Walcom to list on AIM

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Walcom Group Limited

WALCOM TO LIST ON AIM WITH MARKET CAPITALISATION OF £22.718 MILLION.

Walcom Group Limited ("Walcom" or "the Company"), the China based manufacturer
and distributor of "clean" animal feed additives, plans to list on AIM with an
initial market capitalisation of approximately £22.718 million. The Company has
raised £1.572 million via a placing of shares at 35p per share with
institutional and other investors.

Walcom's products are based on Cysteamine, a natural metabolite generated in
animals' bodies which participates in animals' physiological `growth axis' to
stimulate the animals' natural growth hormone level. The Company's feed
additives improve the health of the animals, reduce mortality rates, shorten
the time taken to reduce maturity, increase the protein content in animal food
products, increase egg laying and reduce eggshell breakage and build resistance
to disease. Walcom's feed additives are "non hormonal", "non antibiotic" and
"non gene-altering".

Placing details

  * Placing of 4,491,735 new shares at 35 pence per share to raise £1.572
    million for the Company, before expenses, to provide working capital to
    finance its future growth.
   
  * Unconditional dealings are expected to commence on AIM at 8.00 a.m. 21
    December 2006 (ticker symbol: WALG)
   
  * John East and Partners Limited is acting as Nominated Adviser and King &
    Shaxson Capital Limited is acting as Broker.
   
Francis Chi, Walcom Chief Executive commented:

"We have an extremely strong track record in developing "clean" animal feed
additivesbacked byhighly motivatedresearch andmanagement teams.

"Our listing on AIM will raiseour international profileand will provide us with
theextra working capital needed to increase our market penetration worldwide".

                                                               16 December 2006

Enquiries:

Walcom                                                         [phone]
                                                                            
  Francis Chi, Chief Executive Officer                                      
                                                                            
  Albert Wong, Chief Financial Officer                                      
                                                                            
John East and Partners                                      [phone]
                                                                            
  Jeffrey Coburn/Bidhi Bhoma                                                
                                                                            
King & Shaxon Capital                                      + 44 20 7426 5986
                                                                            
  Nick Bealer                                                               

Disclaimer

This announcement relating to the Company does not constitute or form part of,
and should not be construed as an offer or invitation to sell or issue or any
solicitation of any offer to purchase or subscribe for any securities in the
Company in any jurisdiction. Neither this announcement, nor any part of it nor
anything contained or referred to in it, nor the fact of its distribution,
should form the basis of or be relied on in any connection with or act as an
inducement in relation to a decision to purchase or subscribe for or enter into
any contract or make and other commitment whatsoever in relation to any such
securities. This announcement does not constitute a recommendation regarding
the securities of the Company.

The information contained in this announcement is not for publication or
distribution to persons in the United States of America, its territories or
possessions or to any US person or for the account of a US Person (within the
meaning of Regulation S under the US securities Act of 1933, as amended).
Neither this announcement nor any copy of it may be taken or transmitted to
Australia, Canada or Japan or the Republic of South Africa or to Canadian
persons or to any Securities analyst or other person in any of those
jurisdictions. Any failure to comply with this restriction may constitute a
violation of United States, Australian, Canadian, or South African or Japanese
securities law. The distribution of this Presentation in any other
jurisdictions may be restricted by law and persons into whose possession this
Presentation come should inform themselves about, and observe any such
restrictions. The securities referred to are not being registered under the US
Securities Act of 1933, as amended, or under the applicable securities laws of
Canada, Australia, South Africa or Japan, and may not be offered or sold within
Canada, Australia, South Africa or Japan to any national, resident or citizen
of Canada, Australia, South Africa or Japan.

