Acquisition of Beijing New World Bio-technology Company

30 Jun 2008 07:00

30 June 2008 WALCOM GROUP LIMITED Acquisition of Beijing New World Bio-technology Company Limited ("BNWB")

Walcom Group Limited ("Walcom" or "the Group", AIM: WALG), the Hong Kong based manufacturer and distributor of `clean' animal feed additives, announces that it has entered into an agreement, subject to the satisfaction of certain conditions, to acquire the entire issued share capital of BNWB. BNWB is engaged in the sale of Chinese herb and natural plant extracts. BNWB is a wholly owned subsidiary of Solar Leader Limited ("Solar"), a company which is wholly owned by New World Development Company Limited ("New World"), the property and leisure conglomerate, which is listed on the Hong Kong Stock Exchange. The consideration for the acquisition is RMB 10,341,536 (approximately ‚£755,000), which will be satisfied by the issue to Solar of 3,923,497 new shares in the capital of the Group ("Shares").

BNWB's main business is the sale of Chinese herbs and plant extracts which are produced by third parties. The products include Lutein, Ginseng, Milk Thistle and Tribulus Terrestris.

Walcom's current trading activities do not encompass the herb extract market and the Directors believe the acquisition of BNWB will strengthen and accelerate the Group's ability to develop a new series of phyto-based feed additives. As at 31 May 2008, BNWB had cash of RMB 5,625,439, which will be used to enhance the working capital position of the enlarged group. The Directors anticipate that the acquisition will also give Walcom the opportunity to widen its product range and expand its sales channels to include BNWB's customer network.

In the period commencing 7 August 2007 (BNWB's date of incorporation) to 31 May 2008, BNWB had revenues of RMB 186,142 and made a loss of RMB 3,729,689. BNWB's net assets as at 31 May 2008 were RMB 3,809,449. Upon completion of the acquisition, a loan of RMB 2,100,000 due by BNWB to a related company of Solar will be waived, which will result in the net assets of BNWB increasing to RMB 5,909,449.

Mr Frankie Yuet Leung Wong and Mr Eddie Kin Man Chan, directors of Walcom, have an interest in the transaction. Mr Wong is a director of Yangtze Ventures Ltd., 10 per cent. of which is owned by New World. The beneficial owners of New World are The Cheng Family. The Cheng Family also has an indirect interest in the Group as it beneficially owns Fortune Success Holdings Ltd., which owns 4.01 per cent. of the issued share capital of Walcom. Mr Chan is a partner of the accounting firm CWCC, which has conducted an audit of BNWB's accounts on behalf of the Group.

Under the AIM Rules, the acquisition is classified as a related party transaction. The Directors, other than Mr Eddie Kin Man Chan and Mr Frankie Yuet Leung Wong who are interested in the transaction (the "Independent Directors"), who have consulted with John East & Partners Limited, consider the terms of the transaction to be fair and reasonable insofar as the shareholders of the Group are concerned. In advising the Independent Directors, John East & Partners Limited has relied upon their commercial assessment.

The 3,923,497 Shares will be allotted to Solar subject to the satisfaction of certain conditions in the acquisition agreement between the Group and Solar. A further announcement will be made confirming the date of admission to trading of the Shares to be allotted and issued to Solar.

Enquiries:

Walcom Francis Chi (Chief Executive Officer) Tel: +852 2494 0133 Albert Wong (Chief Financial Officer)

John East & Partners Limited Jeffrey Coburn / Bidhi Bhoma Tel: +44 20 7628 2200About Walcom:

Walcom is a Hong Kong based manufacturer and distributor of `clean' animal feed additives. Walcom's products are based on Cysteamine, a natural metabolite generated in animals' bodies which participates in animals' physiological `growth axis' to stimulate the animals' natural growth hormone level. The Group's feed additives improve the health of the animals, reduce mortality rates, shorten the time taken to reduce maturity, increase the protein content in animal food products, increase egg laying and reduce eggshell breakage and build resistance to disease. Walcom's feed additives are `non hormonal', `non antibiotic' and `non gene-altering'.