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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Walcom Group Limited | LSE:WALG | London | Ordinary Share | VGG574851074 | ORD HKD0.01 (DI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.2025 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
Hot Features
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TIDMWALG
19 September 2017
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")
WALCOM GROUP LIMITED
("Walcom" or "the Company")
Half-yearly results for the six months ended 30 June 2017
Walcom is pleased to announce its interim results for the six months ended 30
June 2017. These results are also available from the Company's website at
www.walcomgroup.com.
Further enquiries:
Walcom Group Limited +852 2494 0133
Francis Chi (Chief Executive Officer)
Albert Wong (Chief Financial Officer)
Allenby Capital Limited +44 20 3328 5656
Virginia Bull
CHAIRMAN'S STATEMENT
On behalf of the board of directors (the "Board"), I am pleased to present the
Company's half-yearly results for the six months ended 30 June 2017.
Introduction
The PRC economy maintained steady growth during the first six months of the
year but the overall performance of the pig farming industry did not improve
during the same period due to a decreasing pig farmgate price. The Company's
revenue decreased by 5 per cent. compared with the same period last year. Due
to the continuing increase in production costs and operating expenses, the
Company incurred a loss per share for the period of HK$5.03 cents compared with
a loss per share of HK$2.46 cents in the same period last year.
Results for the Period
The Company generated revenues of HK$19.6 million during the period (June 2016:
HK$20.7 million) and gross profits of HK$11.0 million (June 2016: HK$11.7
million), representing a decrease of 5 per cent. and 6 per cent. respectively
compared with the same period last year. The gross profit margin remained
approximately the same as last year at 56.4 per cent. (June 2016: 56.5 per
cent.) despite the escalating production costs, particularly raw materials,
labour and rental expenses. Compared to 1 January 2017, as at 30 June 2017 the
Hong Kong currency fell by approximately 3 per cent. against China's Renminbi,
which resulted in an accounting exchange loss of HK$0.90 million (June 2016:
gain of HK$0.59 million) when translating the inter-company balances among the
Group companies. This was a significant contributor to the Company's net loss
increasing by 99 per cent. to HK$3.36 million (June 2016: HK$1.69 million) and
the Company incurring a loss of HK$2.92 million at the EBITDA level, an
increase of 159 per cent. over the same period last year (June 2016: HK$1.12
million).
Review of Activities and Market
Compared to the same period last year, the average exchange rate of Renminbi
weakened against the Hong Kong Dollar by 4.8 per cent. during the period under
review. This, in combination with the decrease in the quantity of sales in
China, resulted in the sales turnover in the PRC decreasing by 8 per cent. to
HK$10.8 million compared with the same period last year (June 2016: HK$11.8
million). Overseas sales remained relatively stable, decreasing only slightly
by 1 per cent. to HK$8.7 million compared with same period last year (June
2016: HK$8.8 million).
The pig farmgate price in China dropped during the first six months of 2017
and, accordingly, the pig number has not increased to its previous level. As
such, the demand for feedstuff remained weak. The pig farming industry
forecast estimated that the pig numbers will remain depressed during the second
half of 2017 as the pig farmgate price is not expected to rise due to
increasing competition from pork imported into China. This will affect the
animal feed market which in turn will likely have an adverse effect on the
operating results of the Company.
Earlier this year the Company strengthened its sales team by appointing Mr.
Paitoon Buddhinunta-opas, the general manager of the Group's subsidiary in
Thailand, as the Company's group sales director. The new sales team is focused
on increasing sales penetration into the Company's existing larger customers
which have low usage of the Company's products and also those integrated meat
producing companies whose businesses include feed milling, pig farming, pig
slaughtering and pork product production. From the Company's previous
experience, these integrated companies are more responsive to the gross margin
impact that the Company's products can have, which increases the Company's
chances of gaining sales traction. By putting this concept in practice, the
Board is delighted to report that the Company has successfully sold its
products into one of the largest integrated meat producing companies in China
since July this year.
The Company's overall overseas sales were maintained at about the same level as
last year.
Sales in Thailand in terms of quantity and turnover both increased by 8 per
cent. over the same period last year (June 2017: HK$7.9 million; June 2016:
HK$7.3 million).
Due to poorer performance of the feed mills, the Korean market weakened during
the period under review and sales decreased by 50 per cent. to HK$0.8 million
(June 2016: HK$1.6 million).