Forward-looking statements are based on current information that is, by its
nature, subject to rapid and even abrupt changes. Due to risks and
uncertainties associated with the Company's business, actual results could
differ materially from those projected or implied by management's
forward-looking statements. These risks and uncertainties include, but are not
limited to: changes and shifts in customer demand away from the Company's
products to competitor products; the Company's ability to maintain and
establish strategic relationships; the effects of competition; the risks
inherent in the development and delivery of complex technologies; the Company's
ability to attract, retain and motivate qualified personnel; the emergence of
new markets for the Company's products and services; the Company's ability to
compete in those markets based on timeliness and cost and market demand. In
addition, new product introductions are subject to the risks and uncertainties
that typically accompany development and delivery of complex products to the
marketplace, including product development delays and defects. In light of
these risks, uncertainties and assumptions, the events described in the
forward-looking statements in this document may not occur.

Information on Walcom

History and background

The Company is actively engaged in the research, development,
commercialisation, production and marketing of animal feed additives. Walcom's
feed additives improve the health of the animals, reduce mortality rates,
shorten the time taken to reach maturity, increase the protein content in
animal food products, increase egg laying and reduce eggshell breakage and
build resistance to disease.

The Company has developed technology which stimulates an animal's natural
physiological systems, without the undesirable side effects commonly associated
with hormones, Beta-agonists and antibiotics. Walcom's directors believe that
the Company is the only animal science company to have developed a "non
hormonal", "non antibiotic", "non gene-altering" physiological regulation
animal feed additive and the only animal science company to have commercially
launched a full range of products in that sector. The Company is headquartered
in Hong Kong with a research and manufacturing facility in Shanghai.

Based on the discovery of the positive effect of Cysteamine, a natural
metabolite existing in plants and animals, on animal health and productivity,
the Company originally directed its research efforts towards stabilising
Cysteamine, a naturally unstable compound, for commercial use in animal feed
products. The Company has successfully developed Walstrong, a patented and
proprietary Cysteamine compound, which retains the essential effects of
Cysteamine in a way which is stable when subjected to prolonged storage and
industrial processing.

Walstrong, which is not a hormone, assists an animal to increase secretion of
its own growth ormone (`GH'), to enhance growth and general well-being of
animals. GH injection is a popular treatment in the US. However, as it is
administered by injection it also raises concerns about possibly harmful
residues which might be left behind by an externally introduced GH. Walstrong
is an attractive alternative in that it is in powder/granule form and can be
easily administered as a feed additive.

Walcom's business

Product Range

The Company has successfully produced a series of animal health and
productivity enhancing products. At present, it has commercialised products
which can be used to enhance productivity in swine (`Porcinin') and broilers
(`Avianin'), increase the yield and quality of milk (`Lactonin') and promote
higher laying and lower egg shell breakage ratios (`Eggronin').

The Company develops its Walstrong compound into feed additive and feed
additive premix. Feed additive is the basic raw product to which buyers are
able to add other vitamins before mixing with their stockfeeds (i.e. corn).
Feed additive premix includes a dosage of vitamins which can be mixed directly
into stockfeeds. Feed additive premix is more attractive to smaller farmers who
do not have the knowledge or resources to add other products. Feed additive is
attractive to feed integrators who prefer to mix all their own raw ingredients.

Walcom's directors believe that the Company's products have a positive effect
on the cost of animal husbandry. Based on trial evidence, Walcom's directors
have found that Porcinin and Avianin increase the average weight gain of swine
and broilers by up to 14.3 per cent. and 17.8 per cent. respectively over a
trial period of 54 and 43 days, respectively. Further trials have demonstrated
that Porcinin can increase the lean meat percentage of swine by up to 4.6 per
cent., Avianin can increase the breast yield of broilers by up to 6.3 per
cent., Eggronin can improve the egg laying rate by up to 11.1 per cent. and
reduce breakage by up to 49 per cent. and Lactonin can improve milk production
by up to 4.9 per cent. whilst increasing the protein content of milk by up to
3.9 per cent. Two new products, Aquanin and Bovinin, are not currently being
marketed.

Walcom received approval from the PRC Ministry of Agriculture to manufacture
feed additives in 2002.

