Changing the world
of packaging
SECOS GROUP LIMITED
(ASX:SES)
ACN 064 755 237
ANNUAL REPORT
For the year ended 30 June 2021
“SECOS has established itself as one of the
key global participants in the bioplastics and
environmental packaging space.”
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
CONTENTS
CORPORATE DIRECTORY
CHAIRMAN’S REPORT
KEY FINANCIAL INDICATORS
DIRECTORS’ REPORT
AUDITOR’S INDEPENDENCE DECLARATION
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
STATEMENT OF FINANCIAL POSITION
STATEMENT OF CHANGES IN EQUITY
STATEMENT OF CASH FLOWS
NOTES TO THE FINANCIAL STATEMENTS
DIRECTORS’ DECLARATION
INDEPENDENT AUDITOR’S REPORT
SHAREHOLDERS’ INFORMATION
4
5
6
7
20
21
22
23
24
25
50
51
56
3
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
CORPORATE DIRECTORY
DIRECTORS:
Mr. Richard Tegoni (Executive Chairman)
Mr. Stephen Walters (Executive Director)
Mr. Donald Haller Jr. (Non-Executive Director)
Mr. David Wake (Non-Executive Director)
Mr. Jim Walsh (Non-Executive Director)
COMPANY SECRETARY:
Mr. Edmond Tern
REGISTERED OFFICE:
Level 3, 302 Burwood Road
Hawthorn, VIC 3122
Telephone: +61 3 8566 6800
Email: info@secosgroup.com.au
SHARE REGISTRY:
Advanced Share Registry Limited
110 Stirling Highway,
NEDLANDS, W.A. 6009
Telephone: +61 8 9389 8033
Email: admin@advancedshare.com.au
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 9824 8555
LAWYERS:
CBW Partners
Level 1, 159 Dorcas Street,
South Melbourne, VIC 3205
SECURITIES 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
www.myecobag.com.au
www.myecoworld.com.au
www.myecopet.com.au
www.myecopet.com
CORPORATE GOVERNANCE
STATEMENT:
The Corporate Governance statement can be found on the Investors
page at www.secosgroup.com.au
4
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
CHAIRMAN’S REPORT
Dear fellow Shareholders,
On behalf of the Board of SECOS Group Ltd (ASX: SES), I am
pleased to present our Annual Report for the year ending 30
June 2021.
The momentum to solve the world’s plastic waste crisis is
building and has resulted in strong demand for compostable
packaging and products globally. SECOS has delivered vastly
improved results in 2021 but most importantly, your Company
has established itself as one of the key global participants in
the bioplastics and environmental packaging space.
industry.
SECOS enjoys advanced technological capabilities in the
compostable and bioplastic
It has established
significant manufacturing assets with three plants in Malaysia
and one in China. It has long standing relationships and sales
offices across Asia and the Americas and has high achieving
distribution network partners in Mexico and throughout
Europe. With sales to over 20 countries and a sales run rate of
over $35 million achieved in the final quarter of FY2021, SECOS
is well positioned to maintain sustainable growth in the
coming years.
“Your Board is now moving SECOS to a growth phase and will focus the
Company on sales growth in bio-resins, biofilms, bio-bags and will make
further investments in the MyEco™ branded product range.”
The Company recently announced an investment in a global research and development centre in Australia
which will focus on new product developments aimed at achieving the environmental, economic and health
benefits as replacement technologies for toxic, petrochemical-based traditional plastics.
The financial performance improvements for FY2021 reveal a strong scorecard with highlights including a
318% improvement in NPAT with FY21 $2.59m vs FY20 ($1.19m loss); sales growth of 43% or FY 21 $30m vs FY20
$21m, margins improved to 19% vs FY20, 17.5% and the ongoing strength of the Company’s balance sheet with
total assets growing by 114% to $33.7m with no debt and cash of $11.3m as of 30 June 2021. Compostable sales
increased 584.4% in the Americas representing the Company’s fastest growing region. Past tax losses of over
$2m were taken up to reflect the board’s expectation that the Company will maintain a profit position that
can absorb past establishment phase losses incurred by the Company.
The Company’s excellent results were achieved despite very difficult global trading conditions hampered by
Covid-19 restrictions and the impact the virus has had on the world economies generally. During the year,
SECOS experienced significant worldwide shipping challenges. However, SECOS staff managed its supply
chain well and maintained strong customer service levels to deliver on its growth targets. Covid-19 continues
to disrupt the Company’s operations with the Delta variant posing even greater challenges. SECOS staff have
proven highly capable in managing this difficult situation and the Board remains optimistic that the
Company’s multi-country manufacturing capability, strong balance sheet and participation in over twenty
countries provides resilience when navigating supply chains worldwide.
On behalf of the board, I would like to congratulate everyone in SECOS team responsible for achieving these
excellent results and for the strong support from shareholders and our key stakeholders. We believe the
Company is now well positioned for further growth and to take advantage of the shift to bioplastics with the
year ahead expected to be very positive.
Richard Tegoni
Executive Chairman
SECOS Group Limited
5
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
KEY FINANCIAL INDICATORS
$35
$30
$25
$20
$15
$10
$5
$0
$0.80
$0.60
$0.40
$0.20
$0.00
($0.20)
($0.40)
($0.60)
($0.80)
($1.00)
($1.20)
($1.40)
$40
$35
$30
$25
$20
$15
$10
$5
$0
REVENUE ($m)
+43%
$30.08m
$21.04m
FY20
FY21
NET PROFIT BEFORE TAX ($m)
+145%
$0.54m
($1.19m)
FY20
FY21
TOTAL ASSETS ($m)
+114%
$33.77m
$15.75m
FY20
FY21
6
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
DIRECTORS’ REPORT
The 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
2021.
DIRECTORS
The following persons were Directors of SECOS during the financial year and up to the date of this report,
unless otherwise stated:
• Richard Tegoni (Executive Chairman)
• Stephen Walters (Executive Director)
• Donald Haller Jr. (Non-Executive Director)
• David Wake (Non-Executive Director)
•
Jim Walsh (Non-Executive Director)
COMPANY SECRETARY
The Company Secretary is Edmond Tern who is also the Chief Financial Officer of SECOS.
PRINCIPAL ACTIVITIES
SECOS Group Limited (ASX: SES) is a leading developer and manufacturer of sustainable packaging materials.
Headquartered in Melbourne, Australia, SECOS supplies its proprietary biodegradable and compostable
resins, packaging products and high-quality cast films to a blue-chip global customer base. SECOS Group is
integrated from resin production, into film (cast and blown) production and can develop bespoke
compostable solutions for a large range of applications.
SECOS holds a strong patent portfolio and the global trend toward sustainable packaging is fueling the
Company’s growth.
The Company’s headquarters and Global Application Development Centre are based in Melbourne, Australia.
SECOS has a Product Development Centre and manufacturing plant for resins and finished products in China
and resins plant in Malaysia. The Company also has manufacturing plants for high quality cast films in
Malaysia as well as manufacturing partners for film, bag making, and other applications in Malaysia, Mexico,
and the United States.
SECOS has sales offices in Australia, Malaysia, China, Mexico and USA, with a network of leading distributors
across the Americas, Europe, Asia, the Middle East, Africa, and India.
OPERATING RESULTS
The consolidated profit / (loss) for the year attributable to the members of the Group:
Profit / (Loss) for the year before income tax
Profit / (Loss) for the year after income tax
2021
$
2020
$
537,072
(1,186,003)
2,590,171
(1,186,003)
Net Profit / (Loss) attributable to members of the Company
2,590,171
(1,186,003)
DIVIDENDS
The 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.
7
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
REVIEW OF OPERATIONS
SECOS finished FY2021 in a strong position with 43% growth in year on year (yoy) sales; a further increase in
Gross Margin and a net profit of $ 2.6 million, which is a significant turnaround from a net loss of $1.2 million a
year ago.
At the close of FY2021, SECOS has a strong net cash position with $11.3m in cash and no debt.
SECOS’ operational performance saw increasing utilisation rates in all its plants, which supported additional
investment in capacity expansion in both China and Malaysia to add to bioresin, film and bag capacity. The
China expansion was installed on time and budget and in line with the capex plan. The expansion in Malaysia
continues despite some COVID-19 associated shipping delays. Initial commissioning runs for film extrusion
and bagging lines have commenced, with further lines arriving for installation shortly. Once completed,
SECOS will be one of the largest compostable film and bag manufacturer and exporters in Malaysia.
Sales growth continues in our Compostable Biopolymer range with 126.6% year on year growth recorded.
SECOS’traditional film business saw weaker sales through a combination of COVID-19 impacts on end use
demand in some markets and a line breakdown over January which was resolved in March.
Compostable Resins, Films and Bags continue to record double digit growth with the largest segment,
compostable bags, growing well as a consequence of strong demand from councils through their household
food organics garden organics (FOGO) programs as well as expanding demand for dog waste bags.
