Marlwood Plc
LSE : MARL KY

October 20, 2010 09:00 ET

Interim results for the six months ended 30 June 2010

20 October 2010

                                             MARLWOOD PLC

                                      ("Marlwood" or "the Group")

          UNAUDITED CONSOLIDATED INTERIM RESULTS FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2010


Marlwood  PLC  (CSX:  MARL  KY), a group specialising in the licensed goods  business,  is  pleased  to
announce its unaudited consolidated interim results for the six month period ended 30 June 2010.

Key features:

*       Revenue  for  the period GBP2,418,977 - continuing operations GBP1,669,591,  discontinuing
        operations GBP749,386.
        
*       Net profit for the period GBP1,303,153;
        
        -       operating loss from continuing operations GBP813,858
        -       profit on disposal of discontinued operations GBP2,050,109
        -       operating profit from discounted operations GBP66,902
        
*       Profit per share GBP0.10.
        
        -       loss on share from continuing operations GBP0.08
        -       profit on share from discontinued operations GBP0.01
        -       profit on share from disposal of discontinued operations GBP0.17
        
*       Successful disposal of Clearance division during the period.


Current Trading Position

The Group continues to trade at a level which is much lower than had previously been anticipated due to
a  lack  of working capital.   There is a requirement for the Group to raise further funds in order  to
improve trading conditions during the last quarter of 2010 and fund new business development with major
UK  retailers.   Discussions with current lenders continue and proposals for an improved asset  finance
package are expected in late October.

The  directors  continue  to manage the Group as effectively as possible given  the  current  financial
position.

CHAIRMAN'S STATEMENT

On  behalf  of the Board of Directors of Marlwood plc, I have pleasure in presenting an update  on  the
Group's activities for the six month period ended 30 June 2010.

Marlwood  PLC  ("the  Company") was established as an investment holding vehicle  for  businesses  that
operate in the licensing or branded goods market segments.

The  Company  is  the  100%  shareholder of four subsidiary undertakings, The Licence  Factory  Limited
(formerley New BAI International Limited), The New Licence Factory Limited, IdealDeal Limited  and  The
Licence Factory (Hong Kong) Limited.

On  24  June  2010  the Group completed the disposal of the clearance division of The  Licence  Factory
Limited  and  the trading operations of the Group now comprise the sourcing, marketing and distribution
of licensed branded goods.

On 9 March 2010 IdealDeal Limited (a dormant subsidiary undertaking) was dissolved.

RESULTS

The results for the six month period ending 30 June 2010 report the following:

                           Discontinued             Continued              Sale of                Total
                             operations            operations         discontinued
                                                                        operations
                                    GBP                   GBP                  GBP                  GBP
                                                                                                       
Revenues                        749,386             1,669,591                    -            2,418,977

Profit/(loss)                    66,902              (813,858)           2,050,109            1,303,153
before tax

Earnings/(loss)                 GBP0.01              (GBP0.08)             GBP0.17              GBP0.10
per share

The  profit  before tax is primarily attributable to the profit generated on the sale of the  clearance
business as approved by the shareholders on 24 June 2010.

The  board  is  disappointed  with the overall result mainly as Q1 was in line  with  expectations  and
indications  were  that the Q1 trend should continue.  The net profit shortfall  against  the  original
forecasts  for the period as disclosed within the CSX Listing Document dated 16 September 2009  in  Q2,
and  therefore  the  first half, was mainly the result of a number of events negatively  affecting  the
gross margin.

*       UK  retailers  placing orders later than usual leading to air freighting of goods  to  meet  in
        take dates
*       The strengthening of the US Dollar
*       Increases in raw material costs in China
*       A lack of labour in China leading to higher cost of goods
*       Shortage in working capital leading to discounting of goods for sale

Overall  the  margin  shortfall  was 17%. (GBP366,949) against that forecast  within  the  CSX  Listing
Document dated 16 September 2009.