Outlook
It is believed that the structural transformation of the Chinese economy which
resulted in a slower growth in the economy over the past three years will
continue for the foreseeable future. However, with the promotion of the
"internet plus" concept, the Chinese economy has shown recovery in some sectors
especially the service industry. This will have a positive impact on the
consumer market, the advantage of which will in turn be passed on to the
Company's sales in the PRC market. With the Company's new sales team, the
Directors are confident that this will result in improved sales in the second
half of the year which will have positive effect in the overall performance of
the Company in the year 2017.
Frankie Y. L. Wong
Chairman
19 September 2017
UNAUDITED CONSOLIDATED STATEMENT OF PROFIT OR LOSS
FOR THE SIX MONTHSED 30 JUNE 2017
Note Unaudited Unaudited
six months six months Audited
ended ended year ended
30 June 2017 30 June 2016 31 December
2016
HK$ HK$ HK$
Revenue 3 19,560,955 20,693,043 46,469,041
Cost of sales (8,534,341) (8,994,822) (19,147,412)
Gross profit 11,026,614 11,698,221 27,321,629
Other income 4 15,842 13,173 275,269
Research and development (328,530) (804,635) (1,565,262)
expenses
Selling and distribution (5,435,032) (5,496,572) (11,346,594)
expenses
General and administrative (8,474,239) (6,825,912) (11,874,526)
expenses
(Loss) / profit from operations 5 (3,195,345) (1,415,725) 2,810,516
Net finance expenses 6 (56,290) (31,507) (70,342)
(Loss) / profit before income (3,251,635) (1,447,232) 2,740,174
tax
Income tax expense 7 (112,609) (240,916) (1,316,475)
(Loss) / profit for the period / (3,364,244) (1,688,148) 1,423,699
year
(Loss) / profit attributable to:
Owners of the Company (3,458,992) (1,690,571) 1,263,286
Non-controlling interests 94,748 2,423 160,413
(Loss) / profit for the period / (3,364,244) (1,688,148) 1,423,699
year
(Loss) / profit per share - 8 (5.03) (2.46) 1.84
basic, HK cents
- diluted, HK cents (5.03) (2.46) 1.84
UNAUDITED CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
FOR THE SIX MONTHSED 30 JUNE 2017
Note Unaudited Unaudited
six months six months Audited
ended ended year ended
30 June 2017 30 June 2016 31 December
2016
HK$ HK$ HK$
(Loss) / profit for the period / (3,364,244) (1,688,148) 1,423,699
year
Other comprehensive income
Exchange difference on
translation of
financial statements of 1,571,508 (669,340) (2,603,259)
overseas subsidiaries
Total comprehensive loss
for the period / year (1,792,736) (2,357,488) (1,179,560)
Total comprehensive loss
attributable to:
Owners of the Company (2,027,469) (2,419,944) (1,356,994)
Non-controlling interests 234,733 62,456 (177,434)
Total comprehensive loss
for the period / year (1,792,736) (2,357,488) (1,179,560)
UNAUDITED CONSOLIDATED BALANCE SHEET
AT 30 JUNE 2017
Note Unaudited Unaudited Audited
30 June 2017 30 June 2016 31 December
2016
HK$ HK$ HK$
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 5,821,135 1,383,334 4,832,774
Patents 1,681,327 1,946,865 1,814,096
Goodwill - - -
7,502,462 3,330,199 6,646,870
CURRENT ASSETS
Inventories 2,890,996 1,759,975 1,380,728
Trade and other receivables 10 9,279,392 7,475,382 9,028,156
Cash and cash equivalents 11 4,397,076 11,428,764 9,012,203
Restricted cash 11 111,768 106,794 105,210
16,679,232 20,770,915 19,526,297
TOTAL ASSETS 24,181,694 24,101,114 26,173,167
EQUITY AND LIABILITIES
EQUITY
Share capital 12 688,344 688,344 688,344
Reserves 13,155,690 14,120,209 15,183,159
TOTAL EQUITY ATTRIBUTABLE TO
OWNERS OF THE COMPANY 13,844,034 14,808,553 15,871,503
Non-controlling interests 2,498,762 2,149,051 2,264,029
TOTAL EQUITY 16,342,796 16,957,604 18,135,532
CURRENT LIABILITIES
Trade and other payables 13 5,133,569 4,561,715 4,744,113
Tax payables 400,916 241,793 1,057,636
Bank borrowings 14 2,304,413 2,340,002 2,235,886
7,838,898 7,143,510 8,037,635
TOTAL LIABILITIES 7,838,898 7,143,510 8,037,635
TOTAL EQUITY AND LIABILITIES 24,181,694 24,101,114 26,173,167
NET CURRENT ASSETS 8,840,334 13,627,405 11,488,662
TOTAL ASSETS 16,342,796 16,957,604 18,135,532
