2015There were no share based payments made during the year.

2016On 4 April 2016, the Company issued 255,680 fully paid ordinary shares under the Loan Share Plan to two of its directors- M/s Tegoni and Haines, in lieu of the part payment of their respective remuneration for the quarter ending 31 March 2016.Mr. Tegoni had agreed to accept 50% of his March 16 Quarter remuneration ($12,500) to be paid in Shares and Mr. Haines had agreed to accept 30% of his March16 Quarter remuneration ($13,068) to be paid in Shares.

The shares are issued at an issue price of $0.10/share. The share issue price has been determined based on volume weighted average sale price of SECOS shares for March16 Quarter.

The issue of these shares to Directors was approved by shareholders at the Annual General Meeting held on 17 November 2015 (Resolutions 6 & 9).

Total amount of $25,568 representing the above equity settled share based payments has been included in Employment Benefits Expenses in the statement of comprehensive income, with a corresponding increase in Equity.

NOTE 22 - FRANKING CREDITS

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NOTE 24 - CONTROLLED ENTITIES

Controlled Entities Consolidated

Equity Holding (%) (1)

Name Country of Incorporation 2016 2015

Stellar Films Group Pty Ltd (2) Australia 100% 100%

Stellar Films (Malaysia) Sdn Bhd (2) Malaysia 100% 100%

Cardia Bioplastics (Australia) Pty Ltd

(100% owned by SECOS Group Limited) Australia 100% 100%

Tristano Pty Ltd

(100% owned by Cardia Bioplastics (Australia) Pty Ltd) Australia 100% 100%

Biograde (Nanjing) Pty Ltd

(100% owned by Biograde (Hong Kong) Pty Ltd) China 100% 100%

Biograde (Hong Kong) Pty Ltd

(100% owned by Cardia Bioplastics (Australia) Pty Ltd) Hong Kong 100% 100%

Cardia Bioplastics Malaysia Sdn Bhd Malaysia 100% 100%

Cardia Bioplasticos (Brasil) Ltda Brazil 100% 100%

CO2Starch Pty Ltd Australia 100% 100%

Cardia Bioplastics LLC USA 100% 100%

Mine Remediation Services Pty Ltd Australia 69.36% 69.36%

Natural Pharmacy Pty Ltd Australia 66.00% 66.00%

Herbworx International Pty Ltd

(60% owned by Natural Pharmacy Pty Ltd) Australia 39.60% 39.60%

1. Percentage of voting power is in proportion to ownership. 2. Interest in subsidiaries that were acquired as part of merger with SECOS Group Limited.

Economic Entity 2016 2015 $ $ Bank Guarantees 130,127 134,648Letter of Credits - 49,399Corporate Guarantees provided by parent entity in relation to its subsidiaries - The parent entity has provided guarantees to third parties in

relation to the performance and obligations of controlled entities in respect to banking & finance facilities and credit facilities. The guarantees are for the terms of the facilities. The period covered by guarantees range from 3 to 5 years.

2,017,000 - 2,147,127 184,047

There were no contingent assets as at 30 June 2016 (2015: NIL).

NOTE 25 - CONTINGENT LIABILITIES AND CONTINGENT ASSETS

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NOTE 26 - LEASING COMMITMENTS

Operating Lease CommitmentsCommitments in relation to operating leases contracted for at the end of the reporting period but not recognised as liabilities, payable:

NOTE 27 - OPERATING SEGMENTS

Segment InformationOperating segments are premised on the internal reports that are reviewed and used by the Board of Directors in assessing performance and determining the allocation of resources.

The Group is managed primarily on the basis of product category and service offerings as the diversification of the Group’s operations inherently have different risk profiles and performance assessment criteria. Operating segments are therefore determined on the same basis.

Reportable segments disclosed are based on aggregating operating segments where the segments are considered to have similar economic characteristics and are also similar with respect to the following:

- the products sold and/or services provided by the segment;

- the manufacturing process; - the distribution method; and - any external regulatory requirements.