Working  capital  has  been  restricted during Q2 due to delays in  agreeing  a  new  business  finance
agreement with current lenders and the lack of new equity investment of GBP1m originally forecast to be
introduced  in March 2010 (as disclosed within the CSX Listing Document dated 16 September 2009).   The
lack  of cash resources has meant a reduction in the amount of stock purchased for resale and therefore
a reduction in revenues generated from sales of stocks from our UK warehouse to smaller UK retailers.

Dividend

The board is not recommending a dividend as all funds are required for the development of the business.

Events during the first half of 2010

Product development and distribution within our core competency of fashion accessories continues  under
the  brands  of  Elle, Head, RAC, Morgan, Cosmopolitan with range development mainly in cosmetic  bags,
luggage and umbrellas with styling to meet ever changing fashion trends.

The  development of new products under new Brands continues to progress well ready for  launch  at  the
businesses main trade fair at the NEC in September.  New brands being launched are:

*       Bang on the Door
*       Marilyn Monroe
*       Gotcha

As  highlighted in the disposal circular developments with other brands continued to be explored by the
Group.   We  are  pleased to report that license agreements have been reached with RAC,  Pineapple  and
Lipsy  with product being available across a wide number of categories including cosmetic bags, luggage
and  gift  products all available for sale in quarter one 2011.  Discussions continue with  Kangol  and
Fila with no agreements being reached so far.

The  licence  with Alan Titchmarsh was terminated due to lower than expected revenues as  a  result  of
Titchmarsh's  association  with  B & Q which has led to a fall in desire  to  list  products  by  other
retailers.

Completion  of the sale of the clearance business to Brennan Atkinson was confirmed on 24th June  2010.
The focus of the trading entities will now be purely licensed business.

Events since the Balance sheet Date

On  the  2nd of July the  main trading entity of the Group, New BAI International Limited, changed  its
name to The Licence Factory Limited.

Future Outlook

Difficult conditions discussed above are expected to continue throughout the remainder of 2010  despite
efforts by the Board to improve funding available to the business.  The current economic climate  seems
to  make  it impossible to attract additional finance outside of the current facilities.  It is however
likely  that current lenders may look to increase the level of funding available to the business during
Q4  however this will be too late to have any serious positive impact on 2010 revenues.  Following  the
initial  placing in September 2009 there was the potential for further investment in the sum  of  GBP1m
which was indicated would be available to the Group in or around March 2010.  This investment has  been
delayed  due entirely to matters outside the control of the Group.  There are positive signs  that  the
funds  will  be  invested  but there is no certainty as to timing or indeed that  the  investment  will
complete.

The  board  is  delighted  to report the success of new business development  with  Tesco  Stores  plc.
Initial  orders  for  luggage and back to school products under the Elle  and  Head  Brands  have  been
received with deliveries scheduled to start from November 2010 and continue through 2011, the board  is
confident  that  business generated for 2011 will be material relative to the current turnover  of  the
business.   New  and  additional business has also been generated with Avon which  will  add  to  Brand
exposure and revenues from Q4.

During  Q2 cost savings have been implemented which will impact the business from Q3 through  to  2011.
The  result of these cost savings and the revenues expected to be generated from the order book  as  at
31st  August should provide the business with the foundation for growth in 2011 providing the  business
finance facilities with the current lender are improved in Q4.

With  the  current  level of funding the business is not capable of producing  the  level  of  revenues
previously  forecast for 2010 of GBP8.6m, based on the revenues generated to date,  the  value  of  the
sales  order book and current weekly order intake rate the Board is confident of achieving revenues  in
excess  of  GBP5m  however this is dependant on current lenders improve their funding levels  early  in
quarter  four.  The cost base of the business has been reduced in line with the expected  reduction  in
turnover.

