TIDMWALG
18 September 2019
WALCOM GROUP LIMITED
("Walcom" or "the Company")
Interim Results for the six months ended 30 June 2019
Walcom is pleased to announce its interim results for the six months ended 30
June 2019. Copies of the interim report will shortly be available on the
Company's website at www.walcomgroup.com.
Further enquiries:
Walcom Group Limited +852 2494 0133
Francis Chi (Chief Executive Officer/Chief Financial
Officer)
Jessie Chan (Deputy Chief Financial Officer)
Allenby Capital Limited +44 20 3328 5656
David Hart / Asha Chotai
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 2019.
Introduction
During the first half of 2019, the growth in the Chinese economy remained slow
amid ongoing trade tensions with the United States and weakening global demand.
The pig farming industry also suffered a significant setback due to the African
Swine Fever ("ASF") outbreak which was first reported in China in August 2018.
The ASF outbreak is yet to be contained and new cases are still being reported
despite various measures by the Chinese government to contain its spread within
the country including but not limited to the mass culling of pigs in affected
areas and banning of long-distance, trans-region transportation of live pigs
and pork products. As there is currently no treatment or vaccine, and the only
way to stop the disease is to cull all affected or exposed swine herds, the
swine herd population in China has decreased considerably since the outbreak.
As a result, demand for the Group's products in China has reduced significantly
resulting in a 55 per cent decrease in revenues compared with the same period
last year. The Group incurred a loss per share for the period of HK Cents 4.73
compared with a loss per share of HK Cents 15.21 in the same period last year
(the higher loss per share in 2018 is mainly due to a provision for doubtful
debt of HK$7.9 million). Without the effects of the doubtful debt provision the
loss per share for the same period in 2018 was HK Cents 3.23.
Results for the Period
The Group generated revenues of HK$8.7 million during the period (June 2018:
HK$19.2 million) and gross profits of HK$4.1 million (June 2018: HK$10.5
million), representing a decrease of 55 per cent and 61 per cent respectively
compared with the same period last year.
Gross profit margins decreased by approximately 7.8 per cent to 47 per cent
(June 2018: 55 per cent) mainly due to the higher per unit fixed costs as a
result of lower production volumes and is partially offset by the effects of a
stronger Hong Kong Dollar exchange rate against Renminbi. The average exchange
rate of Hong Kong Dollar against Renminbi appreciated by approximately 6 per
cent during the period under review compared with the same period last year.
The Group incurred a net loss of HK$3.3 million compared to HK$10.1 million for
the same period last year which included the effects of a doubtful debt
provision of HK$7.9 million.
At the EBITDA level, the Group recorded a higher loss of HK$3.29 million, an
increase of 91 percent compared to the same period last year (June 2018:
HK$1.72 million).
Review of Activities and Market
Turnover in China was HK$3.5 million, 66 per cent lower compared with the same
period last year (June 2018: HK$10.2 million), mainly attributable to a 58 per
cent decline in domestic sales volume and the impact of a stronger Hong Kong
Dollar, which strengthened against the Renminbi by an average of 6 per cent
during the period under review.
The impact of ASF on the Group's performance has been severe as the demand for
feedstuff from the Group's customers in China has declined significantly
following the closure of farms and businesses impacted by ASF. Although the
rate of infections has slowed down compared to the initial outbreak in August
2018 and despite various measures implemented by the Chinese government to
contain the spread of ASF, new cases are still emerging around the country. The
Group expects the ASF to continue to affect the pig farming industry for at
least the next six months following which the Board is hopeful that pig
producers will gradually start to restock and the increase in swine population
will have positive impact on the Group's business. The Group is also actively
working on increasing its customer base and penetration within the poultry feed
sector and beef cattle sector with the hope that the Group will see the benefit
of these efforts in the latter part of the year.
The decline in sales revenue in China compared to the same period last year is
also due loss of sales contribution from the Group's largest customer in China
(June 2019: HK$nil; June 2018: HK$3.9 million) wherein the Group ceased
business with this customer after unsuccessful attempts to recover outstanding
debts. During the corresponding period in 2018, the Group made a provision for
doubtful debts of HK$7.9 million in relation to this customer's outstanding
trade receivables. The Group commenced legal proceedings against the customer
in an effort to recover the debt and whilst the court ruled in favour of the
Group in June 2019, the customer has since filed an appeal against the court's
judgement. It remains unclear whether the overdue receivables will be
recovered.