The Company has also received approval for its core Walstrong technology from
the PRC Ministry of Agriculture, for production and usage in the livestock
industry, and the product series based on this compound. Any new animal product
derived from the approved Walstrong compound needs only to be registered with
the local feed authorities in order to be granted PRC product approval.

Sales of Avianin, Eggronin and Porcinin commenced in the PRC and, in the
Philippines in 2002. Sales of Walstrong branded products commenced in Malaysia
in 2002, in Taiwan in 2003, in Korea in 2004 and in Thailand in 2005.

Avian Influenza

The avian influenza threat is present and serious. Different countries are
adopting different methods to stop it spreading from wild birds to farm poultry
and thence to humans. The two most common are the mass slaughter of farm
poultry on any occurrence of the disease in the flock and vaccination of farm
poultry with H5N1 vaccine. The latter course is the one adopted by the PRC.

Walcom has two products which solve part of the problem. They are the
`Walstrong Specific Vaccine Adjuvent', which increases the H5N1 antibody titer
and is effective against the H5N1 virus, and the `Walstrong Immunity Enhancer'
which is added to poultry feed and enhances the bird's immunity to the disease.

Research and Development

The Company has adopted a strict set of guidelines in its R&D department; no
research is undertaken into exogenous hormones and antibiotics; all research is
focused on physiological related areas in order to maintain its leading
position in that field; and any research undertaken is designed to give rise to
new intellectual property. All initial research is undertaken by the Company's
internal R&D team to ensure that Walcom is entitled to all intellectual
property rights. Once a patent application has been submitted, the Company
engages universities and other institutions to perform further testing.

New Products

There are several potentially rewarding R&D projects in the pipeline. These
include new formulations of Walstrong tailored for specific feed markets to
enable the Company to diversify its product range. The Company has recently
been awarded a UK patent relating to the development of antibodies to pig fat
tissues to increase the percentage of lean meat. This is the first
non-Cysteamine based patent to be awarded to Walcom.

The Company has also developed `Bovinin', a Cysteamine based growth promotant
for beef cows at the finishing stage. Tests show that it can increase daily
weight gain by as much as 15.9 per cent. This product has not been launched in
the PRC because the local price of beef is only slightly higher than that of
pork and therefore the use of Bovinin cannot demonstrate a high economic
benefit. In due course Walcom's directors expect to launch Bovinin in Europe
and Japan where beef fetches much higher prices than in the PRC.

`Aquanin' has been developed as a Cysteamine based growth promotant in the
aquaculture market and tests have shown that it can increase the weight gain of
eel and grouper by up to 77.9 per cent. and 107.9 per cent., respectively. The
Company has also developed a shrimp growth promotant which in trials increased
the weight gain of shrimp by up to 11.9 per cent.

Marketing strategy

The Company's strategy is to focus its marketing efforts principally in the PRC
which, with a population of approximately 1.3-1.4 billion people, is believed
to account for one third of the world's total output of livestock products. To
serve this market, Walcom has employed its own sales force, as well as engaging
independent sales agents, to conduct direct sales of Walstrong products to
large-scale integrators, feed manufacturers and large-scale farmers.

In Asia, outside the PRC, Walcom's directors have entered into exclusive
distribution or agency arrangements with local and/or regional distributors.
Sales operations have been established in Korea, Malaysia, the Philippines,
Taiwan, and Thailand where the Company's products are marketed through local
feed distributors. The Company also intends to expand its distribution into
Brazil.

Intellectual Property

The Company has applied for some 96 patents across six technology areas. Those
areas comprise (i) its core Cysteamine stabilised technology, as well as
inventions specifically relevant to (ii) poultry feed; (iii) dairy cow feed and
(iv)fish feed. The other areas are (v) antibodies to adipose tissues (as
referred to in the section headed "New Products" above) and (vi) compositions
for enhancing immunity to disease.