As  a  result of the aforementioned cost saving measures the directors are of the opinion that provided
the additional lending is obtained the company can continue to trade and settle all its liabilities  as
and  when  they  fall due. However for future investment or development, or if trade declines  for  any
reason the company, would need to attract additional equity investment.

The  directors  continue  to  identify  opportunities to enhance  the  product  offering  with  minimum
investment whilst fulfilling the ever demanding needs of the retailer.

Management and Employees

The  Board  would  like  to thank the management and employees who continue to react  positively  in  a
challenging and changing environment.


V Bloom

Chairman

20 October 2010



        
CONSOLIDATED INCOME STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2010
        

                                                   Note                          Audited period from 16
                                                                Unaudited six           September to 31
                                                              months ended 30             December 2009
                                                                    June 2010                       GBP
                                                                           GBP
                                                                                
Continuing operations                                                           
Revenue                                              4               1,669,591                2,016,972
Cost of Sales                                                       (1,192,189)              (1,414,957)
                                                                     _________                _________

Gross Profit                                         4                 477,402                  602,015
                                                                                
Distribution costs                                                     (35,988)                 (62,492)
Administrative expenses                                             (1,185,309)                (940,988)
                                                                     _________                _________

Operating loss - continuing operations               4                (743,895)                (401,465)
                                                                                
Profit on disposal of discontinued operations        6               2,050,109                        -
                                                                     _________                _________

                                                                     1,306,214                 (401,465)
                                                                                
Finance cost                                                           (69,973)                 (32,294)
Finance income                                                              10                    2,822
                                                                     _________                _________

Profit/(loss) before taxation                                        1,236,251                 (430,937)
                                                                                
Taxation                                                              (326,351)                   3,637
                                                                     _________                _________

Profit/(loss) for the period                         6                 909,900                 (427,300)
Profit for the year from discontinued                                           
operations                                                              66,902                  474,418
                                                                     _________                _________

                                                                       976,802                   47,118
                                                                     =========                =========
                                                                                
Earnings Per Share (Pence) 
                                                     
- Basic earnings per share                           9                   0.100                    0.010
- Diluted earnings per share                         9                   0.100                    0.010


The consolidated income statement should be read in conjunction with the accompanying notes.


CONSOLIDATED BALANCE SHEET AS AT 30 JUNE 2010

                                                                     Unaudited six       Audited period
                                                                    months ended 30    ended 31 December
                                                            Note         June 2010                 2009
                                                                                GBP                 GBP
ASSETS                                                                               
Non current assets                                                                   
Property, plant and equipment                                               270,425             303,058
Goodwill                                                                  4,877,470           4,877,470
Intangible assets                                                         1,850,000           1,850,000
Deferred income tax assets                                                   39,387              39,387
                                                                          _________           _________
 
                                                                          7,037,282           7,069,915
                                                                                     
Current assets                                                                       
Inventories                                                                 250,397             359,105
Trade and other receivables                                               1,231,275           2,722,664
Cash and cash equivalents                                    10              70,118              50,559
                                                                          _________           _________

                                                                          1,551,790           3,132,239
Non current assets and disposal groups held for sale                              -             789,576
                                                                          _________          __________

Total Assets                                                              8,589,072          10,991,819
                                                                          =========          ==========
Current liabilities                                                                  
Trade and other payables                                                  1,975,560           2,368,045
Interest bearing loans and borrowings                                     1,006,194           1,362,879
Income tax payable                                                          326,351                   -        
                                                                          _________           _________

                                                                          3,308,105           3,730,924
                                                                                     
Non current liabilities                                                              
Interest bearing loans and borrowings                                     1,112,500           4,069,230
Provisions for other liabilities and charges                                167,386             167,386
Deferred tax liabilities                                                     35,750              35,750
                                                                          _________           _________

                                                                          1,315,636           4,272,366
                                                                          _________           _________

Total liabilities                                                         4,623,741           8,003,290
                                                                                     
Equity                                                                               
Called up share capital                                      11             970,900             970,900
Share premium                                                11           7,143,909           7,143,909
Reverse acquisition reserve                                              (5,413,008)         (5,413,008)
Retained earnings                                                         1,263,530             286,728
                                                                          _________           _________

Total equity                                                              3,965,331           2,988,529
                                                                          _________          __________

Total equity and liabilities                                              8,589,072          10,991,819
                                                                          =========          ==========
                                                                                                       

The consolidated balance sheet statement should be read in conjunction with the accompanying notes.
        


