Walcom 'severely constrained' after China economic slowdown

Walcom Group on Wednesday reported that its working capital position is "severely constrained" after revenues have been hampered by slowdown in the Chinese economy and failure to receive payments from its largest customer.

The company stated that trading in the first two months of the financial year has been "significantly below budget" as the Chinese economy slowdown and the continuing impact of African swine fever affected Walcom’s revenues.

Meanwhile, the AIM traded company has received RM0.2m (approximately £22,573) in relation to the default on payments owed by its largest customer, having still not received payment of the outstanding amount of an aggregate RMB4.76m (approximately £537,233) and therefore is still pursuing its legal proceedings.

Consequently, Walcom said its working capital position is "severely constrained" to the extent that it may be unable to meet its liabilities as they fall due by the end of March 2019.

The company is resorting to cost savings, negotiating with suppliers on extended payment schedules and other actions in order to generate additional cash resources.

"The actions outlined above are subject to a number of variables which are not wholly within the Company’s control. In the event that the Company is unable to address its working capital shortfall, the Company may be unable to continue its operations and may be forced into liquidation with a consequential diminution in value to shareholders," said a statement from Walcom.

Walcom Group's shares were unchanged at 0.47p at 1239 GMT.