Patent applications have been made throughout the World including in the
Company's target Asian markets, including the PRC, Taiwan, Korea, Malaysia, the
Philippines and Thailand. They have also been filed in countries in, amongst
other places, Europe, North and South America and Australasia.

To date, Walcom has been granted 11 patents in respect of:

  * its core Cysteamine technology in the PRC, Hong Kong, North Korea and New
    Zealand;
   
  * poultry feed in the UK, North Korea, Taiwan and Hong Kong;
   
  * dairy cow feed in New Zealand and the UK; and
   
  * antibodies to adipose tissues in the UK.
   
Walcom's directors propose to continue the Company's policy of pursuing wide
patent coverage for the Company's new inventions, in particular, where Walcom's
directors believe that there will be significant potential demand for products
that may result from those inventions.

To accompany its patented technology, the Company has registered a number of
trademarks, in the markets to which it sells and proposes to sell, including
that of Walstrong, which mark is associated with its core Cysteamine-stabilised
compound.

Competition

Walcom's directors are aware of only one other company presently producing
animal health and productivity solutions based on compounds similar to
Walstrong, however, there are many companies involved in the production,
development and research into animal health and productivity solutions.

Current trading

Walcom's directors believe that the Company is now enjoying the benefits of its
investment in R&D and personnel over the past eight years. There has been
increased awareness of the Company's products which has led to a considerable
upturn in the number of enquiries being received and a consequential
significant increase in the Company's sales. Initial orders have been received
from one of the world's largest feed groups to supply five of its feed mills in
the PRC and one of its mills in Thailand, which is expected to lead to further
substantial orders in the future. Sales for the six months to 30 June 2006
amounted to HK$4.832 million compared to HK$5.046 million for the whole of the
previous year. Walcom's directors believe that sales will continue to increase
and they look forward to the future with confidence.

Directors and Senior Management

Directors

Eddie Kin Man Chan, aged 45, (Non-Executive Chairman) is a practising
accountant and a graduate of the Hong Kong Polytechnic University. In 1989, Mr
Chan founded Chan, Wong, Chung & Co., a firm of certified public accountants.
He is a Vice-President of the China Tax Society and a Fellow of The Association
of Chartered Certified Accountants and a Fellow of the Hong Kong Institute of
Certified Public Accountants. Eddie Chan originally joined the Company in 2002
as a part-time finance director.

Francis Chi, aged 45, (Chief Executive Officer) founded the Company and has
played a leading role in developing the Company's direction in pursuit of its
business and operational objectives. He is responsible for business development
and the commercial activities of the Company, including the manufacturing and
marketing of all product applications. He holds a Bachelor of Arts degree in
Business Administration from the University of Seattle, in the USA. Mr Chi has
over 22 years of entrepreneurship experience, of which he has spent 16 years in
the fields of organic and inorganic chemicals, fertilizers, pharmaceuticals,
bio-chemicals and animal feeds.

Yong Chian Tan, aged 43, (Chief Executive Officer in the PRC) holds a Bachelor
of Science degree in Civil Engineering from the University of Seattle, in the
USA. Prior to joining the Company in 2001, he worked for the Walsin Lihwa Group
which is listed in Taiwan and has diversified operations in power,
telecommunications, cable and wire, steel, electronic components and
semiconductors. His most recent roles with the Walsin Lihwa Group were as
President of HannHann Corporation and DongGuang Hannstar Electronics Company
Limited where he was responsible for establishing operations in the PRC. He has
had over 10 years senior experience in project management, and the operation
and management of new businesses in the PRC and Taiwan.

Albert Siu Fai Wong, aged 46, (Chief Financial Officer) has over 20 years
financial and accounting experience. He is a Fellow of The Association of
Chartered Certified Accountants and a member of the Hong Kong Institute of
Certified Public Accountants. He has been group chief accountant of a business
conglomerate and then finance director of a venture capital fund. Prior to
joining Walcom in 2005 he was a consultant, assisting clients to prepare for
listing on the HKSE. He is currently an independent non-executive director of
TC Interconnect Holdings Limited, a company listed on the HKSE.