The Group's overall overseas sales decreased by 42 per cent to HK$5.2 million
compared with the same period last year (June 2018: HK$8.9 million). The
decline is mainly due to the disposal of Walcom Bio-Chem (Thailand) Company
Limited ("Walcom Thai") in March 2019 resulting in the non-consolidation of its
results from the second quarter of 2019 onwards. Walcom Thai was disposed of to
ease the Group's short-term working capital position, raising net proceeds of
approximately HK$3.0 million which was received at the end of March 2019.
Thailand remains an important market to the Group and subsequent to the
disposal, Walcom Thai was appointed as the exclusive distributor of the Group's
products.
Sales to Thailand remained the main contributor, representing 81 per cent of
the Group's overseas sales (June 2019: HK$4.2 million; June 2018: HK$8.1
million) while demand from the Korean market remained the same during the
period under review with sales of HK$0.7 million (June 2018: HK$0.7 million).
Outlook
The Chinese economy continues to grow at a slower rate in the first half of
2019 amidst slower global economic growth, escalating trade tensions with the
US and domestic downward pressure. Faced with a complex external environment
and emerging downward pressure in the second half, China will continue to take
coordinated steps to stabilize growth and undertake structural reforms to
promote development in order to facilitate sustained and healthy development of
the economy. It is expected that the macro-economic environment coupled with
the impact of ASF on the pig industry will continue to affect the Group's
operations in China in the second half of the year.
Over the past 12 months the Company has made regular announcements in relation
to the weak performance of the Group, which as a result of the aforementioned
factors, has continued to place added pressure on the Group's working capital
position. These announcements have also highlighted the impact on the Company
and its shareholders if the working capital position cannot be resolved in the
short term. The Board will continue to closely monitor the Group's working
capital position and is in discussions regarding seeking additional funding
arrangements to safeguard its liquidity.
Frankie Y. L. Wong
Chairman
18 September 2019
UNAUDITED CONSOLIDATED STATEMENT OF PROFIT OR LOSS
FOR THE SIX MONTHSED 30 JUNE 2019
Note Unaudited Unaudited
six months six months Audited
ended ended year ended
30 June 2019 30 June 2018 31 December
2018
HK$ HK$ HK$
Revenue 3 8,713,318 19,163,440 34,691,030
Cost of sales (4,634,319) (8,697,989) (15,320,919)
Gross profit 4,078,999 10,465,451 19,370,111
Other income 4 400,849 100,719 207,762
Research and development expenses (285,603) (881,279) (1,222,370)
Selling and distribution expenses (2,734,959) (5,849,284) (16,589,116)
General and administrative expenses (4,637,295) (13,630,612) (10,063,495)
Loss from operations 5 (3,178,009) (9,795,005) (8,297,108)
Net finance expenses 6 (107,336) (122,389) (268,616)
Loss before income tax (3,285,345) (9,917,394) (8,565,724)
Income tax refund / (expense) 7 8,378 (205,131) (919,124)
Loss for the period / year (3,276,967) (10,122,525) (9,484,848)
(Loss) / profit attributable to:
Owners of the Company (3,252,648) (10,469,044) (10,253,282)
Non-controlling interests (24,319) 346,519 768,434
Loss for the period / year (3,276,967) (10,122,525) (9,484,848)
Loss per share - basic, HK cents 8 (4.73) (15.21) (14.90)
(4.73) (15.21) (14.90)
- diluted, HK cents
UNAUDITED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME
FOR THE SIX MONTHSED 30 JUNE 2019
Note Unaudited Unaudited
six months six months Audited
ended ended year ended
30 June 2019 30 June 2018 31 December
2018
HK$ HK$ HK$
Loss for the period / year (3,276,967) (10,122,525) (9,484,848)
