Cashflow issues led to missed opportunities for licensing firm

A LACK of working capital has hampered trading at licensed goods trading business Marlwood.

The company, which owns Stockport-based businesses The Licence Factory, said that it has orders “of a value significant to the current turnover level” but needs funding to fulfil them.

Marlwood said trading during the three months to September 30 had been “difficult” and that it finished the period with just £71,000 in its coffers.

However, it has since received a further £100,000 of funds from lender GE Capital and said that it still expected to receive an equity investment of £1m that it had hoped to receive earlier this year but added that the timing of the payment was “uncertain”.

Marlwood floated on the Cayman Islands Stock Exchange last year in a deal which allowed the company to raise £1.2m and valued it at £6.3m. Since then, it has sold its stock clearance business BAI International back to its founder Martin Abramson in a deal worth £2.5m.

The company secures deals with brand owners and then sources products to sell to the retail trade. Earlier this year, the firm said that it was in talks with brands including Pineapple, Kangol, Fila, Lipsy and Ecko.

It said that margins had been reduced as a result of the higher costs of raw materials and increased wages in China, but added that it had managed to cut its own overheads. It also expects to be able to achieve its £5m turnover target for the year and has grown its forward order book to £1.7m (2009: £900,000).

“Although 2010 has been a difficult year the reaction from current and new customers to our products and brands is very positive,” the company said.

“Sell-through within UK retail has been exceptionally good and could have generated further revenues had the group had stocks available to sell. 

“With the sales order book building more quickly in the latter part of 2010 the future looks positive.”