2016 2015 $ $

a. Finance Lease Commitments Not later than 12 months 19,348 16,584between 12 months and 5 years 20,732 37,316 40,080 53,900Less : future finance charges 4,339 7,590Present value of minimum lease payments 35,741 46,310 b. Operating Lease Commitments Not later than 12 months 297,153 335,414between 12 months and 5 years 253,938 501,937 551,091 837,351 c. Capital Expenditure Commitments Capital expenditure commitments contracted for Plant and equipment purchases 165,000 - 165,000 -

The consolidated entity leases property under operating leases expiring from one to five years. Leases generally provide the consolidated entity with a right of renewal from nil years to five years.

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NOTE 27 - OPERATING SEGMENTS (CONTINUED)

The following operating segments have been identified

(i) Manufacturing Division(ii) Distribution Division

Types of products and services by segment

(i) Manufacturing DivisionThe manufacturing segment develops and manufactures sustainable resins derived from renewable resources for the global packaging and plastic products industries and also manufactures high quality cast films for the personal care, hygiene, pet care and medical product industries.

The Manufacturing segment, which includes the manufacturing units in China, Malaysia and Australia is responsible for distribution and sales of products locally and overseas.

The manufacturing segment also sells products to the distribution segment.

(ii) Distribution Division

Distribution segment includes the Group’s cash generating unit that is designated to develop and distribute the Group’s strategic products both locally and overseas.

Basis of accounting for purposes of reporting by operating segments

Accounting policies adoptedUnless stated otherwise, all amounts reported to the Board of Directors, are determined in accordance with accounting policies that are consistent to those adopted in the annual financial statements of the Group.

Inter-segment transactionsAn internally determined transfer price is set for all inter-segment sales. This price is based on what would be realised in the event the sale was made to an external party at arm’s length. All such transactions are eliminated on consolidation of the group’s financial statements.

Inter-segment loans payable and receivable are initially recognised at the consideration received/to be received net of transaction costs. If inter-segment loans receivable and payable are not on commercial terms, these are not adjusted to fair value based on market interest rates.

Corporate charges are allocated to reporting segments based on the segments’ overall performance of revenue generation within the Group. The Board of Directors believes this is representative of likely consumption of head office expenditure that should be used in assessing segment performance and cost recoveries.

Segment assets Where an asset is used across multiple segments, the asset is allocated to that segment that receives majority economic value from that asset. In the majority of instances, segment assets are clearly identifiable on the basis of their nature and physical location.

Segment liabilitiesLiabilities are allocated to segments where there is a direct nexus between the incurrence of the liability and the operations of the segment. Segment liabilities include trade and other payables.

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Manufacturing Division

DistributionDivision

Intersegment eliminations/ unallocated

Total

2016 $ $ $ $

Segment Performance

Revenue

External Sales 18,621,294 2,333,374 - 20,954,668

Inter-segment sales 2,059,305 - (2,059,305) -

Trading Income 296,393 - - 296,393

Research & Development Tax Refund - 198,329 - 198,329

Interest Revenue - - 13,923 13,923

Other Income - - 68,874 68,874

Total Segment Revenue 20,976,992 2,531,703 (1,976,508) 21,532,187

EBITDA (2,737,235) (695,565) - (3,432,800)

Depreciation and amortisations - - (352,364) (352,364)

Depreciation and amortisations (included in cost of goods sold)

- - (405,224) (405,224)

Finance costs - - (393,943) (393,943)

Impairments- Trade & Other Receivables (32,515) - - (32,515)

Discontinued Operations (Equity Interest in Joint Venture)

- - (341,316) (341,316)

Profit/(loss) before income tax expense (4,958,162)

Income tax expense -

Profit/(loss) after income tax expense (4,958,162)

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Total

2016 $ $ $ $

Segment Assets

Segment assets 8,162,142 4,630,003 - 12,792,145

Inter segment assets - 12,150,473 (12,150,473) -

Total Segment assets 8,162,142 16,780,476 (12,150,473) 12,792,145

Unallocated assets:

Cash & cash equivalents 670,379

Trade & other receivables 36,423

Fixed Assets 72,048

Total Assets 13,570,995

Included in segment assets are

Goodwill - 3,532,345 - 3,532,345

Investment in joint venture - - - -

Acquisition of non-current assets 24,787 - 75,706 100,493

Segment Liabilities

Segment Liabilities 6,276,509 1,597,165 - 7,873,674

Inter segment liabilities 2,541,502 - (2,541,502) -

Total Segment liabilities 7,873,674

Unallocated liabilities:

External Loans 239,087

Trade & Other Payables 183,605

Short & Long Term Provisions 450,890

Total Liabilities 8,747,256

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Total

2015 $ $ $ $

Segment Performance

Revenue

External Sales 16,717,648 566,746 - 17,284,394

Inter-segment sales 575,059 - (575,059) -

Trading Income 445,345 - - 445,345

Research & Development Tax Refund - 219,677 - 219,677

Interest revenue 76 1,487 - 1,563

Other Income 6,822 - - 6,822

Total Segment Revenue 17,744,950 787,910 (575,059) 17,957,801

EBITDA (1,375,556) (134,246) - (1,509,802)

Depreciation and amortisations - - (327,766) (327,766)

Depreciation and amortisations (included in cost of goods sold) - - (367,328) (367,328)

Finance costs - - (321,186) (321,186)

Impairments- Trade & Other Receivables (989,786) - - (989,786)

Impairment- Inventories (76,564) - - (76,564)

Merger Transaction costs - - (309,446) (309,446)

Discontinued Operations (Equity Interest in Joint Venture) - - (877,925) (877,925)

Gain on Acquisition - - (500,000) 500,000

Profit/(loss) before income tax expense (4,279,803)

Income tax expense -

Profit/(loss) after income tax expense (4,279,803)

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Total

2015 $ $ $ $

Segment Assets

Segment assets 11,882,332 2,139,533 - 14,021,865

Inter segment assets - 8,888,847 (8,888,847) -

Total Segment assets 11,882,332 11,028,380 (8,888,847) 14,021,865

Unallocated assets:

Cash & cash equivalents 2,340,132

Trade & other receivables 131,246

Financial Assets 563,400

Total Assets 17,056,643

Included in segment assets are

Goodwill - 3,532,345 - 3,532,345

Investment in joint venture - - - -

Acquisition of non-current assets 11,230 - - 11,230

Segment Liabilities

Segment Liabilities 8,183,649 812,523 - 8,996,172

Inter segment liabilities 6,487,231 - (6,487,231) -

Total Segment liabilities 14,670,880 812,523 (6,487,231) 8,996,172

Unallocated liabilities:

Trade & Other Payables - - - 126,552

Total Liabilities 9,122,724

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Sales Revenue by geographical region 2016 2015 $ $

Sales Revenue attributable to external customers is disclosed below, based on the location of the external customer Australia 2,287,776 1,855,776Asia 15,776,427 14,275,827Americas 1,787,021 393,624Others (*) 1,103,444 759,167Total Revenue 20,954,668 17,284,394

*Others include countries falling within Europe and Africa Continents.

Assets by geographical region 2016 2015 $ $

The location of segment assets (non current) by geographical location of assets is disclosed below: Australia 3,746,620 3,970,448Asia 2,629,140 3,445,966Total Assets 6,375,760 7,416,414

Major customersThe Group has a number of customers to whom it provides products. The Group has supplied a single external customer in the manufacturing segment who accounted for 22.25% (2015: 24.83%) of external revenue. The next two significant customers accounted for 19.20% (2015: 13.98%) and 3.77% (2015: 2.97%) of external revenue respectively.