Frankie Yuet Leung Wong, aged 57, (Non-Executive Director) holds a Master of
Arts degree from the University of Lancaster and a Bachelor of Science degree
in Economics from the London School of Economics and Political Science. Mr Wong
joined the Shui On group of companies in 1981 and is the Managing Director of
Shui On Holdings Limited, a position he has held since 1991. He is also Chief
Executive Officer of Shui On Construction and Materials Limited, a company
listed on the HKSE. Prior to his service in the Shui On group of companies, he
had worked for a number of years for several major international banks in Hong
Kong. He was appointed a Non-Executive Director in 2003.

Royston Frederick Drucker, aged 53, (Non-Executive Director) graduated in
Natural Sciences and was awarded a MA by Cambridge University. He qualified
there as a physician being awarded MB, BChir, MRCS and LRCP. He is, inter alia,
a Fellow of the Faculty of Pharmaceutical Medicine, a Founder and Honorary
Member of the Association for Human Pharmacology in the Pharmaceutical
Industry, a Fellow of the Royal Society of Medicine, a member of the British
Association of Pharmaceutical Physicians and a member of the Securities &
Investment Institute, London. Following an eight year clinical career, he
joined Sterling-Winthrop's research and development division, becoming a senior
departmental manager of its department of biochemistry, Alnwick UK with
responsibilities for clinical pharmacology, drug metabolism and bioanalysis in
Europe. In 1985 he joined the Pharmaceutical Research Laboratories of the
Upjohn Company and was appointed European head of Clinical Pharmacology. He was
also appointed an Honorary Research Fellow in Clinical Pharmacology at Guy's
Hospital, London. He then became Executive Director and subsequently Corporate
Vice President of drug development. Since 1996 he has acted as a consultant to
life science companies worldwide through Technomark Consultancy Services
Limited. He was appointed a Non-Executive Director in 2006.

Timothy Robert Nelson, aged 33, (Non-Executive Director) has an MBA from
Business School, Lausanne. He has worked in the insurance industry in Australia
and in corporate finance in South Africa. He is chief executive of the Vuna
Group, a London based finance and project development company. He was a founder
director of Madagascar Oil Limited, an oil exploration company, and a cofounder
of Oxford Pharma Limited, a drug discovery and development company associated
with Department of Pharmacology of Oxford University. He was appointed a
Non-Executive Director in 2006.

Senior Management

Dr Jiang Shulin, aged 50, (Group Chief Marketing Officer) has a Bachelor's
degree in Animal Husbandry, a Master's degree in Animal Nutrition, an MBA in
Managerial Science and Engineering and a Doctorate in Western Economy and Human
Resources Management. A former visiting professor at the food faculty of
Jiangnan University and member of the National Feed Industry Technical
Standards Committee of the PRC he has also been a researcher in Animal
Nutrition at the Research Institute of Sichuan University (PRC) and lead of the
aquatic feed research project of the Sichuan Science and Technical Committee.
Apart from his academic posts he has held managerial and sales roles with
several PRC companies. He joined the Company in 2004.

Wei Chi, aged 61, (General Manager of Shanghai Walcom) graduated with a
Bachelor of Science degree in Mechanical Engineering from Shanghai University.
He has over 30 years of factory management experience, of which over 10 years
was spent in setting up manufacturing plants and establishing facilities in
Shanghai, Wuhan, Nanjing and Guangdong for Walsin (China) Investment Holding
Company Limited. He is responsible for manufacturing operations and factory
design. He joined the Company in 2001.