Figure: Annual sales by product group
'
0
0
0
$
D
U
A
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
FY20
FY21
Traditional
Bio Resin
Bio Bags
Bio Film
SECOS has continued to build on The Business Transformation Program commenced in FY2020 which has
delivered significant value to the business to turnaround profitability and margins. Over FY2021 SECOS
delivered on assets expansion to capture sales growth in its compostable range and enhance its profitability.
The recently announced investment in a new Australian Research and Development centre and associated
staff as well as the launch of SECOS branded products will support growth in new higher end product sales.
8
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
REVIEW OF OPERATIONS (CONTINUED)
FINANCIAL HIGHLIGHTS
FY21
FY20
% Change
Revenue
Traditional
Bio
Gross Margin %
Net Profit before tax
Net Profit after tax
Current assets
Current liabilities
Current ratio
Debt
Equity
Total assets
Debt/equity
Debt/assets
30,081,012
21,038,608
11,339,104
12,767,001
18,741,908
8,271,607
19.0%
17.5%
537,072
(1,186,003)
2,590,171
(1,186,003)
23,313,228
9,107,264
2,944,815
3,627,935
43.0%
-11.2%
126.6%
8.3%
145.3%
318.4%
156.0%
-18.8%
216.0%
7.9
-
2.5
672,075
-100.0%
29,219,820
11,375,302
33,771,755
15,753,302
0.0%
0.0%
5.9%
4.3%
156.9%
114.4%
-100.0%
-100.0%
Overall revenue delivered significant growth of 43.0%. Biopolymer recorded an encouraging 126.6% growth,
more than offsetting a decline in traditional sales that were affected by COVID-19 interruptions and an
extrusion line outage in January. The spring back in global demand for goods after the initial COVID waves,
combined with bottlenecks and industrial action around key ports and shipping lanes, combined to
contribute to longer lead times on shipping and an increase in transport costs and a general increase in raw
material costs.
SECOS Group managed to offset these increased costs through price increases, cost discipline and greater
manufacturing efficiencies, once new capacity was fully installed (at the halfway point of FY2021). SECOS also
made product mix changes and experienced a significant increase in volume demand for its products. All of
these factors contributed to SECOS’ significant improvement in operational profit for FY2021 vs the previous
year.
The Group closed off the year with the balance sheet in good shape with key financial statistics summarised
in the table above.
9
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
REVIEW OF OPERATIONS (continued)
OPERATIONAL ASSETS
During the financial year SECOS:
•
•
•
•
Installed additional film and bag production capacity at its plant in China to cater to expanding
compostable bag market segments,
Installed additional equipment in cast line operation in Malaysia which increased efficiency of
production,
Installed additional compostable resin capacity at its Malaysian bio-resin plant
Increased asset utilisation rates in current compostable operations
• Secured a new facility for the expansion of new compostable film and bag capacity in Malaysia to
meet the demands of expanding compostable markets in Australia, Asia, the Subcontinent, South
Africa and the Americas.
SECOS is in the process of increasing its compostable and bio-resin bag production capacity in line with the
increasing demand in several retail markets.
SALES ACTIVITIES
Double Digit Sales Growth
Biopolymer Sales were up 126% over the prior year with compostable film sales growing rapidly as a
consequence of new markets evolving within which SECOS is active.
SECOS remains committed to the Australian Council initiatives to divert food waste from landfill to organic
waste stations. SECOS promotes Compostable Kitchen Tidy Bags to Councils which are used to facilitate
Council food waste diversion programs. These programs have the benefits of redirecting food waste from land
fill to organic waste treatment which creates fertile mulch, which in turn mitigates greenhouse gas emissions
as well as Council land fill costs.
SECOS is also committed to replacing single use plastics with more sustainable compostable solutions within
the consumer and food packaging industry. Sales demand continues to be supported by significant film
converter and name brand-owner enquiries.
SECOS secured new business with Woolworths supermarket chain in July 2020 to supply 82 stores with the
MyEcoBag™ bin liner range. Following a successful year of sales in those stores, Woolworths recently
announced an expansion to now supply to 203 stores in FY2022.
Council business continues to expand with total Council business increasing by 33.1% on FY2020 as the
number of Australian city councils adopting Food Organics & Garden Organics (FOGO) waste programs
grows.
OUTLOOK
Further strong growth in biopolymer resin and film sales is expected in view of several emerging
opportunities and the Company’s available and expanding manufacturing capacity.
Research and Development activities are on track to further enhance manufacturing efficiencies. Additional
efforts will be invested around SECOS’ own ‘MyEco’ branded finished products in both Australian and USA
retail markets. These are markets where we see considerable consumer demand surrounding the use of
bioproducts, as their renewable content has the double benefit of sequestering atmospheric carbon and
reducing the blight of conventional plastic leakage into the environment.
COVID-19
The impact of the Coronavirus (COVID-19) pandemic is ongoing. While the financial impact on the Group up
to 30 June 2021 was negligible, it is not practicable to estimate the potential impact after the reporting date.
The situation is dependent on measures imposed by governments in various jurisdictions in which the Group
operates.
10
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
REVIEW OF OPERATIONS (continued)
CORPORATE
Capital Raising
During the year, SECOS raised $15 million via a placement issue pursuant to ASX Listing Rule 7.1 and 7.1A
placement capacity.
The funds raised provided funding to invest in capital equipment and working capital to expand biopolymer
capacity in Malaysia and China following a sustained period of strong growth in demand for the Company’s
proprietary biopolymer resin. As stated above, as at 30 June 2021, the Company holds over $11m in available
cash for ongoing investment.
Share Price
The Board noted there had been significant uplift in the Company’s share price over the past year as the
Company delivered strong revenue growth, improved profitability and communicated a positive outlook for
its proprietary biopolymer technology and products.
11
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
REVIEW OF OPERATIONS (continued)
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
The following significant changes in the state of affairs of the Group occurred during the year.
• On 9-Jul-2020, the Company announced the supply of 8L Kitchen Caddy Bag and 36L Bin Liner under
its MyEcoBag™ brand to Woolworths Limited for 86 of their stores.
• On 10-Jul-2020, the Company issued 7,458,346 fully paid ordinary shares to unlisted convertible
noteholders in full settlement of the remaining $0.35 million of convertible notes debt.
• On 10-Aug-2020, the Company announced a significant supply contract being entered into with
Jewett-Cameron Trading Company Limited for the supply of dog waste bag for big box retail stores
in the Americas.
• On 26-Aug-2020, the Company issued 3,166,666 fully paid ordinary shares to option holders that were
expiring 16 May 2021. The shares were issued at $0.06/share pursuant to the option deed.
• On 16-Sep-2020, the Company issued 87,423,379 fully paid ordinary shares at $0.17/share under the
terms of Placement Shares to institutional and sophisticated investors.
• On 25-Sep-2020, the Company issued 7,142,875 fully paid ordinary shares to option holders that were
expiring 16 May 2021. The shares were issued at $0.06/share pursuant to the option deed.
• On 26-Nov-2020, the Company issued 7,716,000 and 811,920 fully paid ordinary shares to related
parties from previous placement plans which required shareholder approval. The shares were issued
in line with the terms of the Placement Shares at $0.05/share and $0.17/share respectively.
• On 18-Mar-2021, the Company announced the expansion of a new biopolymer plant in Malaysia and
signing of a lease on the new site.
• On 11-May-2021, the Company issued 2,375,000 fully paid ordinary shares to option holders that were
expiring 16 May 2021. The shares were issued at $0.06/share pursuant to the option deed which
cleared all unlisted options issued by the Company.
• On 15-Jun-2021, the Company updated the market on the supply of 8L Kitchen Caddy Bag and 36L
Bin Liner under its MyEcoBag™ brand to Woolworths Limited being increased to 203 of their stores.
EVENTS AFTER THE REPORTING DATE
No matter or circumstance has arisen since 30 June 2021 that has significantly affected, or may significantly
affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of
affairs in future financial years. The ongoing impact of COVID 19 is commented upon above.
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.
12
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
INFORMATION ON DIRECTORS
Richard Tegoni, Executive Chairman
Experience and qualifications
Joined the Board as a Non-Executive Director on 21 December 2012.
Richard was nominated as Non-Executive Chairman on 18 October
2013 before being appointed as Executive Chairman effective 16
September 2014.
Richard has held executive positions with various large private and
public companies with a strong background in Finance and
Banking, Sales and Marketing.
Richard has an MBA (AGSM) and Diploma in Financial Markets (SIA).
Special Responsibilities
Chairman of the Board of directors
Corporate Strategy and Capital Raisings
Interest in Shares and Options
14,606,231 Ordinary Shares
Directorships held in Other
Listed Entities
Has not held a directorship in any other listed entity over the last
3 years
Stephen Walters, Executive Director
Experience and qualifications
Joined the Board on 21 April 2015. Steve is a veteran in the flexible
packaging industry having held senior management positions with
Orica Limited (formerly ICI Australia) and Stellar Films Group. Steve
was instrumental in the integration of the Stellar and Cardia
businesses.
Steve has a B. Bus (Marketing).
Special Responsibilities
Responsible for the sales management of the Group.