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NOTE 28 - CASH FLOW INFORMATION

2016$

2015$

Reconciliation of Cash Flow from Operations with Profit after Income Tax

Loss for the year after tax (4,951,804) (4,279,803)

Depreciation & Amortisation 352,364 327,766

Depreciation included in Costs of goods sold 405,224 367,328

Foreign Currency translation differences 40,895 (73,079)

Gain on Disposal of Equity Interest in Joint venture (203,428) -

Profit on sale of Fixed Assets - (6,962)

Loss on Sale of Financial Assets 75,120 -

Write off of Fixed Assets 22,671 -

Issue of shares to Directors in lieu of cash remuneration 25,568 -

Impairments 32,515 1,066,350

Share in loss of joint venture entity 443,030 877,925

Gain on Acquisition - (500,000)

Changes in operating assets and liabilities, net of business combination effects:

Decrease in receivables 368,075 688,235

Decrease in other operating assets 513,137 1,040,853

Decrease in creditors (907,128) (913,434)

Decrease in provisions and payables 348,321 63,868

Net cash outflow from operating activities (3,435,440) (1,340,953)

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NOTE 29 - EVENTS AFTER THE REPORTING DATE

Other than the matters discussed below, there has not arisen in the interval between the end of the financial year and the date of this report, any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company to affect the operations of the consolidated entity, the results of these operations or the state of affairs of the consolidated entity in subsequent years.


− Effective 1 August 2016, Mr Edmond Tern has been appointed as Chief Financial Officer of the Company. Edmond will replace current CFO Trevor Haines. Trevor has transitioned to a Corporate Development role charged with expanding sales of the Company’s sustainable bioplastic technology to key customers and will continue to serve on the Board.

− On 5 July 2016, the Company issued 241,208 fully paid ordinary shares under the Loan Share Plan to two of its di-rectors- M/s Tegoni and Haines, in lieu of the part payment of their respective remuneration for the quarter ending 30 June 2016. The issue of these shares to Directors was approved by shareholders at the Annual General Meeting held on 17 November 2015 (Resolutions 6 & 9). The shares were issued at an issue price of $0.106/share, which was determined based on the volume weighted average sale price of SECOS shares for June16 Quarter.


− On 31 August 2016, SECOS completed placement of 12,720,562 ordinary shares and raised $1,043,086. The majority of the investment in the Placement was made by Don Haller and parties introduced by Mr Haller. The shares under the Placement were issued pursuant to the Company’s 15% and 10% placement capacities.

− On 14 September 2016, SECOS issued 382,342 shares and raised further $31,352 under the placement. The shares under the Placement were issued pursuant to the Company’s 10% placement capacity.

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NOTE 30 - EVENTS AFTER THE REPORTING DATE

Parent EntitySECOS Group Limited is the parent entity.

SubsidiariesInterests in subsidiaries are set out in Note 24.

AssociatesInterest in associates are set out in Note 6.

Key management personnel Disclosures relating to key management personnel are set out in Note 7 and the remuneration report in the directors’ report.

Transactions with related parties

Stellar Directors related entities have advanced amounts to that Company for working capital purposes. As part of merger negotiations, on 31 March 2015, these entities have entered into respective loan agreements with Stellar for the amounts advanced. Pursuant to the loan agreements, loan amount advanced are on an unsecured basis and will be repayable after 2 years after the merger completion date i.e. 21 April 2017, with SECOS having further discretion to extend the loan term for a further 12 months period. Loans will attract interest at bank market rates for the term. Any early repayment of these loans is at the discretion of SECOS Board.

The following balances are outstanding at the reporting date in relation to above loans from the related parties:

Terms and ConditionsAll transactions were made on normal commercial terms and conditions and at market rates.

2016$

2015$

Stephen Walters 89,389 105,388

Trevor Haines 123,902 139,356

Robert Morgan 72,763 72,763

Peter Symons 76,117 77,865

TOTAL 362,171 395,372

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NOTE 31 - FINANCIAL INSTRUMENTS

a) Financial Risk ManagementThe group’s financial instruments consist mainly of deposits with banks and short term investments, accounts receivable and payable and available for sale financial assets. The totals for each category of financial instruments, measured in accordance with AASB 139 as detailed in the accounting policies to these financial statements, are as follows:

Note 2016 2015 $ $

Financial Assets Cash and cash equivalents 10 1,343,293 2,627,392Loans and receivables 11 2,900,423 3,442,035Available –for- Sale Financial Assets 13 - 563,400Total Financial Assets 4,243,716 6,632,827 Financial Liabilities Trade and other payables 16 4,151,854 4,942,205Borrowings 17 3,601,668 3,418,328Total Financial Liabilities 7,753,522 8,360,533

Financial risk management objectivesThe consolidated entity’s activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and interest rate risk), credit risk and liquidity risk. The consolidated entity’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the financial performance of the consolidated entity. The consolidated entity uses natural hedges and derivative financial instruments such as forward foreign exchange contracts to hedge certain risk exposures. Derivatives are exclusively used for hedging purposes, i.e. not as trading or other speculative instruments. The consolidated entity uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange and other price risks, ageing analysis for credit risk.

Specific Financial Risk Exposures and ManagementThe main risks the group is exposed to through its financial instruments are credit risk, liquidity risk and market risk consisting of interest rate risk and foreign currency risk.

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NOTE 31 - FINANCIAL INSTRUMENTS (continued)

Credit riskExposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of contract obligations that could lead to a financial loss to the Group.

Credit risk is managed through the negotiation of payment terms with customers such as advance payment on order or payments through letter of credits, title retention clauses over goods, ensuring to the extent possible, that customers and counterparties to transactions are of sound credit worthiness and monitoring the financial stability of significant customers and counterparties. Such monitoring is used in assessing receivables for impairment.

The maximum exposure to credit risk by class of recognised financial assets at the end of the reporting period is equivalent to the carrying amount of those financial assets (net of any provisions) as presented in the statement of financial position.

The Group has no significant concentration of credit risk with any single counterparty or group of counterparties. However, on a geographical basis, the Group has significant credit risk exposures to Americas and Asia, given the substantial transactions from those regions. Details with respect to credit risk of Trade and Other Receivables are provided in Note 11.

Trade and other receivables that are neither past due or impaired are considered to be of high credit quality. Aggregate of such amounts are as detailed in Note 11.

Credit risk arising on cash balances is not material.

Liquidity riskLiquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or meeting its obligations related to financial liabilities. The group manages liquidity risk by maintaining a reputable credit profile, managing credit risk related to financial assets, monitoring forecasted cash flows and ensuring that new funding facilities are in place either in the form of the issuing of new securities or establishing borrowing facilitiesUnused borrowing facilities at the reporting date are disclosed under Note 17.

The bank overdraft facility may be drawn at any time and is provided on an on-demand basis.

The bank loan facilities in respect of Stellar Films (Malaysia) are repayable on demand but until such demand, have a maturity term ending on 1 October 2016 and is subject to monthly repayments amortising to nil at maturity.

The multi option facility that includes bank guarantee, letter of credit and foreign currency trade finance is revolving facility subject to annual review.

Stellar Films Group Pty Ltd’s outstanding overdraft facility and market rate facilities as at 30 June 2015 (totalling $770,992) have been combined into a new market rate facility of $767,000 with term of 4 years effective 23 September 2015. The new market rate facility will have an interest only term of 1 year and then amortising over the following 3 years.

Remaining contractual maturitiesThe following tables detail the consolidated entity’s remaining contractual maturity for its financial instrument liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position.

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Economic Entity2016

Weighted average

interest rate

1 year or Less

Between 1 and 2 years


Over 5 years

Remaining contractual maturities

% $ $ $ $ $

Non-derivatives

Non-interest bearing

Trade Payables - 3,126,655 - - - 3,126,655

Other Payables - 1,025,199 - - - 1,025,199

Interest bearing- variable

Bank Loans 8.55% 1,211,418 566,558 64,808 - 1,842,784

Foreign Currency Trade Finance

1.83% 653,368 - - - 653,368

Debtor Finance Facility 9.50% 479,646 - - - 479,646

Interest bearing- Fixed

Unsecured Loan (shareholder) 15.00% 101,250 - - - 101,250

Unsecured Loan (related parties)