Other comprehensive income
Exchange difference on
translation of
financial statements of 175,170 (443,061) (1,701,349)
overseas subsidiaries
Total comprehensive loss
for the period / year (3,101,797) (10,565,586) (11,186,197)
Total comprehensive loss
attributable to:
Owners of the Company (3,195,158) (10,874,678) (11,965,901)
Non-controlling interests 93,361 309,092 779,704
Total comprehensive loss
for the period / year (3,101,797) (10,565,586)
(11,186,197)
UNAUDITED CONSOLIDATED BALANCE SHEET
AT 30 JUNE 2019
Note Unaudited Unaudited Audited
30 June 2019 30 June 2018 31 December
2018
HK$ HK$ HK$
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 452,310 5,876,007 5,849,236
Patents 82,249 405,836 97,094
Goodwill - - -
Deferred tax assets 575,845 1,072,500 575,845
1,110,404 7,354,343 6,522,175
CURRENT ASSETS
Inventories 1,527,574 3,083,831 2,169,866
Trade and other receivables 10 1,433,758 3,968,541 4,085,775
Tax recoverable 316,151 464,357 210,263
Cash and cash equivalents 11 1,169,733 3,395,045 4,825,759
4,447,216 10,911,774 11,291,663
TOTAL ASSETS 5,557,620 18,266,117 17,813,838
EQUITY AND LIABILITIES
EQUITY
Share capital 12 688,344 688,344 688,344
Reserves (1,219,562) 3,156,840 2,065,617
TOTAL EQUITY ATTRIBUTABLE TO
OWNERS OF THE COMPANY (531,218) 3,845,184 2,753,961
Non-controlling interests - 3,213,527 3,203,016
CAPITAL DEFICIENCY
/ TOTAL EQUITY (531,218) 7,058,711 5,956,977
CURRENT LIABILITIES
Trade and other payables 13 3,474,310 5,781,740 7,126,883
Tax payables - 207,303 253,830
Loans from non-controlling - 473,967 481,626
interests
Bank borrowings 14 2,614,528 4,744,396 3,994,522
6,088,838 11,207,406 11,856,861
TOTAL LIABILITIES 6,088,838 11,207,406 11,856,861
TOTAL EQUITY AND LIABILITIES 5,557,620 18,266,117 17,813,838
NET CURRENT LIABILITIES (1,641,622) (295,632) (565,198)
TOTAL ASSETS (531,218) 7,058,711 5,956,977
LESS CURRENT LIABILITIES
WALCOM GROUP LIMITED
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHSED 30 JUNE 2019
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 2018 688,344 95,298,644 23,852,469 883,998 794,643 3,773,101 (110,571,337) 14,719,862 2,904,435 17,624,297
Comprehensive loss
Loss for the - - - - - - (10,469,044) (10,469,044) 346,519 (10,122,525)
period
Other
comprehensive
income
Exchange
difference on
translation of
financial - - - - (405,634) - - (405,634) (37,427) (443,061)
statements of
overseas
subsidiaries
Total - - - - (405,634) - (10,469,044) (10,874,678) 309,092 (10,565,586)
comprehensive loss
for the period
Lapse of share - - - (68,477) - - 68,477 - - -
option
At 30 June 2018 688,344 95,298,644 23,852,469 815,521 389,009 3,773,101 (120,971,904) 3,845,184 3,213,527 7,058,711
At 1 January 2019 688,344 95,298,644 23,852,469 815,521 (917,976) 3,773,101 (120,756,142) 2,753,961 3,203,016 5,956,977
Comprehensive loss
Loss for the - - - - - - (3,252,648) (3,252,648) (24,319) (3,276,967)
period
Other
comprehensive
income
Exchange
difference on
translation of
financial - - - - 57,490 - - 57,490 117,680 175,170
statements of
overseas
subsidiaries
Total - - - - 57,490 - (3,252,648) (3,195,158) 93,361 (3,101,797)
comprehensive loss
for the period
Disposal of a - - - - (90,021) - - (90,021) (3,296,377) (3,386,398)
subsidiary
At 30 June 2019 688,344 95,298,644 23,852,469 815,521 (950,507) 3,773,101 (124,008,790) (531,218) - (531,218)
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHSED 30 JUNE 2019
Note Unaudited Unaudited
six months six months Audited
ended ended year ended
30 June 20 30 June 201 31 December
19 8 2018
HK$ HK$ HK$
Cash flow from operating activities
Loss before income tax (3,285,345) (9,917,394) (8,565,724)
Amortisation of patents 14,845 47,030 92,447
Depreciation 57,238 109,684 209,083
Foreign exchange loss / (gain), net 5,823 (325,103) (1,665,315)
Gain on disposal of a subsidiary (180,760) - -