Interest in Shares and Options
29,044,639 Ordinary Shares
Directorships held in Other
Listed Entities
Has not held a directorship in any other listed entity over the last
3 years
Donald Haller Jr., Non-Executive Director
Experience and qualifications
Appointed 1 September 2016. Don has a distinguished background
in accounting as a former partner of a major international
accounting firm in the USA before venturing into management
consulting as a leading professional consultant.
Special Responsibilities
Non-Executive Director
Interest in Shares and Options
45,748,826 Ordinary Shares
Directorships held in Other
Listed Entities
Has not held a directorship in any other listed entity over the last
3 years.
13
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
INFORMATION ON DIRECTORS (continued)
David Wake, Non-Executive Director
Experience and qualifications
Appointed 16 July 2018. David held a number of positions in the USA
at Imperial Chemical Industries’ (ICI) multi-billion-dollar specialty
chemical subsidiary, National Starch and Chemical Co, including
Finance Director for the Specialty Synthetic Polymer division, Senior
Director of Financial Planning and Reporting, and ultimately Vice
President Finance in the company’s New Jersey head office.
David was Chief Financial Officer of polymer banknote company
Securency.
David has a B. Ec. from Monash University
Special Responsibilities
Non-Executive Director
Interest in Shares and Options
5,157,109 Ordinary Shares
Directorships held in Other
Listed Entities
Has not held a directorship in any other listed entity over the last
3 years.
Jim Walsh, Non-Executive Director
Experience and qualifications
Appointed 16 November 2018. Previous executive roles include
Finance Director at carpet manufacturer Godfrey Hirst Australia Pty
Ltd for 10 years, and most recently five years in a similar role at
specialist mechanical services company A.G. Coombs Group Pty Ltd.
Jim is a Fellow of Chartered Accountants Australia and New Zealand
with B.Com, MBA, FCA, FAICD. He is a chairman and non-executive
director of several unlisted organisations including:
Non- Executive Director of A.G. Coombs Group Pty Ltd
Non-Executive Chairman of KM Property Funds Ltd
Special Responsibilities
Chair of Remuneration Committee
Interest in Shares and Options
3,771,189 Ordinary Shares
Directorships held in Other
Listed Entities
Has not held a directorship in any other listed entity over the last
3 years.
Company Secretary
Edmond Tern has held the role of Company Secretary since March 2017. He was previously Company
Secretary of Q Technology Group Limited for 4 years.
DIRECTORS’ MEETINGS
The number of meetings of the Company’s Board of Directors and Board Committees held during the year
ended 30 June 2021 and the number of meetings attended by each Director.
Director
R Tegoni
S Walters
D Haller Jr
D Wake
J Walsh
Board Meetings
Audit Committee
Remuneration Committee
Number
eligible to
attend
Number
attended
Number
eligible to
attend
Number
attended
Number
eligible to
attend
Number
attended
13
13
13
13
13
13
13
13
13
13
2
2
2
2
2
14
2
2
2
2
2
N/A
N/A
2
2
2
N/A
N/A
2
2
2
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
REMUNERATION REPORT (Audited)
Remuneration Policy
The Group's policy for determining the nature and amount of remuneration of board members and senior
executives of the Group is as follows:
•
The remuneration structure for executive officers, including executive directors, is based on a number
of factors, including length of service and particular experience of the individual concerned.
• All key management personnel receive a base salary and superannuation and/or equivalent.
• Remuneration consultants have not been used in assessing and calculating Director and Key
Management personnel remuneration in the year.
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 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.
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 22 November 2019,
where the shareholders approved an aggregate remuneration of $300,000.
The resolution to adopt the remuneration report for the year ended 30 June 2020 was passed at the 2020
Annual General Meeting (“AGM”), which occurred on 25 November 2020.
Relationship between share price and Company Performance
The remuneration policy has been tailored to increase goal congruence between shareholders, directors and
executives.
The following table shows the gross revenue and profits for the last 5 years for the listed entity, as well as the
share prices at the end of the respective financial years.
FY2021
FY2020
FY2019
FY2018
FY2017
Revenue
$30,081,012
$21,038,608
$20,851,647
$23,638,055
$22,364,976
Net Profit/(loss)
$2,590,171
($1,186,003)
($4,169,981)
($3,107,886)
($2,949,170)
Share price at year-end (cents)
26.6
6.0
4.2
8.1
7.7
15
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
REMUNERATION REPORT (continued)
The key management personnel of the Group consisted of the following persons:
Position held as at
30 June 2021 and
any change
during the year
Contract Details
(Duration and
Termination)
Proportions of
remuneration
package not
related to
performance at 30
June 2021
Proportions of
remuneration
package not
related to
performance at 30
June 2020
Group Key
Management
Personnel
Executive Directors
Richard Tegoni
Executive
Chairman
Letter of
appointment
Stephen Walters
Executive Director
Executive Service
Agreement
One month’s
termination notice
period
Non-Executive Dlirectors
Donald Haller Jr
Non-Executive
Director
Letter of
appointment
David Wake
Jim Walsh
Non-Executive
Director
Letter of
appointment
Non-Executive
Director
Letter of
appointment
Executive Management
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Ian Stacey
Chief Executive
Officer
Executive Service
Agreement
100%
100%
Edmond Tern
Chief Financial
Officer and
Company
Secretary
Three months’
termination notice
period
Executive Service
Agreement
Three months’
termination notice
period
100%
100%
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.
16
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
REMUNERATION REPORT (continued)
Post-
employment
Benefits
Long
Term
Benefits
Share-
based
Payments
Short
Term
Benefits
Salary,
fees and
leave
Pension and
Superannuation
Shares
Issue
Termination
Benefits
Total
Name
Fin
Year
$
$
Non-Executive Directors
D Haller Jr
2021
50,000
2020
-
D Wake
2021
40,000
2020
-
J Walsh
2021
40,000
2020
-
Executive Directors
R Tegoni
2021
120,000
2020
-
-
-
-
-
-
-
-
-
LSL
$
-
-
-
-
-
-
-
-
$
-
50,000
-
40,000
-
40,000
-
120,000
-
-
-
-
-
$
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
50,000
50,000
40,000
40,000
40,000
40,000
120,000
120,000
163,865
117,758
227,789
216,357
240,963
230,531
882,617
814,646
S Walters
2021
146,785
14,160
2,920
2020
104,133
12,461
1,164
Other Key Management Personnel
E Tern
2021
205,141
18,857
2020
194,324
18,145
I Stacey
2021
220,156
18,249
3,791
3,888
2,558
2020
181,579
18,076
876
30,000
Total remuneration
Total
2021
822,082
51,266
9,269
-
2020
480,036
48,682
5,928
280,000
Share based payments are shares issued in lieu of cash remuneration, not based on performance.
17
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
REMUNERATION REPORT (continued)
Cash Bonuses, Performance-related Bonuses
There was no performance related remuneration paid during the year.
Options Issued as part of remuneration for the year ended 30 June 2021
No options were issued as part of remuneration during the year.
Consequent to Employee Incentive Plan approved by shareholders at Annual General Meeting held on 25
November 2020 it is expected that performance-based incentives will be introduced in the coming months
in accordance with the approved Employee Incentive Plan.
a.
Option Holdings
Number of Options Held by Key Management Personnel (Direct and Indirect Interest)
No options are held by KMP as at 30 June 2021.
b.
Share Holdings (Direct and Indirect)
Opening
Balance
1 July 2020
Received as
Compensation1
On market
transaction
Change as a
result of
resignation
Closing
Balance
30 June 2021
R Tegoni
19,611,386
528,170
(5,533,325)
S Walters
30,054,639
-
(1,010,000)
D Haller Jr
37,548,775
220,071
7,979,980
D Wake
J Walsh
I Stacey
E Tern
4,681,052
176,057
300,000
3,285,132
176,057
300,000
2,950,877
2,131,945
-
-
441,177
-
1. Shares in lieu of cash for directors fee for quarter ended 30 June 2020
This concludes the remuneration report, which has been audited.
-
-
-
-
-
-
-
14,606,231
29,044,639
45,748,826
5,157,109
3,761,189
3,392,054
2,131,945
18
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
SHARES UNDER OPTION
The Group has no unlisted Options as at the date of this report.
SHARES ISSUED ON THE EXERCISE OF OPTIONS
The following ordinary shares of SECOS Group Limited were issued during the year ended 30 June 2021 and
up to the date of this report on the exercise of options granted:
Date options granted
Exercise price
Number of shares issued
26-Aug-20
25-Sep-20
11-May-21
$0.060
$0.060
$0.060
3,166,666
7,142,875
2,375,000
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
The 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 AUDITOR
The 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 COMPANY
No 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 SERVICES
No non-audit services were undertaken by the auditors during the period.
AUDITOR’S INDEPENDENCE DECLARATION
The lead Auditor's Independence Declaration for the year ended 30 June 2021 is attached to the Directors’
Report.
This report of the Directors incorporating the Remuneration Report is signed in accordance with a Resolution
of the Board of Directors.