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30 JUNE 2010

For the period from 19 August 2008 to 31 December 2009

                                   Share         Share          Reverse       Retained            Total
                                 Capital       premium      acquisition       Earnings                 
                                                                reserve                                
                                     GBP           GBP              GBP            GBP              GBP
                                                                                         
Balance at 19 August 2008                                                                
                                       2             -               -               -                2
                                                                                         
Issue of share capital           970,898     7,143,909               -               -        8,114,807
Profit for the period                  -             -               -           7,118           47,118
Reverse acquisition                    -             -      (5,413,008)        239,756        5,173,252
Foreign exchange                                                                         
movements                              -             -               -            (146)            (146)
                                ________     _________       _________        ________        _________
                                                                      
Balance at 30 June 2010          970,900     7,143,909      (5,413,008)        286,728        2,988,529
                                ========     =========       =========        ========        =========
                                                                                           
For the six months ended 30 June 2010

                                   Share         Share          Reverse       Retained            Total
                                 Capital       premium      acquisition       Earnings                 
                                                                reserve                                
                                     GBP           GBP              GBP            GBP              GBP
                                                                                         
Balance at 1 January 2010                                                                
                                 970,900     7,143,909       (5,413,008)        286,728        2,988,529
                                                                                         
Issue of share capital                 -             -                -               -                -
Profit for the period                  -             -                -         976,802          976,802
                                ________     _________        _________       _________        _________

Balance at 30 June 2010          970,900     7,143,909       (5,413,008)      1,263,530        3,965,331
                                ________     _________        _________       _________        _________
                                                                                           

Share capital is the amount subscribed for shares at nominal value.

Share  premium represents the excess of the amount subscribed for share capital over the nominal  value
of the respective shares net of directly attributable share issue expenses.

Retained earnings represent the cumulative earnings of the company attributable to equity shareholders.

The  consolidated  statement of changes in equity should be red in conjunction  with  the  accompanying
notes.



CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2010
        

                                                                       Unaudited six       Audited period
                                                                     months ended 30    ended 31 December
                                                            Note           June 2010                 2009
                                                                                  GBP                 GBP
Cash flows from operating activities                                                   
Cash generated from operations                                12              945,328          (2,085,911)
Interest paid                                                                (112,363)            (52,557)
                                                                             ________           _________

Net cash used in operating activities                                         832,965          (2,138,468)
                                                                             ________           _________
                                                                                       
Cash flows from investing activities                                                   
Acquisition of subsidiary, net of cash acquired                                     -              16,136
Cost directly attributable to acquisition                                           -            (945,499)
Purchase of property, plant and equipment (PPE)                                     -             (12,350)
Proceeds from sale of PPE                                                           -               4,295
Interest received                                                                  10               2,822
                                                                             ________            ________

Net cash inflow/(outflow) from investing activities                                10            (933,532)
                                                                             ________            ________
                                                                                         
Cash flows from financing activities                                                   
Proceeds from issuance of ordinary shares                                           -           2,185,000
Proceeds from borrowings                                                            -             405,133
Repayment of borrowings                                                      (564,068)            (23,118)
Loan amounts received from related parties                                          -             555,544
Repayment of amounts received from related parties                           (249,348)                  -
                                                                             ________           _________

Net cash (outflow)/inflow from financing activities                          (813,416)          3,122,559
                                                                             ________           _________

Net increase in cash and cash equivalents                                      19,559              50,559
                                                                                       
Cash and cash equivalents at beginning of period                               50,559                   -
                                                                             ________           _________

Cash and cash equivalents at end of period                    10               70,118              50,559
                                                                             ========           =========

The consolidated cash flow statement should be read in conjunction with the accompanying notes.


