StockMarketWire.com - Livestock feed supplier Walcom warned it would post a deeper annual loss and could struggle to stay afloat, as a swine fever epidemic in China hurt sales and a key customer defaulted on its payments.

The company said it had commenced legal action against its biggest customer, which still owed the company an aggregate RMB 4.96m, or around £556k.

An African swine fever epidemic on pigs, meanwhile, had affected most provinces in China, including those in which the company operated.

'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,' Walcom said.

'This reduction in revenue, in conjunction with the impact of the default, 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.'

At 31 October, Walcom had around HK$4m in the bank.

It had repaid a short-term bank loan of RMB 2m and was in discussions with the same lender regarding an additional facility.

'As previously announced, the company's working capital position is significantly restrained but manageable in the near term,' Walcom said.

'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.'


At 1:48pm: [LON:WALG] Walcom Group Ltd share price was 0p at 0.38p



Story provided by StockMarketWire.com