Richard Tegoni
Executive Chairman
27 August 2021
Melbourne, Australia
19
AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE
CORPORATIONS ACT 2001 TO THE DIRECTORS OF SECOS GROUP LIMITED
I declare that, to the best of my knowledge and belief during the year ended 30 June 2021
there have been:
— no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
— no contraventions of any applicable code of professional conduct in relation to the
audit.
William Buck Audit (Vic) Pty Ltd
ABN 59 116 151 136
A. A. Finnis
Director
Melbourne, 27 August 2021
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
For the year ended 30 June 2021
Sales
Cost of sales
Gross profit
Other Income
Notes
3
3
2021
$
2020
$
30,081,012
21,038,608
(24,370,932)
(17,350,253)
5,710,080
3,688,355
226,312
2,279
Employment related expense
(2,604,283)
(2,408,555)
Marketing and distribution expenses
(905,635)
(565,468)
Administration expense
Legal and compliance
Occupancy costs
(321,680)
(288,452)
(477,041)
(336,935)
(72,662)
(146,357)
Depreciation and amortisation expense
(882,419)
(827,410)
Finance costs
Profit / (Loss) before income tax
(135,600)
(303,460)
537,072
(1,186,003)
Income tax benefit
5
2,053,099
-
Profit / (Loss) for the year after tax
2,590,171
(1,186,003)
Other comprehensive income
Item that may be reclassified to the profit or loss
in subsequent periods (net of tax)
Foreign currency translation differences for
foreign operations
(410,265)
(324,109)
Total comprehensive profit / (loss) for the year
2,179,906
(1,510,112)
Profit / (Loss) per share
Basic / diluted profit / (loss) per share
0.5 cents
(0.3) cents
The accompanying notes form part of these financial statements.
21
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
STATEMENT OF FINANCIAL POSITION
As at 30 June 2021
Current Assets
Cash at bank
Trade and other receivables
Inventories
Prepayments
Total Current Assets
Non-Current Assets
Other assets
Deferred tax assets
Plant and equipment
Right-of-use asset
Intangible assets
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Borrowings
Short term provisions
Accrued expenses
Lease Liability
Total Current Liabilities
Non-Current Liabilities
Long term provisions
Lease Liability
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Issued Capital
Reserves
Accumulated Losses
Total Equity
Notes
9
10
5
11
12
14
15
16
17
13
18
13
19
20
2021
$
11,286,927
5,975,010
5,308,512
742,779
2020
$
2,878,827
3,245,454
2,449,616
533,367
23,313,228
9,107,264
14,257
2,071,091
2,650,056
2,105,136
3,617,987
23,297
-
1,830,503
1,187,622
3,605,004
10,458,527
6,646,426
33,771,755
15,753,690
1,498,848
-
339,387
531,103
575,476
1,539,525
672,075
307,519
560,628
548,188
2,944,814
3,627,935
41,770
1,565,351
55,319
695,134
1,607,121
750,453
4,551,935
4,378,388
29,219,820
11,375,302
44,730,115
29,065,503
(782,117)
(371,852)
(14,728,178)
(17,318,349)
29,219,820
11,375,302
The accompanying notes form part of these financial statements.
22
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2021
Issued
Capital
Accumulated
Losses
Foreign
Currency
Translation
Reserve Total Equity
$
$
$
$
Balance at 01 July 2020
29,065,503
(17,318,349)
(371,852)
11,375,302
Profit for the Year
Other Comprehensive income for the year
Total comprehensive income / (loss) for
the year
-
-
-
2,590,171
-
2,590,171
-
(410,265)
(410,265)
2,590,171
(410,265)
2,179,906
Shares issued during the year net of costs
15,664,612
-
-
15,664,612
Balance at 30 June 2021
44,730,115
(14,728,178)
(782,117)
29,219,820
Issued
Capital
Accumulated
Losses
Foreign
Currency
Translation
Reserve
Total Equity
$
$
$
$
Balance at 01 July 2019
26,159,423
(16,116,945)
(47,743)
9,994,735
Adjustments due to change of accounting
policy (note 1)
-
(15,401)
-
(15,401)
Balance of 01 July 2019 restated
26,159,423
(16,132,346)
(47,743)
9,979,334
Loss for the Year
Other Comprehensive income for the year
Total comprehensive income / (loss) for
the year
-
-
-
(1,186,003)
-
(1,186,003)
-
(324,109)
(324,109)
(1,186,003)
(324,109)
(1,510,112)
Shares issued during the year net of costs
2,906,080
-
-
2,906,080
Balance at 30 June 2020
29,065,503
(17,318,349)
(371,852)
11,375,302
The accompanying notes form part of these financial statements.
23
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
STATEMENT OF CASH FLOWS
For the year ended 30 June 2021
Notes
2021
$
2020
$
Cash Flows from Operating Activities
Receipts from customers
30,096,899
23,155,046
Payments to suppliers and employees
(34,665,105)
(23,504,246)
Finance costs
(135,600)
(301,180)
Net Cash Outflow from Operating Activities
25
(4,703,806)
(650,380)
Cash Flows from Investing Activities
Purchase of plant and equipment
(1,150,417)
(493,330)
Net Cash Outflow from Investing Activities
(1,150,417)
(493,330)
Cash Flows from Financing Activities
Proceeds from issues of ordinary shares (net of costs)
15,131,732
1,630,557
Lease payments
Repayments of unsecured loan
(541,951)
-
(200,000)
(482,964)
Net Cash Inflow from Financing Activities
14,389,781
1,147,593
Net increase in cash and cash equivalents Held
8,535,558
3,883
(Decrease) in cash due to changes in foreign
exchange rate
Cash and cash equivalents at the beginning of the
financial year
Cash and Cash Equivalents at the end of the
financial year
(127,458)
-
2,878,827
2,874,944
11,286,927
2,878,827
The accompanying notes form part of these financial statements.
24
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PREPARATION
These 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 consolidated financial statements incorporate the assets and liabilities of all subsidiaries of SECOS Group
Limited ('Company' or 'parent entity') as at 30 June 2021 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
'‘Group’.
SECOS Group Limited is a listed public company, incorporated and domiciled in Australia. The Company is a
for-profit entity for accounting purposes.
The Financial statements were authorised for issue on 27 August 2021 by the Board of Directors.
REPORTING BASIS AND CONVENTIONS
These financial statements have been prepared on an accruals basis and are based on historical costs. Except
for new accounting standards as stated below, the financial statements have been prepared in accordance
with the same accounting policies adopted in the Group’s last annual financial statements for the year ended
30 June 2020.
At this time the Directors are of the opinion that no asset is likely to be realied for an amount less than the
amount at which it is recorded in the Financial Report.
a.
New Accounting Standards and interpretations issued in the period.
During the financial year the Group adopted the following new interpretation;
Conceptual Framework for Financial Reporting (Conceptual Framework)
The consolidated entity has adopted the revised Conceptual Framework from 1 July 2020. The Conceptual
Framework contains new definition and recognition criteria as well as new guidance on measurement that
affects several Accounting Standards, but it has not had a material impact on the consolidated entity's
financial statements.
b.
Principles of Consolidation
Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the
Group 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 Group. They are de-consolidated from the date that
control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the Group 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 Group.
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.
25
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
b.
Principles of Consolidation (continued)
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 Group. Losses incurred by the Group are attributed to the non-controlling interest in full, even if
that results in a deficit balance.
Where the Group 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 Group 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 22 to
the financial statements.
c.
Goodwill
Goodwill 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.
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.
d.
Income Tax
The 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
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 Group will
derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions
of deductibility imposed by the law.
e.
Inventories
Inventories 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.
26
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
f.
Plant and Equipment
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.
Depreciation
The depreciable amount of all fixed assets is depreciated on a straight-line basis over their useful lives to the
Group 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
Plant and Machinery
Office Equipment and Motor Vehicles
Leasehold Improvements
Depreciation Rate
10% to 33%
7.5% to 40%
2.50%
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each
reporting period.
Leasehold improvements are depreciated over the unexpired period of the lease or the estimated useful life
of the assets, whichever is shorter.
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.
g.
Fair Value Measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure
purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at the measurement date; and assumes that the
transaction will take place either: in the principle market; or in the absence of a principal market, in the most
advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or
liability, assuming they act in their economic best interest. For non-financial assets, the fair value
measurement is based on its highest and best use. Valuation techniques that are appropriate in the
circumstances and for which sufficient data are available to measure fair value, are used, maximising the use
of relevant observable inputs and minimiing the use of unobservable inputs.
The Group 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.
27
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
h.
Financial Instruments
Investments and other financial liabilities are initially measured at fair value. Transaction costs are included as
part of the initial measurement, except for the financial assets at fair value through the profit and loss. Such
assets are subsequently measured at either amortised cost or fair value depending on their classification.
Financial assets or liabilities are derecognised when the right to receive cash flows have expired or have been
transferred and the Group has transferred substantially all the risks and rewards of ownership. When there is
no reasonable expectation of recovering part or all of a financial asset the carrying value is written off.
i.