NOTES TO THE UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2010

1. General information
   
   Marlwood  plc is a public limited liability company incorporated in England and Wales on  19  August
   2008  under  the Companies Act 2006 with the registration number 06676987 and quoted on  the  Cayman
   Islands  Stock Exchange.  The address of the registered office is Unit 38 Newby Road,  Hazel  Grove,
   Stockport, Cheshire SK7 5AS.
   
   On  24  June 2010 the Group completed the disposal of the clearance division of The Licence  Factory
   Limited.   On  9  March 2010 IdealDeal Limited (a dormant subsidiary undertaking of the  Group)  was
   dissolved.
   
   Marlwood  plc ("the Company") and its subsidiaries (together "the Group) specialise in the sourcing,
   marketing and distribution of licensed branded goods.  The Group operates from the registered office
   with the sourcing and distribution agency in Hong Kong, and sells mainly in countries within the  UK
   and Europe.
   
   This  condensed  consolidated interim financial information was approved for issue on 20 October 2010.
   This consolidated financial information has been reviewed, not audited.
   
2. Basis of preparation

   The  unaudited interim financial statements comprise the consolidated income statement, consolidated
   balance  sheet, consolidated cashflow statement and consolidated changes in equity and  the  related
   explanatory notes for the six month period ended 30 June 2010.
   
   The  unaudited  interim  financial statements have been prepared in  accordance  with  International
   Accounting  Standard  34  'Interim  Financial Reporting'  ('IAS  34')  and  International  Financial
   Reporting   Interpretations Committee ('IFRIC') interpretations as adopted  by  the  European  Union
   ('EU').
   
   Under  IFRS 3 'Business combinations' the New BAI International Limited and The New Licence  Factory
   Limited share exchanges have been accounted for as a reverse acquisition.
   
   Although  these consolidated financial statements have been issued in the name of the legal  parent,
   the  Companies  it  represents in substance are a continuation of the financial information  of  the
   legal subsidiaries, New BAI International Limited and The New Licence Factory Limited, both of which
   were newly incorporated in 2008 and 2009 respectively and did not begin trading until they purchased
   their  respective  businesses on the date of admission to CSX, 16th September  2009.  Therefore  the
   income  and  expenses included within these results relate to the period from 1 January 2010  to  30
   June  2010  and  there  are no directly comparative results.  The results for the  period  ended  31
   December 2009 cover the reporting period from 16th September 2009 to 31st December 2009.
   
   Marlwood  plc is an existing preparer of IFRS consolidated financial statements; IFRS 1  "First-time
   adoption  of  International Financial Reporting Standards" is not applicable.  Marlwood  plc  is  an
   issuer of shares and does not have listed debt.
   
   The  accounting  policies used are consistent with those adopted in the annual financial  statements
   for  the  period ending 31 December 2009, subject to any changes to IFRS that may be implemented  in
   the  mean  time.   These  interim  financial statements should  be  read  in  conjunction  with  the
   consolidated financial statements for the period ended 31 December 2009 as they provide an update of
   previously reported information.
   
   The  preparation  of  the interim financial statements required management  to  make  estimates  and
   assumptions  that  affect  the  reported  amounts of revenues,  expenses,  assets,  liabilities  and
   disclosure  of  contingent liabilities at the date of the interim financial statements.  If  in  the
   future  such estimates and assumptions, which are based upon the management's best judgement at  the
   date  of  the  interim  financial statements, deviate from the actual  circumstances,  the  original
   estimates  and  assumptions will be modified as appropriate in the period in which the circumstances
   change.
   
   The interim report covers the period from 1 January 2010 to 30 June 2010.
   