LESS CURRENT LIABILITIES
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHSED 30 JUNE 2017
Share-based Non-
Share Share Merger compensation Exchange Surplus Accumulated controlling Total
capital premium reserve reserve reserve reserve losses Total interests equity
HK$ HK$ HK$ HK$ HK$ HK$ HK$ HK$ HK$ HK$
At 1 January 2016 688,344 95,298,644 23,852,469 1,568,769 225,525 3,263,694 (107,668,948) 17,228,497 2,086,595 19,315,092
Comprehensive loss
Loss for the period - - - - - - (1,690,571) (1,690,571) 2,423 (1,688,148)
Other comprehensive
income
Exchange difference on
translation of
financial statements of - - - - (729,373) - - (729,373) 60,033 (669,340)
overseas subsidiaries
Total comprehensive loss - - - - (729,373) - (1,690,571) (2,419,944) 62,456 (2,357,488)
for the period
Lapse of share option - - - - - - - - - -
At 30 June 2016 688,344 95,298,644 23,852,469 1,568,769 (503,848) 3,263,694 (109,359,519) 14,808,553 2,149,051 16,957,604
At 1 January 2017 688,344 95,298,644 23,852,469 1,568,769 (2,394,755) 3,602,327 (106,744,295) 15,871,503 2,264,029 18,135,532
Comprehensive loss
Loss for the period - - - - - - (3,458,992) (3,458,992) 94,748 (3,364,244)
Other comprehensive
income
Exchange difference on
translation of
financial statements of - - - - 1,431,523 - - 1,431,523 139,985 1,571,508
overseas subsidiaries
Total comprehensive loss - - - - 1,431,523 - (3,458,992) (2,027,469) 234,733 (1,792,736)
for the period
Lapse of share options - - - (684,771) - - 684,771 - - -
At 30 June 2017 688,344 95,298,644 23,852,469 883,998 (963,232) 3,602,327 (109,518,516) 13,844,034 2,498,762 16,342,796
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHSED 30 JUNE 2017
Note Unaudited Unaudited
six months six months Audited
ended ended year ended
30 June 201 30 June 201 31 December
7 6 2016
HK$ HK$ HK$
Cash flow from operating activities
(Loss) / profit before income tax (3,251,635) (1,447,232) 2,740,174
Amortisation of patents 132,769 132,769 265,538
Depreciation 144,293 151,229 288,704
Foreign exchange loss / (gain), net 968,688 (685,765) (2,083,712)
Interest received (8,861) (36,618) (63,460)
Interest paid 65,151 68,125 133,802
(Gain) / loss on disposal of
property, plant and equipment (23) 3,419 11,317
Operating (loss)/ profit before
working capital changes (1,949,618) (1,814,073) 1,292,363
(Increase) / decrease in inventories (1,510,268) 487,909 867,156
(Increase) / decrease in trade and (251,236) 328,909 (1,209,281)
other receivables
Increase / (decrease) in trade and 389,456 (393,204) (210,806)
other payables
Net cash (used in) / generated from (3,321,666) (1,390,459) 658,432
operations
Corporate income tax paid (769,329) (768,579) (961,878)
Interest paid (65,151) (68,125) (133,802)
Net cash used in operating activities (4,156,146) (2,227,163) (437,248)
Cash flow from investing activities
Purchase of property, plant and (816,090) (9,768) (3,649,857)
equipment
Proceeds from disposal of fixed 23 - -
assets
Interest received 8,861 36,618 63,460
Net cash (used in)/ generated from (807,206) 26,850 (3,586,397)
investing activities
Cash flow from financing activities
Repayment of bank borrowings - - (2,387,205)
Proceeds from new bank borrowings - - 2,235,886
Increase in restricted bank balance (4,974) (2,981) (1,397)
Net cash used in financing activities (4,974) (2,981) (152,716)
Net decrease in cash and cash (4,968,326) (2,203,294) (4,176,361)
equivalents
Cash and cash equivalents at the 9,012,203 13,670,351 13,670,351
beginning of the period / year
Exchange profit/(loss) on cash and 353,199 (38,293) (481,787)
cash equivalents
Cash and cash equivalents at the end 11 4,397,076 11,428,764 9,012,203
of the period / year
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHSED 30 JUNE 2017
(1) BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES
The unaudited consolidated financial statements have been prepared using
accounting policies consistent with International Financial Reporting Standards
and in accordance with International Accounting Standard (IAS) 34 Interim
Financial Reporting.