Impairment of financial assets
The Group recognises a loss allowance for expected credit losses on financial assets which are either
measured at amortised cost or fair value through other comprehensive income. The measurement of the loss
allowance depends upon the Group’s assessment at the end of each reporting period as to whether the
financial instrument's credit risk has increased significantly since initial recognition, based on reasonable and
supportable information that is available, without undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month
expected credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit
losses that is attributable to a default event that is possible within the next 12 months. Where a financial asset
has become credit impaired or where it is determined that credit risk has increased significantly, the loss
allowance is based on the asset's lifetime expected credit losses. The amount of expected credit loss
recognised is measured based on the probability weighted present value of anticipated cash shortfalls over
the life of the instrument discounted at the original effective interest rate.
j.
Impairments of Non-Financial Assets
At 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.
k.
Foreign Currency Transactions and Balances
Functional and presentation currency
The 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 balances
Foreign 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.
Exchange differences arising on the translation of monetary items are recognised in the statement of profit
or loss and other comprehensive income.
28
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 and other
comprehensive income.
Group companies
The 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.
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 and other comprehensive income in the period in which the operation is
disposed.
l.
Borrowings
Loans 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.
m.
Finance costs
Finance 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.
n.
Employee Benefits
Short-term employee benefits
Liabilities for wages and salaries, including, 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 benefits
The 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.
o.
Provisions
Provisions are recognised when the Group has a legal or constructive obligation as a result of past events for
which it is probable that an outflow of economic benefits will result, and that outflow can be reliably
measured.
Provisions are measurable using the best estimate of the amounts required to settle the obligation at the end
of the reporting period.
29
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
p.
Cash and Cash Equivalents
Cash and cash equivalents include 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.
q.
Revenue
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the Group is expected to be
entitled in exchange for transferring goods or services to a customer. For each contract with a customer, the
Group identifies the contract with a customer; identifies the performance obligations in the contract;
determine the transaction price, which takes into account estimates of variable consideration and the time
value of money; allocates the transaction price on the basis of the relative stand-alone selling price of each
distinct good or service to be delivered; and recognise revenue when each performance obligation is satisfied
in a manner that depicts the transfer to the customer of the goods or services promised.
Variable consideration with the transaction price, if any, reflects concessions provided to the customer such
as discounts, rebates and refunds, any potential adds-ons or bonuses from the customer and any other
contingent events. Such estimates are determined using either the “expected value” or “most likely amount”
method. The measurement of variable consideration is subject to a constraining principle whereby revenue
will only be recognised to the extent that it is highly probable that a significant reversal in the amount of
cumulative revenue will not occur. The measurement constraint continues until the uncertainty associated
with the variable consideration is subsequently resolved. Amounts received that are subject to the
constraining principle are initially recognised as deferred revenue in the form of a separate liability.
Sale of goods
Revenue from the sale of goods is recognised at the point in time when the customer obtains control of the
goods, which is generally the time of delivery.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
r.
Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the
effective interest method, less any allowance for expected credit losses. Trade receivables are generally due
for settlement within 30 days.
The Group has applied the simplified approach to measuring expected credit losses, which uses a lifetime
expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based
on days overdue. Other receivables are recognised at amortised cost, less any allowance for expected credit
losses.
s.
Goods and Services Tax (GST) and other similar taxes
Revenues, 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.
30
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the
tax authority.
t.
Right-of-use assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured
at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments
made at or before the commencement date net of any lease incentives received, any initial direct costs
incurred, and, except where included in the cost of inventories, an estimate of costs expected to be incurred
for dismantling and removing the underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the
estimated useful life of the asset, whichever is the shorter. Where the consolidated entity expects to obtain
ownership of the leased asset at the end of the lease term, the depreciation is over its estimated useful life.
Right-of use assets are subject to impairment or adjusted for any remeasurement of lease liabilities.
The consolidated entity has elected not to recognise a right-of-use asset and corresponding lease liability for
short-term leases with terms of 12 months or less and leases of low-value assets. Lease payments on these
assets are expensed to profit or loss as incurred.
u.
Lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at
the present value of the lease payments to be made over the term of the lease, discounted using the interest
rate implicit in the lease or, if that rate cannot be readily determined, the consolidated entity's incremental
borrowing rate. Lease payments comprise of fixed payments less any lease incentives receivable, variable
lease payments that depend on an index or a rate, amounts expected to be paid under residual value
guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur,
and any anticipated termination penalties. The variable lease payments that do not depend on an index or a
rate are expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts
are remeasured if there is a change in the following: future lease payments arising from a change in an index
or a rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When
a lease liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or
loss if the carrying amount of the right-of-use asset is fully written down.
v.
Profit or Loss per share
Basic profit or loss per share
Basic profit or loss per share is calculated by dividing the profit or loss 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 profit or loss per share
Diluted profit or loss per share adjusts the figures used in the determination of basic profit or 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.
31
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
w.
Critical Accounting Estimates, Judgements and Assumptions
The 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. 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.
Expected credit loss for impairment of receivables
The provision for impairment of receivables assessment requires a degree of estimation and judgement. The
level of expected credit loss is assessed by taking into account the recent sales experience, the ageing of
receivables, historical collection rates and specific knowledge of the individual debtor’s financial position.
Provision for impairment of inventories
The 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.
Estimation of useful lives of assets
The Group 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 assets
The Group 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.
Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable
amount, which is the higher of its fair value less costs of disposal. The fair value less costs of disposal calculation
is based on available fund, conducted at arm’s length, for similar assets or observable market prices less
incremental costs of disposing of the asset. The value in use calculation is based on a DCF model. The cash
flows are derived from the budget for the next five years and do not include restructuring activities that the
Group is not yet committed to or significant future investments that will enhance the performance of the
assets of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF
model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. These
estimates are most relevant to goodwill and other intangibles with indefinite useful lives recognised by the
Group. The key assumptions used to determine the recoverable amount for the different CGUs, including a
sensitivity analysis, are disclosed and further explained in Note 14.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences and/or tax losses only if the Group
considers it is probable that future taxable amounts will be available to utilise those losses carried forward. A
deferred tax asset of $2,071,091 was recognised as at 30 June 2021. The Directors and management of the
Group have made a significant judgment in respect of forecasting the future profitability of the Group to
determine the carrying value of the deferred tax asset.
x.
New Accounting Standards and interpretations issued not yet mandatory or
early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not
yet mandatory, have not been early adopted by the Group for the annual reporting period ended 30 June
2021. There are no new standards that have been issued but not yet effective that will impact the financial
position and performance of the Group.
32
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
NOTE 2 PARENT ENTITY
The following information has been extracted from the books and records of the parent (“SECOS Group
Limited”) and has been prepared in accordance with Australian Accounting Standards.
STATEMENT OF FINANCIAL POSITION
ASSETS
Current assets
Non-current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Non-current liabilities
TOTAL LIABILITIES
EQUITY
Issued capital
Accumulated losses
TOTAL EQUITY
STATEMENT OF COMPREHENSIVE INCOME
Loss for the year after tax
Total comprehensive income
Guarantees
2021
$
2020
$
7,766,388
37,713,648
297,973
32,162,055
45,480,036
32,460,028
437,822
18,412
456,234
93,798,614
(48,774,813)
45,023,801
1,383,945
10,489
1,394,434
78,134,022
(47,068,428)
31,065,594
(1,706,386)
(1,706,386)
(2,067,740)
(2,067,740)
SECOS Group Limited has from time to time provided guarantees to third parties in relation to the
performance and obligations of controlled entities in respect to finance facilities. The guarantees are for the
terms of the facilities. No amount outstanding as at 30 June 2021 (2020: NIL).
Contingent liabilities
SECOS Group Limited had no contingent liabilities as at 30 June 2021. (2020: NIL).
Contractual commitments
At 30 June 2021, SECOS Group Limited had not entered into any contractual commitments for the acquisition
of property, plant and equipment (2020: NIL).
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group, as disclosed in Note 1,
except for investments in subsidiaries that are accounted for at cost, less any impairment, in the parent entity.
33
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
NOTE 3 REVENUE
Revenue
Note
2021
$
2020
$
Sales of goods at a point in time
24
30,081,012
21,038,608
Total sales revenue
Other Income
Sundry income and subsidies
Total other income
NOTE 4 EXPENSES FOR THE YEAR
The Profit/(loss) before income tax includes the
following items of expenses:
Research, development, and patent costs
Superannuation expense
Amortisation of right-of-use assets
Finance cost for leases
30,081,012
21,038,608
226,312
226,312
2021
$
181,997
112,922
541,951
135,600
2,279
2,279
2020
$
155,494
102,493
523,263
94,360
34
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
NOTE 5
INCOME TAX EXPENSE
Income tax expense
Current tax (withholding tax)
Recognition of previously unrecognised
tax losses
Income tax benefit
Deferred Tax Assets
Deferred tax asset comprises temporary
differences attributable to:
Amounts recognised in profit or loss:
Employee benefits
Leases
Recognition of tax losses carried forward
Accrued expenses
Deferred tax asset
Movements:
Opening balance
Credited to profit or loss
Closing balance
2021
$
(17,992)
2,071,091
2,053,099
2021
$
2,071,091
-
-
2,071,091
-
2,071,091
-
2,071,091
2,071,091
2020
$
-
-
-
2020
$
-
-
-
-
-
-
-
-
-
The Group sought professional advice from Deloitte Tax consultants to assess the ability of the Company to
satisfy the Continuity of Ownership Test (COT) in connection with carried forward tax losses per Income Tax
Assessment Act 1997 (ITAA 1977). Consequently, it was determined that $2,071,091 of deferred tax assets are to
be taken up at this time.