3. Accounting policies
   
   The  accounting policies are consistent with those of the annual financial statements for  the  year
   ended 31 December 2009, except as described below.
   
   Taxes  on  income in the interim periods are accrued using the tax rate that would be applicable  to
   expected total annual earnings
   
   (a) New and amended standards adopted by the Group
       
   The following new standards and amendments to standards are mandatory for the first  time  for  the
   financial year beginning 1 January 2010.
   
   IFRS 3 (revised), 'Business combinations', and consequential amendments to IAS 27, 'Consolidated and
   separate financial statements', IAS 28, 'Investments in associates', and IAS 31, 'Interests in joint
   ventures', are effective prospectively to business combinations for which the acquisition date is on
   or after the beginning of the first annual reporting period beginning on or after 1 July 2009.
   
   The  revised  standard continues to apply the acquisition method to business combinations  but  with
   some significant changes compared with IFRS 3. For example, all payments to purchase a business  are
   recorded  at  fair  value  at  the acquisition date, with contingent  payments  classified  as  debt
   subsequently  re-measured  through the income statement. There is a  choice  on  an  acquisition-by-
   acquisition basis to measure the non-controlling interest in the acquiree either at fair value or at
   the  non-controlling interest's proportionate share of the acquiree's net assets.  All  acquisition-
   related costs are expensed.
   
   As  the  Group has adopted IFRS 3 (revised), it is required to adopt IAS 27 (revised), 'consolidated
   and  separate financial statements', at the same time. IAS 27 (revised) requires the effects of  all
   transactions  with  non-controlling interests to be recorded in equity if  there  is  no  change  in
   control  and these transactions will no longer result in goodwill or gains and losses. The  standard
   also  specifies  the accounting when control is lost. Any remaining interest in the  entity  is  re-
   measured to fair value, and a gain or loss is recognised in profit or loss. There has been no impact
   of  IAS  27 (revised) on the current period, as none of the non-controlling interests have a deficit
   balance. There have been no transactions whereby an interest in an entity is retained after the loss
   of control of that entity; there have been no transactions with non-controlling interests.
   
   (b) Standards, amendments and interpretations to existing standards effective in 2010 but
   not relevant to the Group
   
    *   IFRIC 17, 'Distributions of non-cash assets to owners', effective for annual periods beginning
        on or after 1 July 2009. This is not currently applicable to the Group, as it has not made any non-cash
        distributions.

    *   IFRIC 18, 'Transfers of assets from customers', effective for transfer of assets received on
        or after 1 July 2009. This is not relevant to the Group, as it has not received any assets from
        customers.

    *   'Additional exemptions for first-time adopters' (Amendment to IFRS 1) was issued in July 2009.
        The amendments are required to be applied for annual periods beginning on or after 1 January 2010. This
        is not relevant to the Group, as it is an existing IFRS preparer.

    *   Improvements to International Financial Reporting Standards 2009 were issued in April 2009.
        The effective dates vary standard by standard but most are effective 1 January 2010.

   (c)  The   following  new  standards,  new  interpretations  and  amendments  to   standards   and
   interpretations have been issued but are not effective for the financial year beginning 1 January 2010
   and have not been early adopted:
   
    *   IFRS 9, 'Financial instruments', issued in December 2009. This addresses the classification
        and measurement of financial assets and is likely to affect the Group's accounting for its financial
        assets. The standard is not applicable until 1 January 2013 but is available for early adoption. The
        Group is yet to assess IFRS 9's full impact. However, initial indications are that it may affect the
        Group's accounting for its available-for-sale financial assets, as IFRS 9 only permits the recognition
        of fair value gains and losses in other comprehensive income if they relate to equity investments that
        are not held for trading. Fair value gains and losses on available-for-sale debt investments, for
        example, will therefore have to be recognised directly in profit or loss. In the current reporting
        period, the Group recognised C5,000 of such gains in other comprehensive income. The Group has not yet
        decided when to adopt IFRS 9.