Interest received (4,266) (5,157) (23,059)
Interest paid 111,602 127,547 291,675
Provision of impairment of trade - 7,899,419 5,750,768
receivables
Patents written off - - 278,922
Property, plant and equipment written - 15,597 6,752
off
Operating loss before
working capital changes (3,280,863) (2,048,377) (3,624,451)
(Increase) / decrease in inventories (768,432) (176,564) 737,401
Decrease / (increase) in trade and 1,284,322 (108,163) 2,571,802
other receivables
(Decrease) / increase in trade and (2,479,547) 209,879 1,338,290
other payables
Net cash (used in) / generated from (5,244,520) (2,123,225) 1,023,042
operations
Corporate income tax paid (971) (315,466) (562,513)
Interest paid (111,602) (127,547) (291,675)
Net cash (used in) / generated from (5,357,093) (2,566,238) 168,854
operating activities
Cash flow from investing activities
Purchase of property, plant and (23,877) (39,701) (45,038)
equipment
Proceeds from disposal of a 3,109,462 - -
subsidiary
Interest received 4,266 5,157 23,059
Net cash generated from / (used in) 3,089,851 (34,544) (21,979)
investing activities
Cash flow from financing activities
Repayment of bank borrowings (2,500,853) - (2,282,584)
Proceeds from new bank borrowings 1,136,751 2,375,015 3,994,522
Dividend paid to non-controlling - - (264,391)
interests
Decrease in restricted bank balance - 116,377 117,249
Net cash (used in) / generated from (1,364,102) 2,491,392 1,564,796
financing activities
Net (decrease) / increase in cash and (3,631,344) (109,390) 1,711,671
cash equivalents
Cash and cash equivalents at the 4,825,759 3,594,050 3,594,050
beginning of the period / year
Exchange gain on cash and cash (24,682) (89,615) (479,962)
equivalents
Cash and cash equivalents at the end 11 1,169,733 3,395,045 4,825,759
of the period / year
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHSED 30 JUNE 2019
(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 2018 except for those that relate to
new standards and interpretations effective for the first time for periods
beginning on (or after) 1 January 2019, and will be adopted in the 2019 annual
financial statements.
The following new standards and interpretations became effective on 1 January
2019 and have been adopted by the group:
- IFRS 16 Leases
On 1 January 2019, the Group has performed an assessment on the impact of the
adoption of IFRS 16 and concluded that no material financial impact exists, and
therefore no adjustment to the opening balance sheet on 1 January 2019 was
recognised.
The consolidated financial statements have been prepared on a going concern
basis notwithstanding that the Group had incurred a loss for the period of
HK$3,276,967 during the period ended 30 June 2019 and, as of that date, the
Group's current liabilities exceeded its current assets by HK$1,641,622. These
conditions indicate the existence of a material uncertainty which may cast
significant doubt about the Group's ability to continue as a going concern. In
preparing the consolidated financial statements, the directors have carefully
reviewed the Group's cash position as at the balance sheet date and the cash
flow forecast for the next six months. In reviewing the Group's cash flows, the
directors have considered the following factors:
* A stable sales target for 2019 and stable gross profit ratio with the
escalating cost of production
* Continuous close monitoring of outgoing expenses
* Current cash level and committed lines of funding from financial
institutions
* Failure to renew or replace the above mentioned lines of funding from
financial institutions
The directors believe that the Group is able to meet its financial obligations
in full as and when they fall due and consider that the preparation of the
consolidated financial statements on going concern basis is appropriate.