2021
$
2020
$
Tax losses carried forward
7,585,929
9,328,279
The Group has carried forward tax losses (prior year did not include overseas subsidiaries’ credits) that can be
offset against taxable profit at each tax jurisdiction (China, Australia and Malaysia). This is subject to probable
future taxable profit and in accordance with the laws of each tax jurisdiction.
35
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
NOTE 6 KEY MANAGEMENT PERSONNEL COMPENSATION
Names and positions held of Group 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.
Short-term employee benefits
Post-employment benefits
Long-term employee benefits
Share based payment
Total
NOTE 7 REMUNERATION OF AUDITORS
Remuneration of the auditor of the parent
entity for
•
auditing or reviewing the financial
statements
Remuneration of other auditors of
subsidiaries for:
•
auditing or reviewing the financial
statements of subsidiaries
Total
NOTE 8 PROFIT / (LOSS) PER SHARE
2021
$
822,082
51,266
9,269
-
882,617
2021
$
2020
$
480,036
48,681
5,928
280,000
814,645
2020
$
77,000
77,850
11,346
88,346
2021
$
10,192
88,042
2020
$
Gain/(Loss) used to calculate
basic/diluted EPS
$2,590,171
(1,186,003)
Weighted average number of ordinary
shares used in the calculation of basic
and diluted profit / (loss) per share
Number
Number
509,259,297
394,804,785
Profit / (Loss) per share
0.5 cents
(0.3) cents
36
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
NOTE 9 TRADE AND OTHER RECEIVABLES
Current
Trade Receivables
Less: Allowance for expected
credit losses
Other receivables
Trade and other receivables
2021
$
5,862,360
-
5,862,360
112,650
5,975,010
2020
$
3,168,351
(47,842)
3,120,509
124,945
3,245,454
Allowance for expected credit losses
The ageing of the receivables and allowance for expected credit losses provided for above are as follows:
Trade
Receivables
Impaired
<30
31-60
61-90
>90
2021
2020
5,862,360
-
2,403,945
1,838,337
1,023,061
597,017
3,120,509
(47,842)
1,518,414
618,869
575,331
455,737
Current trade receivables are non-interest bearing and are generally on 30 to 60 day terms. The receivables
in the over 60 day ageing category are generally on longer credit terms. Receivables are in line with their
payment terms.
Based on the above, the Directors have deemed that no impairment on trade receivables is required in 2021
(2020: $47,842) at the reporting date.
Movement in the expected credit loss for receivables is as follows:
Expected credit
loss
2021
2020
Opening
Balance
Charge for
the Year
Amounts Write
off/back
$
47,842
153,748
$
-
-
$
(47,842)
(105,906)
Closing
Balance
$
-
47,842
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 Pledged
No security over trade receivables has been provided as at 30 June 2021. (2020: Nil).
37
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
NOTE 10 INVENTORIES
Current
Raw materials including work in
progress
Finished goods
TOTAL
2021
$
3,256,171
2,052,341
5,308,512
2020
$
1,247,232
1,202,384
2,449,616
Inventories are held at the lower of cost or net realisable value. The increase in inventories held reflects
increased sales activity.
NOTE 11 PLANT AND EQUIPMENT
Leasehold Improvements
At cost
Accumulated depreciation
Plant, Machinery and
Equipment
At cost
Accumulated depreciation
Total Cost of Assets
Total Accumulated Depreciation
Written down value of assets
2020
$
108,938
(74,700)
34,238
12,838,917
(11,042,652)
1,796,265
12,947,855
(11,117,352)
1,830,503
2021
$
108,938
(75,881)
33,057
13,250,219
(10,633,221)
2,616,998
13,359,158
(10,709,102)
2,650,056
38
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
NOTE 11 PLANT AND EQUIPMENT (continued)
Movement in Carrying Amounts
Reconciliations of the carrying amounts of plant and equipment at the beginning and end of the current and
previous financial year are set out below.
2021
Leasehold
Improvements
Plant, Machinery
and Equipment
$
$
Total
$
Balance at 1 July 2020
34,238
1,796,265
1,830,503
Additions/(Disposals)
Depreciation Expenses
Exchange Rate Variations
-
(1,181)
-
1,150,417
(339,287)
9,604
1,150,417
(340,468)
9,604
Balance at 30 June 2021
33,057
2,616,999
2,650,056
2020
Leasehold
Improvements
Plant, Machinery
and Equipment
$
$
Total
$
Balance at 1 July 2019
95,700
1,672,493
1,768,193
Additions/(Disposals)
Depreciation Expenses
Exchange Rate Variations
-
(61,462)
-
541,332
(242,685)
(174,875)
541,322
(304,147)
(174,875)
Balance at 30 June 2020
34,238
1,796,265
1,830,503
NOTE 12 NON-CURRENT ASSETS - RIGHT-OF-USE ASSETS
Land and buildings - Right-of-use
Less: Accumulated amortisation
Total Land and buildings
Total right-of-use assets
2021
$
3,164,173
(1,059,037)
2,105,136
2,105,136
2020
$
1,712,386
(524,764)
1,187,622
1,187,622
The Group leases land and buildings for its offices, factories and warehouses under agreements of between
three to five years with, in some cases, options to extend. The leases have various escalation clauses. On
renewal, the terms of the leases are renegotiated.
During the year the Group signed a new lease for a facility in Malaysia.
Additions to the right-of-use assets during the year were $1,228,294.
39
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
NOTE 13
LEASE LIABILITY
Lease liability – current
Lease liability – non-current
Lease liability
NOTE 14 INTANGIBLE ASSETS
Goodwill
Product Development
Less: amortisation
Net carrying value
Impairment Disclosures
2021
$
575,476
1,565,351
2,140,827
2021
$
3,532,345
109,462
(23,820)
3,617,987
2020
$
548,188
695,134
1,243,322
2020
$
3,532,345
90,824
(18,165)
3,605,004
The Group first recognised Goodwill on its balance sheet following the acquisition of Stellar Film Group in
April 2015.
Per AASB 138, $85,662 relates to product development costs incurred prior to commercialisation of new
products which are captured in the Balance Sheet as intangible assets.
Since then and as required by AASB 136 regulatory guidelines, the Group has undertaken annual impairment
tests for its single cash-generating unit (“CGU”) being the manufacture and distribution of polyethylene films
and the renewable resource-based resins and finished products.
The Group has determined the recoverable amount of the Group’s goodwill by a Value-in-Use calculation
using a discounted cash flow (“DCF”) model. Value-in-use is calculated based on the present value of cash
flow projections for the next five years. The cash flows are discounted using an estimated discount rate based
on Capital Asset Pricing Model.
Management has based the value-in-use calculations on five-year budget forecasts of the group. 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.
b.
c.
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 managers. Terminal growth post year 5 of
the forecast period has been estimated at 2.5%.
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.
Projected cash flows have been discounted using discount rate of 12.3% (2020: 15%).
Gross profit margins are forecast to be in a range of 22%-29% dependent upon product and each
geographic region.
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 2021 and; accordingly, no impairment loss has been recognised.
No reasonably possible change in any of the aforesaid assumptions materially impacting the above analysis
would result in an impairment charge.
40
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
NOTE 15 TRADE AND OTHER PAYABLES
2021
$
1,176,664
322,184
1,498,848
2020
$
1,008,934
530,591
1,539,525
2021
$
2020
$
-
-
-
-
-
2021
$
339,387
339,387
2021
$
18,412
23,358
41,770
300,000
350,000
22,075
672,075
672,075
2020
$
307,519
307,519
2020
$
10,489
44,830
55,319
Current
Trade Payables
Sundry payables
Total
NOTE 16 BORROWINGS
Current
Unsecured Liabilities
Unsecured Loan (Shareholder)
Convertible Notes
Unsecured Loans
Total Current borrowings
Total borrowings
NOTE 17 SHORT TERM PROVISIONS
Employee benefits
Total
NOTE 18 LONG TERM PROVISIONS
Employee benefits
Other provisions
Total
41
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
NOTE 19
ISSUED CAPITAL
a)
Share Capital
Ordinary - fully paid shares
$44,730,115
$29,065,503
2021
2020
b)
Movements in Ordinary Share Capital
Date
01-Jul-20
Balance
Number of
Shares
418,348,517
7-Jul-20
Director shares in lieu of cash
1,100,355
7-Jul-20
Marketing consultants
358,804
$/share
Amount ($)
-
29,065,503
$0.057
$0.057
$62,500
$20,380
10-Jul-20
Convertible notes converted
7,458,346
$0.047
$350,000
26-Aug-20
Options exercised
3,166,666
$0.060
$190,000
16-Sep-20
Placement $15m
87,423,379
$0.170
$14,861,974
Cost of capital
(529,341)
25-Sep-20
Options exercised
7,142,875
$0.060
$428,573
26-Nov-20
26-Nov-20
March placement shares by
related parties
7,716,000
$0.050
cash received in
March 2020
September placement shares
by related party
811,920
$0.170
$138,026
11-May-21
Options exercised
2,375,000
$0.060
$142,500
30-Jun-21
Balance
535,901,862
44,730,115
c)
Options
Unlisted Options
-
12,684,541
No unlisted Options outstanding as at 30 June 2021.