The unaudited consolidated financial statements have been prepared under the
historical cost convention. The same accounting policies, presentation and
methods of computation are followed in these unaudited consolidated financial
statements as were applied in the preparation of the group's financial
statements for the year ended 31 December 2016.
(2) SEGMENT REPORTING
(a) Primary reporting format - Geographical Segment
The group's operations are mainly located in Hong Kong, PRC, Thailand. The
group's sales revenue by geographical location of customers are analysed as
follows:
Unaudited Unaudited
six months six months Audited
ended ended year ended
30 June 2017 30 June 201 31 December
6 2016
HK$ HK$ HK$
PRC 10,821,546 11,824,924 26,447,044
Thailand 7,894,388 7,289,399 16,643,536
Others 845,021 1,578,720 3,378,461
19,560,955 20,693,043 46,469,041
(b) Secondary reporting format - Business Segment
The Group is principally engaged in the manufacture, distribution and sale of
chemical feed and additive products. All of the group's products are of a
similar nature and subject to similar risk and returns. Accordingly, the
group's activities are attributable to a single business segment and no
business segment analysis is presented.
(c) Segment assets by geographical location of assets
Unaudited Unaudited
six months six months Audited
ended ended year ended
30 June 2017 30 June 201 31 December
6 2016
HK$ HK$ HK$
PRC 13,854,608 14,446,142 14,882,387
Thailand 8,039,316 3,454,609 8,287,443
Hong Kong 606,442 4,253,498 1,499,263
Others 1,681,328 1,946,865 1,504,074
24,181,694 24,101,114 26,173,167
(3) REVENUE
Revenue represents the sales value of goods supplied to the customers less
returns, discounts, value added tax and sales taxes.
(4) OTHER INCOME
Unaudited Unaudited
six months six months Audited
ended ended year ended
30 June 201 30 June 2016 31 December
7 2016
HK$ HK$ HK$
Government subsidy - - 248,841
Gain on disposal of property,
plant and
equipment 23 - -
Sundry income 15,819 13,173 26,428
15,842 13,173 275,269
(5) OPERATING (LOSS) / PROFIT
Operating (loss) / profit is stated after charging the following items:-
Unaudited Unaudited
six months six months Audited
ended ended year ended
30 June 30 June 2016 31 December
2017 2016
HK$ HK$ HK$
Amortisation of patents 132,769 132,769 265,538
Auditor's remuneration 182,040 180,879 312,226
Cost of inventories 8,139,119 8,426,009 17,675,779
Depreciation 96,012 107,795 210,131
Loss on disposal of property,
plant and equipment - 3,419 11,317
Rental charges under operating
leases 410,733 442,955 878,599
in respect of land and
buildings
Staff costs
(including directors'
emoluments)
- wages and salaries 5,549,091 5,664,518 10,275,948
- contributions to retirement 419,466 425,378 839,484
benefits
- other staff benefits 1,527,712 1,684,273 3,545,683
(6) NET FINANCE (EXPENSES)/ INCOME
Unaudited Unaudited
six months six months Audited
ended ended year ended
30 June 30 June 31 December
2017 2016 2016
HK$ HK$ HK$
Bank interest income 8,861 36,618 63,460
Interest expense on bank loans (65,151) (68,125) (133,802)
(56,290) (31,507) (70,342)
(7) INCOME TAX EXPENSE
No provision for Hong Kong Profits Tax has been made (June 2016: HK$nil; 2016:
HK$nil) as the group's assessable profit subject to Hong Kong profits tax for
the period is fully set-off by tax loss brought forward from last year.
Taxation on overseas profits has been calculated on the estimated assessable
profit for the period/year at the rate of taxation prevailing in the countries
in which the group companies operate. The overseas income tax provided for the
six months ended 30 June 2017 is HK$112,609 (June 2016: HK$240,916; 2016:
HK$1,316,475).
(8) LOSS PER SHARE
The calculation of the basic loss per share for the six months ended 30 June
2017, is based on the loss attributable to ordinary equity shareholders of the
company of HK$3,458,992 (June 2016: HK$1,690,571; 2016: Profit HK$1,263,286)
during the period and the weighted average number of 68,834,388 ordinary shares
(June 2016: 68,834,388; 2016: 68,834,388) in issue during the period/year. No
diluted loss per share is to be reported for the period/year.
(9) DIVIDS
No payment of dividend was recommended for the first six months of 2017 (June
2016: HK$ nil; 2016: HK$nil).