(2) SEGMENT REPORTING
(a) Primary reporting format - Geographical Segment
The group's operations are mainly located in Hong Kong and PRC. The group's
sales revenue by geographical location of customers are analysed as follows:
Unaudited Unaudited
six months six months Audited
ended ended year ended
30 June 2019 30 June 201 31 December
8 2018
HK$ HK$ HK$
PRC 3,500,668 10,216,380 15,994,416
Thailand 4,229,382 8,102,788 17,012,750
Korea 702,000 702,000 1,541,592
Others 281,268 142,272 142,272
8,713,318 19,163,440 34,691,030
(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 2019 30 June 201 31 December
8 2018
HK$ HK$ HK$
PRC 4,574,668 6,687,472 7,181,498
Thailand (see Note 16) - 8,962,265 9,738,811
Hong Kong 900,703 2,210,544 868,917
Others 82,249 405,836 24,612
5,557,620 18,266,117 17,813,838
(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 2019 30 June 2018 31 December
2018
HK$ HK$ HK$
Government subsidy - - 105,096
Gain on disposal of a 180,760 - -
subsidiary
Sundry income 220,089 100,719 102,666
400,849 100,719 207,762
(5) OPERATING LOSS
Operating loss is stated after charging the following items:-
Unaudited Unaudited
six months six months Audited
ended ended year ended
30 June 20 30 June 2018 31 December
19 2018
HK$ HK$ HK$
Amortisation of patents 14,845 47,030 92,447
Auditor's remuneration 183,240 183,808 298,683
Cost of inventories 5,285,773 8,349,076 14,648,394
Depreciation 57,238 75,736 139,287
Exchange losses / (gains), net 5,823 (325,103) (1,665,315)
Provision of impairment of
trade receivables - 7,899,419 5,750,768
Property, plant and equipment - - 6,752
written off
Patents written off - 15,597 278,922
Rental charges under operating
leases 476,930 486,701 1,022,660
in respect of land and
buildings
Staff costs
(including directors'
emoluments)
- wages and salaries 3,441,848 4,853,038 9,321,216
- contributions to retirement 427,552 452,386 893,779
benefits
- other staff benefits 754,861 1,380,641 2,496,701
(6) NET FINANCE EXPENSES
Unaudited Unaudited
six months six months Audited
ended ended year ended
30 June 30 June 31 December
2019 2018 2018
HK$ HK$ HK$
Bank interest income 4,266 5,157 23,059
Interest expense on loans
from non-controlling interest (10,011) (35,592) (64,690)
Interest expense on bank loans (101,591) (91,954) (226,985)
(107,336) (122,389) (268,616)
(7) INCOME TAX REFUND / (EXPENSE)
No provision for Hong Kong Profits Tax has been made (June 2018: HK$nil; 2018:
HK$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 refund provided
for the six months ended 30 June 2019 is HK$8,378 (June 2018: Tax expense
HK$205,131; 2018: Tax expense HK$422,469).
(8) LOSS PER SHARE
The calculation of the basic loss per share for the six months ended 30 June
2019, is based on the loss attributable to ordinary equity shareholders of the
company of HK$3,252,648 (June 2018: HK$10,469,044; 2018: HK$10,253,282) during
the period and the weighted average number of 68,834,388 ordinary shares (June
2018: 68,834,388; 2018: 68,834,388) in issue during the period/year. No diluted
loss per share is to be reported for the period/year.
(9) DIVIDS
No payment of dividend was recommended for the first six months of 2019 (June
2018: HK$nil; 2018: HK$nil).
(10) TRADE AND OTHER RECEIVABLES
Unaudited Unaudited Audited
30 June 20 30 June 2018 31 December
19 2018
HK$ HK$ HK$
Trade receivables 5,786,882 10,628,698 8,333,556
Less: provision for (5,410,936) (7,899,419) (5,432,550)
impairment loss
375,946 2,729,279 2,901,006
Other receivables 184,599 221,943 244,801
Prepayments and deposits 873,213 1,017,319 939,968
1,433,758 3,968,541 4,085,775
(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 2018 31 December 2018
9
HK$ HK$ HK$
At 1 January 5,432,550 508,758 508,758
Impairment loss - 7,899,419 5,750,768
recognised
Written off - (508,758) (508,758)
Exchange difference (21,614) - (318,218)
At 30 June/31 5,410,936 7,899,419 5,432,550
December
The Group applies the IFRS 9 simplified approach to provide for expected credit
losses which uses a lifetime expected loss provision for trade receivables.
