The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR").

15 June 2020

WALCOM GROUP LIMITED
(“Walcom” or “the Company”)

Trading Update

The Board of Walcom provides an update on revenues for the year ended 31 December 2019, current trading and its working capital position.  

2019 Revenue

The Company has announced previously that its operations during the 2019 financial year were adversely affected by the effects of African Swine Influenza on customer orders in its key market of China.  As a result, the Board of the Company currently anticipates that revenues for the year ended 31 December 2019 will be approximately HK$15.1m (2018: HK$34.7m), though the Company’s results remain subject to audit.

Current Trading

The Company has seen a gradual recovery of the swine market in China, whereby most of its customers have re-commenced ordering the Company’s swine feed products. Whilst the quantity per order is smaller than before, the Company has observed a trend of more regular orders from customers. The Board is cautiously optimistic that sales of swine products in China will continue and hopefully accelerate during the fourth quarter of the current financial year.

Due to the combined effect of African Swine Influenza and COVID-19, Walcom has experienced a significant reduction in sales of its products in markets outside China which the Board expects will continue until the final quarter of the current financial year.

The Company continues to develop its products for dairy cows in China, and the Board anticipates that sales of these products will begin during Q4 2020.

Working Capital Position

Mr Francis Chi, Chief Executive of the Company, has still been unable to provide the proposed loan of HK$1,230,000 (the “Director Loan”) to the Company as intended. Mr Chi has, again, reiterated his intention to provide the Director Loan but there can be no certainty as to the provision or the timing of the Director Loan.

Further to the announcement on 5 June 2020, the Company has  extended its payment plan with its bank in relation to a loan which was due for repayment at the end of May 2020. Under the revised payment scheme, the Company is required to repay RMB150,000 by 19 June 2020, with a further six monthly instalments of RMB50,000 being payable commencing in July 2020.  

The Company will require additional funding to satisfy the loan repayment due on 19 June 2020. Therefore, based on Walcom’s current cash flow projections, the Company will be able to continue operations until 19 June 2020. In the absence of the Director Loan now being received in part or in full by this date, the Company would be unable to continue its operations and would be forced into liquidation with a consequential diminution in value to shareholders. 

Further announcements will be made in due course. 

Further enquiries:

Walcom Group Limited
Francis Chi (Chief Executive Officer/Chief Financial Officer)
 
+852 2494 0133
Allenby Capital Limited (Nominated Adviser and Broker)
David Hart / Asha Chotai
+44 20 3328 5656

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