8.36% 384,879 - - - 384,879

Unsecured Loan (third party) 18.00% 159,950 - - - 159,950

Software Licence Finance 9.37% 19,348 20,732 - - 40,080

Total Non-derivatives 7,161,713 587,290 64,808 - 7,813,811

Economic Entity2015

Weighted average

interest rate

1 year or Less



Over 5 years

Remaining contractual maturities

% $ $ $ $ $

Non-derivatives

Non-interest bearing

Trade Payables - 4,046,285 - - - 4,046,285

Other Payables - 895,920 - - - 895,920

Interest bearing- variable

Bank Loans 7.43% 972,454 1,340,490 - - 2,312,944

Foreign Currency Trade Finance

1.83% 176,243 - - - 176,243

Interest bearing- Fixed

Secured Loan (shareholder) 15.00% - - 55,000 - 55,000

Unsecured Loan (shareholder) 15.00% 111,250 - - - 111,250

Unsecured Loans (related parties)

8.35% - 461,399 - - 461,399

Software Licence Finance 9.37% 16,584 16,584 20,732 - 53,900

Total Non-derivatives 6,218,736 1,818,473 75,732 - 8,112,941

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The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above.

Fair Value of financial instruments

Unless otherwise stated, the carrying amount of financial instruments reflect their fair value.

Market risks

Interest rate riskExposure to interest rate risk arises on financial assets and financial liabilities recognized at the end of the reporting period whereby a future change in interest rates will affect future cash flows or the fair value of fixed rate financial instruments. The Group is also exposed to earnings volatility on floating rate instruments.

The variable interest rate borrowings expose the Group to interest rate risk which will impact future cash flows and interest charges are indicated by the following floating interest rate financial liabilities

Note 2016 2015 $ $ Variable rate instruments Bank Overdrafts 132,619 450,349Bank Loans 1,707,514 2,196,652Foreign Currency Trade Loan 650,443 174,645Debtor Finance Facility 474,093 - 2,964,669 2,821,646

Interest rate risk sensitivity analysis An official increase/decrease in interest rates of 100 (2015: 100) basis points would have an adverse/favourable effect on profit before tax of $29,647 (2015: $28,216) per annum. The percentage change is based on the expected volatility of interest rates using market data and analysts forecasts. In addition, minimum principal repayments of $1,132,268 (2015: $888,119) are due during the year ending 30 June 2017.

Foreign currency riskThe consolidated entity undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk through foreign exchange rate fluctuations.

As the Group’s significant purchase and sales transactions are in US Dollars, any fluctuations in US Dollars may impact on the Group’s financial results unless this exposure is appropriately hedged. The risk is measured using sensitivity analysis and cash flow forecasting.

In order to protect against exchange rate movements in US Dollar, the consolidated entity manages the risk through natural hedge to the extent possible and has also entered into forward foreign exchange contracts. These contracts are hedging highly probable forecasted cash flows for the ensuing financial year. Management has a risk management policy to hedge between 30% and 60% of anticipated foreign currency transactions for the subsequent 3-4 months.

For payments in all other foreign currencies, the Group has established that its exposure to foreign currency risk is not material at this stage.

The maturity, settlement amounts and the average contractual exchange rates of the consolidated entity’s outstanding forward foreign exchange contracts:

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NOTE 31 - FINANCIAL INSTRUMENTS

Sell US Dollars Average exchange rates

2016$

2015$

2016$

2015$

Buy Australian Dollars

Maturity

0-3 months 1,083,136 1,227,743 0.7405 0.8932

3-6 months - - - -

Buy Malaysian Ringgits

Maturity

0-3 months - 388,511 - 1.2451

3-6 months - 188,273 - 1.2552

The carrying amount of the Group’s foreign currency (US Dollars) denominated financial assets and financial liabilities at the reporting date were as follows:

Financial Assets Financial Liabilities

2016$

2015$

2016$

2015$

US Dollars 2,159,858 1,903,015 1,930,981 2,332,957

The Group has performed a sensitivity analysis relating to its net exposure to foreign currency risk at the end of reporting period. This sensitivity analysis demonstrates the effect on the current year results and equity which could result from a change in these risks.