Professor Chen Jie, aged 68, (Chief Research Officer) is a director of Shanghai
Walcom. He is a Professor of Animal Physiology at Nanjing Agricultural
University and a doctoral supervisor teaching courses for post-graduate
students. He is also a Director of the Council of Teaching-Guidance in
Veterinary Medicine, Degree Council of State Department of the PRC and a
visiting scholar to the farming graduate school of the Swiss Federal Research
Centre in Switzerland. He has over 42 years experience in the study of poultry
nutrition physiology. He is head of new product research and development.
Professor Chen joined the Company in 2001.

Wen Qin Tang, aged 65, (Chief Engineer) is a director of Shanghai Walcom. He
graduated from Tsinghua University, with a bachelor's degree in chemistry. In
1967, he joined the PRC National Defence Ministry where he was a research
officer working on the transformation of nuclear materials to industrial use.
He then joined Wuxi Chemical Industrial Research and Design Institute, as
senior engineer, later as deputy director, where he focused on chemical
research for the electronic industry. He also spent six years as deputy head of
Wuxi City Council Economic Research Centre. He joined the Company in 2001 and
is primarily responsible for production and technology division.

Professor Lu Tian Shui, aged 70, (Senior Researcher) is a director of Shanghai
Walcom and has over 40 years experience in animal physiology and feed
nutrition. He is a former Professor of Nanjing Agricultural University, where
he was engaged in teaching and research in animal physiology. He was also a
visiting scientist at Cornell University in the USA. He is Secretary General of
Shanghai Branch of the Animal Physiology and Biochemistry Academy of Farming
and Veterinary Medicine of China. Due to his expertise in the animal husbandry
industry and hands-on experience in the animal nutrition, feed, veterinary
practice and farming industries he is involved in the Company's research into
animal growth. Professor Lu joined the Company in 2001.

Xu Jinxian, aged 32, (Product Development) has bachelor's and master's degrees
in agronomy and is currently a doctoral student attached to Nanjing
Agricultural University. He joined the Company in 2001 and is a member of the
research and development team.

Consultants

Professor Shen Zan Ming, aged 56, is a senior research officer to the Company
and is an Associate Professor at Nanjing Agricultural University where she
teaches courses for undergraduate and postgraduate students. She has a
doctorate in agriculture and was a visiting scholar at Bern University,
Switzerland, in 2001 and was one of the co-researchers in the Research
Institute of Biology for Farm Animals in Germany for almost four years.
Professor Shen specialises in nutritional physiology and biological regulation
for cows and became a consultant to the Company in 2001.

Professor Zhao Ru Qian, aged 42, is a senior research officer to the Company.
She graduated with a Ph.D in Animal Physiology and Biochemistry from Nanjing
Agricultural University where she remains a Professor and head of the
laboratory. Professor Zhao was a visiting scientist at the Federal Agricultural
Research Center in Cella, Germany in 1994 and 1998, a research officer at
Prince Henry's Institute of Medical Research in Australia in 2000 and a Tang
scholar and visiting professor at Cornell University, USA, in 2005. She
specialises in Growth Axis studies in animals and became a consultant to the
Company in 2001.

Employees Apart from Walcom's directors, senior management and consultants,
Walcom employs approximately 73 people, including 8 employees in Hong Kong and
65 employees in the PRC. It is an equal opportunities employer and protects and
respects the statutory rights of all its employees.

Details of and reasons for the placing and use of the proceeds

Walcom's directors believe that the placing and Admission will expand the
Company's capital base and enhance its profile, thereby enabling the Company to
attract high calibre research scientists and other professionals, to increase
its sales and marketing division and to forge strategic alliances and/or
partnerships for future growth and development.

Based on the placing price of 35 pence per share, the net proceeds from the
placing, after deducting related expenses to be borne by the Company, are
estimated to amount to approximately £1.01 million. It is the present intention
of Walcom's directors to apply the net proceeds for general working capital
purposes.

Dividend Policy

The Board's objective is to maximize the capital value of the Company and it is
not their present intention to recommend the payment of dividends, bearing in
mind the financial resources which will be required for the development of the
Company.