The Group does not hold any collateral over these balances.
As at 30 June 2019, the trade receivables of HK$5,474,594 (June 2018: HK$nil;
2018: HK$5,992,011) were pledged as securities for secured bank borrowings
(note 14).
(11) CASH AND CASH EQUIVALENTS
Unaudited Unaudited Audited
30 June 2019 30 June 31 December
2018 2018
HK$ HK$ HK$
Cash at bank and on hand 1,169,733 3,395,045 4,825,759
(12) SHARE CAPITAL
Unaudited Unaudited Audited
30 June 30 June 31 December
2019 2018 2018
HK$ HK$ HK$
Authorised
150,000,000 (June 2018:
150,000,000 and Dec 2018:
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 2018:
68,834,388 and
Dec 2018: 68,834,388) 688,344 688,344 688,344
ordinary
shares of HK$0.01 each
The holders of ordinary shares are entitled to receive dividends as declared
from time to time and are entitled to one vote per share at meetings of the
Company. All ordinary shares rank equally with regard to the Company's
residual assets.
(13) TRADE AND OTHER PAYABLES
Unaudited Unaudited Audited
30 June 2018 30 June 2018 31 December
2018
HK$ HK$ HK$
Trade payables 1,039,560 1,384,916 1,295,639
Contract liabilities 4,567 - 329,062
Other payables and 2,430,183 4,396,824 5,502,182
accrued expenses
3,474,310 5,781,740 7,126,883
All of the trade and other payables are expected to be settled within one year.
(14) BANK BORROWINGS
Unaudited Unaudited Audited
30 June 20 30 June 31 December
19 2018 2018
HK$ HK$ HK$
Current
Bank borrowing, unsecured 1,136,751 4,744,396 1,711,938
Bank borrowings, secured 1,477,777 - 2,282,584
(a) 2,614,528 4,744,396 3,994,522
a. The effective interest rate per annum for bank borrowings at balance sheet
date is at 6.4% (June 2018: 5.7%, 2018: 6.4%) per annum.
(15) RECONCILIATION OF LOSS BEFORE INCOME TAX TO EBITDA
Unaudited Unaudited
six months six months Audited
ended ended year ended
30 June 2019 30 June 2018 31 December
2018
HK$ HK$ HK$
Loss before income tax (3,285,345) (9,917,394) (8,565,724)
Depreciation 57,238 109,684 209,083
Amortisation of patents 14,845 47,030 92,447
Interest income (4,266) (5,157) (23,059)
Interest expenses 111,602 127,546 291,675
Patents written off - 15,597 278,922
Gain on disposal of a subsidiary (180,760) - -
Impairment loss of trade - 7,899,419 5,750,768
receivables
Property, plant and equipment - - 6,752
written off
EBITDA (3,286,686) (1,723,275) (1,959,136)
EBITDA is defined herein as earnings before depreciation, amortisation,
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 amortisation 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) DISPOSAL OF A SUBSIDIARY
On 20 March 2019, the Group disposed of its entire interest in its 55 per cent.
owned subsidiary, Walcom Bio-Chen (Thailand) Company Limited, to
non-controlling interests for a consideration of THB16.5 million (approximately
HK$4.1 million). After deduction of certain amounts due to the purchaser, the
net proceeds received were approximately HK$3 million.
HK$
Net assets of the subsidiary at the date of disposal
were as follows:
Property, plant and equipment 5,559,426
Inventory 1,410,724
Trade and other receivables 1,261,807
Cash and cash equivalents 1,010,182
Trade and other payables (1,417,507)
Loans from non-controlling interests (499,350)
7,325,282
Non-controlling interests (3,296,377)
Exchange reserves (90,021)
3,938,884
Gain on disposal of a subsidiary 180,760
Total consideration 4,119,644
Net cash inflow arising on disposal of a subsidiary:
Cash consideration received 4,119,644
Cash and cash equivalents disposed of (1,010,182)
3,109,462
(17) 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
(END) Dow Jones Newswires
September 18, 2019 05:59 ET (09:59 GMT)
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