Further re Customer Payment and Trading Update

Walcom Group Ltd - Further re Customer Payment and Trading Update

PR Newswire

London, November 21

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")

21 November 2018

WALCOM GROUP LIMITED

(“Walcom” or “the Company”)

Further re Customer Payment

Trading Update

Further to the announcement on 8 October 2018, the Company provides an update on the default on payments owed to the Company of an aggregate RMB 4.96 million (approximately £556,000) by the Company’s largest customer (the “Customer”). The Company has still not received payment of the outstanding amount, and therefore has recommenced legal proceedings against the Customer to recover the contractual monies due.

The Company also provides an update on its current trading and market conditions. The African swine fever epidemic on pigs has affected most provinces in China including those in which the Company operates. This has had an adverse effect on trading, and the Directors now expect revenue for the current financial year to be significantly lower than the previous financial year. This reduction in revenue, in conjunction with the impact of the default on payments owed by the Customer, are likely to lead to the Company’s loss before tax for the current financial year being significantly higher than that for the 2017 financial year.

As at 31 October 2018, the Company had cash at bank of approximately HK$ 4 million. Subsequent to this, the Company has repaid a short-term bank loan of RMB 2 million in accordance with its terms and is in discussions with the same lender regarding an additional facility. The Company has also agreed that the secured three-year RMB 2 million revolving credit facility in place via the Company’s wholly owned subsidiary, Shanghai Walcom Bio-Chem Co., Ltd, will be repaid on a quarterly basis commencing in January 2019.

As previously announced, the Company’s working capital position is significantly restrained but manageable in the near term. However, if the full amount outstanding from the Customer is not received or the Company is not able to secure the alternative financing arrangement with its lender highlighted above, or any similar alternative arrangement, the Company may be in a position where it is unable to settle its liabilities as and when they fall due. The Company continues to monitor closely its cash position.

Further announcements will be made in due course.

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