Foreign currency risk sensitivity analysisAt 30 June 2016, the effect on profit and equity as a result of changes in the value of the Australian Dollar to the US Dollar with all other variables remaining constant is as follows:

2016$

2015$

Change in Profit and Equity

- Improvement in AUD to USD by 5% 46,849 21,497

- Decline in AUD to USD by 5% (46,849) (21,497)

The Directors assess that 5% variance in AUD to USD can have material impact on the Company’s operations in the event the Company’s receipts in USD are not sufficient to manage its USD payments through a natural hedge.

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NOTE 32 - FAIR VALUE MEASUREMENT

Fair value hierarchyThe following tables detail the economic entity’s assets measured or disclosed at fair value, using a three level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being: • Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the

measurement date • Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either

directly or indirectly • Level 3: Unobservable inputs for the asset or liability

Economic Entity - 2015 Level 3$

Total$

Assets

Available for sale financial assets

Unlisted Investments at fair value 563,400 563,400

Total Assets 563,400 563,400

There were no transfers between levels during the financial year.

The carrying amounts of trade and other receivables and trade and other payables are assumed to approximate their fair values due to their short-term nature. Valuation techniques for fair value measurements categorised within level 3

Available for sale financial assets consisted of 18,780,000 ordinary shares in Bioglobal Limited. On 6 October 2015, SECOS sold its investment in Bioglobal for consideration of $488,280.

As at 30 June 2015, these assets have been valued at 3 cents per share based on the offer price for the last capital raising by Bioglobal that occurred in December 2013.

Level 3 assets There were no movements in level 3 assets during the current and previous financial year.

Any reasonable change to unobservable inputs would not be material to these financial statements.

NOTE 33 - COMPANY DETAILS

The principal place of business and registered office isSuite 6, Level 2, 205-211 Forster Road, Mount Waverley, Victoria, Australia 3149. F

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2016DIRECTORS’DECLARATION

Page 78.

1. The Directors declare that the financial statements and notes, as set out on pages 29 to 77 and remuneration disclosures that are detailed within the Remuneration Report in the Directors’ Report, are in accordance with the Corporations Act 2001 and:

a. comply with Accounting Standards, the Corporations Regulations 2001; and b. give a true and fair view of the financial position as at 30 June 2016 and of the performance for the year ended on

that date of the company and economic entity. c. the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.

2. The Managing Director and Chief Financial Officer have each declared that:

a. the financial records of the company for the financial year have been properly maintained in accordance with section 286 of the Corporations Act 2001;

b. the financial statements and notes for the financial year comply with the Accounting Standards; and c. the financial statements and notes for the financial year give a true and fair view.

3. In the directors’ opinion there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Directors.

Richard Tegoni DirectorMount Waverley Dated this 27th day of September 2016

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2016INDEPENDENT AUDITOR’S REPORT

Page 79.

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2016INDEPENDENT AUDITOR’S REPORT

Page 80.

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2016SHAREHOLDERS’ INFORMATION

Page 81.

The shareholder information set out below was applicable as at 12 September 2016

(A) DISTRIBUTION OF EQUITY SECURITIES

Analysis of numbers of equity security holders by size of holding:

Ordinary Shares Number of Holders

1 - 1,000 306

1,001 - 5,000 406

5,001 - 10,000 193

10,001 - 100,000 385

100,001 and over 167

1,457

There were 753 holders of less than a marketable parcel of ordinary shares.