2021
Number
2020
Number
42
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
NOTE 19
ISSUED CAPITAL (CONTINUED)
d)
Ordinary Shares
Ordinary 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.
e)
Capital Management
Management 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
Group’s ability to continue as a going concern.
The Group’s debt and capital include ordinary share capital and financial liabilities supported by financial
assets.
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 are no externally imposed capital requirements other than Australian Stock Exchange (ASX) listing rule
7.1 and 7.1A placement capacity. As at 30 June 2021, available placement capacity were circa 134 million new
shares.
There have been no changes in the strategy adopted by management to control the capital of the Group
since the prior year.
NOTE 20 RESERVES
Nature and purpose of Reserves is foreign currency translation reserve records exchange differences arising
on translation of a foreign controlled subsidiary as described in Note 1(k).
NOTE 21 SHARE BASED PAYMENTS
In July 2020, the Company issued 1,100,355 fully paid ordinary shares to directors, Mr. Tegoni, Mr. Haller, Mr.
Wake and Mr. Walsh as payment of their respective director fee for the quarter ending 30 June 2020. The
shares were issued at an issue price of $0.057/share, determined based on the volume weighted average sale
price of SECOS shares for the June 2020 Quarter.
In July 2020, the Company issued 358,804 fully paid ordinary shares to a marketing consultant being
professional fees for the quarter ending 30 June 2020. The shares were issued at an issue price of $0.057/share,
determined based on the volume weighted average sale price of SECOS share for the June 2020 Quarter.
43
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
NOTE 22 CONTROLLED ENTITIES
Controlled Entities Consolidated
Name
Country of
Incorporation
Principal
activities
2021
Stellar Films (Malaysia) Sdn Bhd
Malaysia
Manufacturing
100%
CO2 Starch Pty Ltd
Australia
Research
100%
2020
100%
100%
Equity Holding (%)
Secos Americas LLC
Cardia Bioplastics (Australia) Pty Ltd
Cardia Bioplastics (Malaysia) Sdn Bhd
100% owned by Cardia Bioplastics
(Australia) Pty Ltd
Tristano Pty Ltd
100% owned by Cardia Bioplastics
(Australia) Pty Ltd
Biograde (Hong Kong) Pty Ltd
100% owned by Cardia Bioplastics
(Australia) Pty Ltd
Biograde (Nanjing) Pty Ltd
100% owned by Biograde (Hong Kong)
Pty Ltd
USA
Australia
Sales and
marketing
Sales and
marketing
100%
100%
100%
100%
Malaysia
Manufacturing
100%
100%
Australia
Research
100%
100%
Hong Kong
Holding
company
100%
100%
China
Manufacturing
100%
100%
NOTE 23 CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Estimates of the potential financial effect of contingent liabilities that may become payable:
Bank Guarantees
The parent entity provided guarantees
to third parties in relation to the
performance and obligations of
controlled entities in respect lease
obligations.
There were no contingent assets as at 30 June 2021 (2020: NIL).
2021
$
-
-
-
2020
$
50,713
-
50,713
44
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
NOTE 24 OPERATING SEGMENTS
Identification of reportable operating segment
The management view the business as a single operating segment being the manufacture and distribution
of polyethylene films, and the renewable resource-based resins and finished products.
Operationally, Chief Executive Officer and Chief Financial Officer oversee the previously separate Cardia and
Stellar business. The Group now share common R&D resources actively promoting the films and renewable
recourses part of the business. There is now one warehouse location in each region housing films, resins and
biodegradable finished goods.
The management team prepares internal reports with multi-dimensional view with emphasis on group
consolidated results that are viewed and used by the Board of Directors in assessing the performance and in
determining the allocation of resources. The information is reported monthly.
Sales Revenue by geographical region
(external customers)
Oceanic
Asia
Americas
Europe
Africa
2021
$
5,060,050
13,929,724
8,975,370
1,401,819
714,049
2020
$
3,682,281
14,148,774
1,311,399
1,257,307
638,847
Total Revenue
30,081,012
21,038,608
Major customers
The 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 13.2% (2020: 23.1%) of external revenue.
Plant and equipment by
geographical region
The location of segment assets (plant and
equipment) by geographical location is disclosed
below:
Australia
Asia
Total Assets
2021
$
2020
$
49,474
2,600,582
2,650,056
55,769
1,774,735
1,830,504
45
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
NOTE 25 CASH FLOW INFORMATION
Reconciliation of Cash Flow from Operations with Profit after Income Tax
Profit/(Loss) for the year after tax
Non-Cash Items
Deferred tax assets
Depreciation and amortisation
Issue of shares in lieu of cash
Unrealised foreign currency differences
2021 $
2,590,171
(2,071,091)
882,419
82,880
(410,265)
1,074,114
Movements in assets and liabilities
Decrease/(increase) in inventories
(2,858,897)
Decrease/(increase) in receivables and
other assets
(Decrease)/increase in payables
R&D capitalised
Net cash outflow from operating
activities
(2,938,968)
32,928
(12,983)
2020 $
(1,186,003)
-
827,410
341,740
(50,460)
(67,313)
(10,020)
150,316
(650,704)
(72,659)
(4,703,806)
(650,380)
NOTE 26 EVENTS AFTER THE REPORTING DATE
No matter or circumstance has arisen since 30 June 2021 that has significantly affected, or may significantly
affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of
affairs in future financial years.
NOTE 27 RELATED PARTIES
Parent Entity
SECOS Group Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in Note 22.
Key management personnel
Disclosures relating to key management personnel are set out in Note 6 and the remuneration report in the
directors’ report.
46
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
NOTE 28 FINANCIAL INSTRUMENTS
Financial risk management objectives
The Group’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 Group’s overall risk management program focuses
on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial
performance of the Group.
Specific Financial Risk Exposures and Management
The 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.
Credit risk
Exposure 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. Trade and other receivables that are neither past due nor impaired are considered to be of
high credit quality. Aggregate of such amounts are as detailed in Note 9.
Credit risk arising on cash balances is not material.
Liquidity risk
Liquidity 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 facilities.
47
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
NOTE 28 FINANCIAL INSTRUMENTS (CONTINUED)
A summary of the entity’s financial assets and liabilities is shown in the table below;
<6 months
6-12 months
1-5 years
Year ended 30 June 2021
$
Financial assets
Cash and cash equivalents
11,286,927
Trade and other receivables
5,975,010
17,261,937
Financial liabilities
Trade and other payables
1,498,848
$
-
-
-
-
$
-
-
-
-
Total
$
11,286,927
5,975,010
17,261,937
1,498,848
Lease Liability
342,641
232,835
1,565,351
2,140,827
Net maturity
15,420,448
(232,835)
(1,565,351)
13,622,262
1,841,489
232,835
1,565,351
3,639,675
<6 months
6-12 months
1-5 years
Year ended 30 June 2020
$
Financial assets
Cash and cash equivalents
2,878,827
Trade and other receivables
3,245,454
Financial liabilities
Trade and other payables
Borrowings
Lease Liability
Net maturity
6,124,281
1,539,525
672,075
548,188
2,759,788
3,364,494
$
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
Total
$
2,878,827
3,245,454
6,124,281
1,539,525
672,075
548,188
2,759,788
3,364,494
Fair Value of financial instruments
Unless otherwise stated, the carrying amount of financial instruments reflect their fair value.
Market risks
There is no material exposure for the Group.
Interest Rate Risk
There is no material exposure for the Group.
Interest rate risk sensitivity analysis
An official increase/decrease in interest rates of 2% has no adverse/favorable effect on profit before tax of $0
(2020: $0) per annum. The Group had no borrowings as at 30 June 2021 (2020: $0.7 million).
48
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
NOTE 28
FINANCIAL INSTRUMENTS (CONTINUED)
Foreign Currency Risk
The Group 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 assets. The risk is measured using sensitivity analysis and cash flow
forecasting.
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 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
2021
$
1,391,854
-
2020
$
241,097
22,075
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 Analysis
At 30 June 2021, 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:
2021
$
2020
$
Change in Profit and Equity
• movement in AUD to USD by 9.6%
+/- 174,479
+/- 31,796
Foreign Currency Translation Reserves (“FCTR”)
The foreign currency translation reserve records exchange differences arising on translation of a foreign
controlled subsidiary as described in Note 1(k). At 30 June 2021, all balance sheet items in foreign currencies
are translated to local currency at closing exchange rate and this is further translated to Australian dollar.
