WALG.L Regulatory News (WALG)

Walcom Group Ltd - Company update

PR Newswire

London, June 4

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")

4 June 2019

WALCOM GROUP LIMITED

(“Walcom” or “the Company”)

Company update

Appointment of Deputy Chief Financial Officer

Further to the Company’s announcement on 7 May 2019, the Company provides the following update.

Trading Update

As previously announced, Walcom’s trading performance in 2018 and in the early part of the current financial year has been impacted by the effects of African swine fever in China, one of the Company’s main markets. The Company notes that it has not lost any major customers to competitors and that the decline in sales is a direct effect of the severe reduction in the swine population. As a result, the Company expects revenues for the first half of 2019 to be substantially below those achieved in the same period in 2018.

The Company is actively working to increase its customer base and is hopeful that trading conditions in this market will improve in the second half of the year. In addition, the Company is also focusing on increasing sales penetration within the poultry feed sector and is hopeful it will see the benefit of this in the fourth quarter of the financial year.

Overdue customer receivable

As previously announced, the Group’s largest customer in China (the “Customer”), a sizable listed company, defaulted on paying large overdue trade receivables owed to the Company. Whilst some of outstanding amount was received initially from the Customer, there have been no further payments received such that the current amount due from the Customer is approximately HK$5.4 million. The Company commenced legal proceedings against the Customer to recover the debt and these legal proceedings against the Customer are ongoing. However, at present it remains unclear as to when and how much of this overdue amount will be recovered. The Company expects to receive an update on the outcome of the legal proceedings in the coming weeks.

Loan update

Walcom has a bank loan of RMB1.5 million (approximately HK$1.8 million) which is due for review and repayment by 10 June 2019. The Company has been in discussions with the bank which provided the loan and it has agreed, in principle, that shortly after the repayment of the RMB1.5 million loan, the bank will issue a new loan of RMB1.0 million, due for review and repayment six months after drawdown but otherwise on the same terms. In addition, the bank has agreed in principle to issue of a further loan of RMB0.5m should the Company’s trading stabilise.

In conjunction with the expected improvement in trading, the issue of the new RMB1.0 million loan will be used to ease the Group’s working capital position in the short term, with the Board now expecting that it will enable the Group to meet its liabilities as they fall due until at least the end of August 2019. The Group continues to closely monitor its working capital position and continues to seek further investment in the business to safeguard its liquidity.

Further announcements will be made in due course.

Appointment of Deputy Chief Financial Officer

The Company is pleased to announce the appointment of Ms Hwai Ming Chan (Jessie) as non-board Deputy Chief Financial Officer, effective from 1 June 2019. As announced on 14 December 2018, Mr Albert SF Wong resigned as a director of the Company and remains as non-board Chief Financial Officer and Company Secretary until 1 July 2019, following which Mr Francis Chi will assume the additional role of interim Chief Financial Officer and Ms Chan the additional role of Company Secretary. It is intended that Ms Chan will become Walcom’s Chief Financial Officer in due course and a further announcement will be made in that regard at the appropriate time. 

Ms Chan has approximately 20 years of experience in the financial industry. She is a qualified accountant by training and a member of both CPA Australia and the Malaysian Institute of Accountants. Ms Chan has worked in the areas of auditing and corporate finance in Malaysia and China and was previously an Associate Director at an investment bank specialising in large IPOs and fundraising projects in Asia and has significant experience working with listed companies in the region.

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