(10) TRADE AND OTHER RECEIVABLES
Unaudited Unaudited Audited
30 June 30 June 2016 31 December
2017 2016
HK$ HK$ HK$
Trade receivables 8,275,752 6,880,895 8,019,256
Less: provision for (508,758) (508,758) (508,758)
impairment loss
7,766,994 6,372,137 7,510,498
Other receivables 524,206 229,745 280,487
Prepayments and deposits 988,192 873,500 1,237,171
9,279,392 7,475,382 9,028,156
(a) All trade and other receivables, are expected to be recovered
within one year.
(b) Impairment of trade receivables
The movement in the provision of impairment for doubtful debts during the
period/year, including both specific and collective loss components, is as
follows:
Unaudited Unaudited
six months six months Audited
ended ended year ended
30 June 201 30 June 2016 31 December 2016
7
HK$ HK$ HK$
At 1 January 508,758 508,758 508,758
Written off - - -
Exchange difference - - -
At 30 June/31 508,758 508,758 508,758
December
At 30 June 2017, the Group's trade receivables of HK$508,758 (June 2016:
HK$508,758, 2016: HK$508,758) have been outstanding for a certain period of
time. The management assessed that only a portion of the receivables is
expected to be recoverable. Consequently, specific allowance for doubtful
debts was recognised for the individually impaired receivables.
The Group does not hold any collateral over these balances.
(11) CASH AND CASH EQUIVALENTS
Unaudited Unaudited Audited
30 June 2017 30 June 2016 31 December 201
6
HK$ HK$ HK$
Cash at bank and on hand 4,508,844 11,535,558 9,117,413
Less: Cash at bank - (111,768) (106,794) (105,210)
restricted
Cash and cash equivalents
in the cash flow statement 4,397,076 11,428,764 9,012,203
(12) SHARE CAPITAL
Unaudited Unaudited Audited
30 June 30 June 31 December
2017 2016 2016
HK$ HK$ HK$
Authorised
150,000,000 (June 2016:
150,000,000 and Dec 2016:
150,000,000) ordinary shares of 1,500,000 1,500,000 1,500,000
HK$0.01 each
Issued and fully paid
68,834,388 (June 2016:
68,834,388 and
Dec 2016: 68,834,388) 688,344 688,344 688,344
ordinary
shares of HK$0.01 each
The holders of ordinary shares are entitled to receive dividends as declared
from time to time and are entitled to one vote per share at meetings of the
Company. All ordinary shares rank equally with regard to the Company's
residual assets.
(13) TRADE AND OTHER PAYABLES
Unaudited Unaudited Audited
30 June 2017 30 June 2016 31 December
2016
HK$ HK$ HK$
Trade payables 1,478,806 1,416,707 1,318,966
Other payables and accrued 3,654,763 3,145,008 3,425,147
expenses
5,133,569 4,561,715 4,744,113
All of the trade and other payables are expected to be settled within one year.
(14) BANK BORROWINGS
Unaudited Unaudited Audited
30 June 201 30 June 31 December
7 2016 2016
HK$ HK$ HK$
Current
Bank borrowings, unsecured (a) 2,304,413 2,340,002 2,235,886
a. The effective interest rate per annum for bank borrowings at balance sheet
date is at 5.7% (June 2016: 7.8%, 2016: 5.7%) per annum.
(15) RECONCILIATION OF (LOSS) / PROFIT BEFORE INCOME TAX TO EBITDA
Unaudited Unaudited
six months six months Audited
ended ended year ended
30 June 2017 30 June 2016 31 December 201
6
HK$ HK$ HK$
(Loss) / profit before income tax (3,251,635) (1,447,232) 2,740,174
Depreciation 144,293 151,229 288,704
Amortisation of patents 132,769 132,769 265,538
Interest income (8,861) (36,618) (63,460)
Interest expenses 65,151 68,125 133,802
(Gain) / loss on disposal of
property, plant and equipment (23) 3,419 11,317
EBITDA (2,918,306) (1,128,308) 3,376,075
EBITDA is defined herein as earnings before depreciation, amortization,
interest and tax, plus specific charges which are considered non-recurring in
nature. Specific charges include impairment loss in value and gain/loss in
disposal of non-current assets, and amortization of fair value of share-based
compensation. EBITDA is not a recognised term under generally accepted
accounting principles and does not purport to be an alternative to net income
as a measure of operating performance or to cash flows from operating
activities as a measure of liquidity. Because not all companies use identical
calculations, this presentation may not be comparable to other similarly titled
measures of other companies.
(16) COPIES OF THE HALF YEARLY REPORT
Copies of the half-yearly report will be available shortly from the Company's
website www.walcomgroup.com .
END
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