Upon consolidation of the entities, the impact is captured in reserves line in equity section.
49
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
DIRECTORS’ DECLARATION
1.
The Directors declare that the financial statements and notes; and remuneration disclosures that
are detailed within the Remuneration Report in the Directors’ Report, are in accordance with the
Corporations Act 2001 and:
a.
b.
c.
comply with Accounting Standards, the Corporations Regulations 2001; and
give a true and fair view of the financial position as at 30 June 2021 and of the
performance for the year ended on that date of the Company and Group.
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.
b.
c.
the financial records of the Company for the financial year have been properly
maintained in accordance with section 286 of the Corporations Act 2001;
the financial statements and notes for the financial year comply with the Accounting
Standards; and
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
Executive Chairman
Melbourne, Australia
Date: 27 August 2021
50
SECOS Group Limited
Independent auditor’s report to members
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of SECOS Group Limited (the Company and its
subsidiaries (the Group)), which comprises the consolidated statement of financial position
as at 30 June 2021, the consolidated statement of profit or loss and other comprehensive
income, the consolidated statement of changes in equity and the consolidated statement
of cash flows for the year then ended, and notes to the financial statements, including a
summary of significant accounting policies and other explanatory information, and the
directors’ declaration.
In our opinion, the accompanying financial report of the Group, is in accordance with the
Corporations Act 2001, including:
(i) giving a true and fair view of the Group’s financial position as at 30 June 2021 and of
its financial performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations
2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our
responsibilities under those standards are further described in the Auditor’s
Responsibilities for the Audit of the Financial Report section of our report. We are
independent of the Group in accordance with the auditor independence requirements of
the Corporations Act 2001 and the ethical requirements of the Accounting Professional
and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants
(including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in
accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the financial report of the current period. These matters were
addressed in the context of our audit of the financial report as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
ASSESSMENT OF CARRYING VALUE OF GOODWILL
Area of focus
Refer also to notes 1 and 14
During the financial year ended 30 June 2015
the group expanded its activities through the
reverse acquisition of Cardia Bioplastics Limited
by Stellar Films Group. As a result, the
acquisition created Goodwill on the Group’s
Consolidated Statement of Financial Position of
$3.5 million.
There is a risk that the carrying amount of
goodwill exceeds its recoverable amount and
may be impaired.
The Group continues to operate as a single
Cash Generating Unit (“CGU”) being the
manufacture and distribution of polyethylene
films, and renewable resources-based resins.
Management has assessed that they had been
no significant change to the business which
would require a change in the current year.
The recoverable amount of the CGU has been
calculated based on a value-in-use discounted
cashflow model, the examines the expected
discounted cashflows of its sole CGU over a
five-year period extending from reporting date,
plus a terminal value.
Overall due to the high level of judgement
involved, and the significant carrying amounts
involved, we have determined that this is a key
judgemental area that our audit concentrated
on.
How our audit addressed it
Our audit procedures included:
— A detailed analysis of any changes to the
business to determine the continued
appropriateness of a single segment and
CGU;
— An examination of the discounted cashflow
model, testing for
a) its arithmetical accuracy;
b) the reasonableness of the future
cashflows, comparing to historical trends of
the business and its pipeline of future sales
transactions and the overall industry climate
affecting the economics of the business
model;
c) the reasonableness of key inputs into the
model, including growth rates, the discount
rate and the working capital levels
associated with the derivation of those
growth rates;
— An examination of key sensitivities of the
Group’s future discounted cash flows to
changes in key inputs; and
— Cross-checking the overall net present
value derived by the model to the current
enterprise value of the business, embodied
in its market capitalisation.
We also considered the adequacy of the
Group’s disclosures in relation to the impairment
testing in the financial report.
RECOVERABILIITY OF DEFERRED TAX ASSETS
Area of focus
Refer also to notes 1 and 5
As at 30 June 2021, the Group has recognised a
deferred tax asset of $2.1 million.
Assessing the recoverability of deferred tax
assets requires the Group to make significant
estimates related to the quantum and timing of
future taxable income. Estimates of future
taxable income are based on the forecast of
cash flows from operations, the reversal of
temporary differences and the application of
existing tax laws in each jurisdiction. To the
extent that future cash flows and taxable income
differ significantly from estimates, the ability of
the Group to realise the net deferred tax assets
recorded at the reporting date could be
impacted.
Due to the above mentioned factors,
recoverability of deferred tax assets is
considered a key audit matter.
INVENTORY
Area of focus
Refer also to notes 1 and 10
The Group’s inventory of $5.3 million is
significant to the financial statements and has
increased significantly from prior year. The
Group’s inventory predominantly includes
polyethylene films and renewable resource-
based resins.
Inventory is required to be carried at the lower of
its cost and net realisable value applying the
weighted average cost method.
The valuation of inventory involves significant
judgement by management as value depends
on the age and types of polyethylene films and
renewable resource-based resins.
How our audit addressed it
Our audit procedures included:
— Understanding the tax position taken by the
group, reviewing correspondence between the
Group and its external tax specialist;
— Assessing the board approved budgets to
determine the likelihood of future profitability and
the use of its deferred tax assets in future
periods; and
— Understanding the basis of accounting for
recognised deferred tax assets based on our
knowledge of the tax environment in which the
Group operates and work performed on the cash
flow projections used in forecasting future taxable
income and the reversal of temporary
differences.
We also considered the adequacy of the Group’s
disclosures in relation to the recognised and
unrecognised deferred tax assets in the financial
report.
How our audit addressed it
Our audit procedures included:
— A physical verification of inventory at material
locations within the Group;
— Performance of cut-off testing for both inwards
and outwards goods around the year end date;
— A review of subsequent product sales to ensure
inventory was valued at the lower of cost and net
realisable value; and
— We assessed management’s judgements in
relation to the need for provisioning based on the
aging and condition of the inventory.
We also considered the adequacy of disclosures in
relation to inventory in the notes to the financial
statements.
Other Information
The directors are responsible for the other information. The other information comprises the information in
the Group’s annual report for the year ended 30 June 2021 but does not include the financial report and the
auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial report or our
knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal control as the directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted
in accordance with the Australian Auditing Standards will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of this financial report.
A further description of our responsibilities for the audit of these financial statements is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf
This description forms part of our independent auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June
2021.
In our opinion, the Remuneration Report of SECOS Group Limited, for the year ended 30 June 2021,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing
Standards.
William Buck Audit (Vic) Pty Ltd
ABN: 59 116 151 136
A. A. Finnis
Director
Melbourne, 27 August 2021
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
SHAREHOLDER INFORMATION
The shareholder information set out below was applicable as at 1 August 2021
(A) DISTRIBUTION OF EQUITY SECURITIES
Analysis of numbers of equity security holders by size of holding:
Ordinary Shares
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Total
Number of Holders
314
867
528
1170
363
3,242
There were 1,830 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 Held
Percentage of Issued
Shares (%)
R&K EDWARDS INVESTMENTS
BELGRAVIA STRATEGIC EQUITIES PTY LTD
DONALD HALLER JR
STELLAR DEVELOPMENTS
SECOS FRIENDS LLC
HSBC CUSTODY NOMINEES
UBS NOMINEES
RICHARD TEGONI
NATIONAL NOMINEES
BRENDAN O'SULLIVAN
KIRZY (PHILLIPPA WEEKLEY)
CITICORP NOMINEES
HELPLESS PTY LTD
GOBBLE PTY LTD
ADVANCE PUBLICITY
PLANET JANET PTY LTD
DAVID WAKE
MARK DEUTSCH
ROBERT DEUTSCH
FEMALE PTY LTD
TOTAL
57,295,825
51,500,000
45,748,826
20,696,906
18,832,738
17,219,030
16,704,457
14,606,231
11,449,995
11,189,054
8,698,217
8,173,730
8,024,262
7,203,346
6,474,963
6,030,000
5,157,109
4,741,575
4,741,575
4,418,950
10.7%
9.6%
8.5%
3.9%
3.5%
3.2%
3.1%
2.7%
2.1%
2.1%
1.6%
1.5%
1.5%
1.3%
1.2%
1.1%
1.0%
0.9%
0.9%
0.8%
328,906,789
61.4%
56
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
(C)
SUBSTANTIAL SHAREHOLDERS
The names of the substantial shareholders listed in the holding company’s register as at 1 August 2021 are:
Number of Ordinary
Shares Held
Percentage of Issued
Shares (%)
R&K EDWARDS INVESTMENTS LLC
57,295,825
BELGRAVIA STRATEGIC EQUITIES PTY LTD
51,500,000
DONALD HALLER JR
45,748,826
10.7
9.6
8.5
(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.
57
SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
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ANNUAL REPORT
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SECOS GROUP LIMITED (ASX:SES)
ANNUAL REPORT
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