(B) EQUITY SECURITY HOLDERS

The names of the twenty largest holders of quoted equity securities are listed below:

Fully Paid Ordinary Shares Number HeldPercentage of Issued Shares

%

STELLAR DEVELOPMENTS PTY LTD <THE STELLAR UNIT A/C> 20,789,040 12.87

MR DONALD HALLER JR 11,353,199 7.03

GANSPRUSE PTY LTD <THE HAINES FAMILY A/C> 7,795,891 4.83

GOBBLE PTY LTD <MORGAN DISCREATIONARY A/C> 7,795,891 4.83

HELPLESS PTY LTD <THE INFINITY DISCRETIONARY> 7,795,891 4.83

FEMALE PTY LTD <SYMONS DISCRETIONARY A/C> 7,755,891 4.80

G & N LORD SUPERANNUATION PTY LTD <GNR SUPERANNUATION FUND A/C> 5,500,000 3.40

R&K EDWARDS INVESTMENTS LLC 3,174,987 1.97

MR RICHARD ROGER TEGONI + MRS DEBRA MARISA TEGONI <TEGONI SUPER FUND A/C> 2,648,998 1.64

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 2,221,993 1.38

RETZOS EXECUTIVE PTY LTD <RETZOS EXECUTIVE S/FUND A/C> 2,200,000 1.36

MRS DEBRA MARISA TEGONI 2,147,858 1.33

MRS JANET LOUISE COLMAN <JL COLMAN SUPER FUND A/C> 2,033,876 1.26

INSYNC INVESTMENTS PTY LTD <WEEKLEY SUPER FUND NO 1 A/C> 2,000,000 1.24

ADVANCE PUBLICITY PTY LTD <THE IZMAR FAMILY A/C> 1,750,000 1.08

STEPHEN J CARLOTTI <STEPHEN J CARLOTTI A/C> 1,606,948 0.99

SOMNUS PTY LTD <SOMNUS SUPERANNUATION A/C> 1,382,927 0.86

KIRZY PTY LTD <SPRINGDALE NO 2 A/C> 1,300,000 0.80

VANFULL INVESTMENTS LIMITED 1,237,723 0.77

REDCLIFF PTY LTD <MCGHEE SUPER FUND A/C> 1,182,927 0.73

TOTAL 93,674,040 58.00

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2016SHAREHOLDERS’ INFORMATION

Page 82.

(C) SUBSTANTIAL SHAREHOLDERS

The names of the substantial shareholders listed in the holding company’s register as at 12 September 2016 are:

Number of Ordinary

Shares Held

Percentage of Issued Shares

%

STELLAR DEVELOPMENTS PTY LTD <THE STELLAR UNIT A/C> 20,789,040 12.87

MR DONALD HALLER JR 11,353,199 7.03

(D) VOTING RIGHTS

The voting rights attaching to each class of equity security are set out below:

Ordinary Shares: On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.

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2016

SECOS GROUP LIMITED AND ITS CONTROLLED ENTITIES

Resin Production Finished Goods Sales Offices Distributors

SECOS GROUP COMPANIES

Renewable

Earth Friendly

Sustainable

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Changing the World of Packaging stellarfilmsgroup.comcardiabioplastics.comcardiabioproducts.cominfo@secosgroup.com.au

GROUP

GROUP

SECOS Group Limited and Its Controlled Entities

ACN 064 755 237SECOS Group LimitedSuite 6,205-211 Forster Road, Mt. Waverley VIC 3149+61 3 8566 6800 Cardia BioplasticsAustraliaSuite 6,205-211 Forster Road, Mt. Waverley VIC 3149+61 3 8566 6800 North AmericaPMB 122, 1124 Fir Avenue,Blaine,Washington 98230U.S.A.+1 888 605 1488 ChinaRoom 1402-140366 Qinhuai Lu,Jiangning Qu, Nanjing Shi, Jiangsu Sheng, China, 211100+86 25 5272 8473 Stellar Films GroupAustraliaSuite 6,205-211 Forster Road, Mt. Waverley VIC 3149+61 3 8566 6800 Australia6 Tilburn Road,Deer Park, VIC 3023 Australia+61 3 9361 8260 MalaysiaStellar Films (M) Sdn Bhd10, Jalan Sultan Muhamed,4 Kawasan Selat Klang Utara,42000 Pelabuhan Klang, Selangor Darul Ehsan,Malaysia+60 3 3176 3419F

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