    *   Revised IAS 24, 'Related party disclosures', issued in November 2009. It supersedes IAS 24,
        'Related party disclosures', issued in 2003. The revised IAS 24 is required to be applied from 1
        January 2011. Earlier application, in whole or in part, is permitted.

    *   'Classification of rights issues' (Amendment to IAS 32), issued in October 2009. For rights
        issues offered for a fixed amount of foreign currency, current practice appears to require such issues
        to be accounted for as derivative liabilities. The amendment states that if such rights are issued pro
        rata to all the entity's existing shareholders in the same class for a fixed amount of currency, they
        should be classified as equity regardless of the currency in which the exercise price is denominated.
        The amendment should be applied for annual periods beginning on or after 1 February 2010. Earlier
        application is permitted.

    *   'Prepayments of a minimum funding requirement' (Amendments to IFRIC 14), issued in November
        2009. The amendments correct an unintended consequence of IFRIC 14, 'IAS 19 - The limit on a defined
        benefit asset, minimum funding requirements and their interaction'. Without the amendments, entities
        are  not  permitted  to recognise as an asset some voluntary prepayments  for  minimum  funding
        contributions. This was not intended when IFRIC 14 was issued, and the amendments correct the problem.
        The amendments are effective for annual periods beginning 1 January 2011. Earlier application is
        permitted. The amendments should be applied retrospectively to the earliest comparative  period
        presented.

    *   IFRIC 19, 'Extinguishing financial liabilities with equity instruments'. This clarifies the
        requirements of IFRSs when an entity renegotiates the terms of a financial liability with its creditor
        and the creditor agrees to accept the entity's shares or other equity instruments to settle the
        financial liability fully or partially. The interpretation is effective for annual periods beginning on
        or after 1 July 2010. Earlier application is permitted.

    *   Improvements to International Financial Reporting Standards 2010 were issued in May 2010. The
        effective dates vary standard by standard but most are effective 1 January 2010
   
 
4. Discontinued operations

   On  the  24  June 2010 the shareholders of Marlwood plc formally approved the disposal of the  stock
   clearance division to Brennan Atkinson International Limited (a company owned by Mr M Abramson).
   
   In  accordance  with  IFRS  5  "Non-current assets held-for-sale and  discontinued  operations"  the
   clearance  division  has been reclassified as a discontinued operation and its trading  results  are
   included  in  the  income  statement as a single line below profit after  taxation  from  continuing
   operations.
   
   The impact of the discontinued operations on the income statement is detailed below:

                                                                       Group

                                                       Period 1 January 2010 to 30 June 2010

                                                  Discontinued            Continued               Total
                                                    operations           operations
                                                           GBP                  GBP                 GBP
                                                                                     
    Revenue                                           749,386             1,669,591           2,418,977
    Cost of sales                                    (574,545)           (1,192,189)         (1,766,734)
                                                     ________             _________           _________

    Gross profit                                      174,841               477,402             652,243
                                                                                     
    Distribution costs                                (18,317)              (35,988)            (54,305)
    Administrative expenses                           (47,232)           (1,185,309)         (1,232,541)
                                                     ________             _________           _________ 

    Operating loss                                    109,292              (743,895)           (634,603)
                                                                                     
    Profit on disposal of discontinued                      -             2,050,109           2,050,109
    operations                                       ________             _________           _________

                                                      109,292             1,306,214           1,415,506
                                                                                     
    Finance costs                                     (42,390)              (69,973)           (112,363)
    Finance income                                          -                    10                  10
                                                     ________             _________           _________
    
    Profit before income tax                           66,902             1,236,251           1,303,153
                                                                                     
    Income tax                                              -              (326,351)           (326,351)
                                                     ________             _________           _________

    Profit after income tax                            66,902               909,900             976,802
                                                     ========             =========           ========= 


5. Segmental information
   
   The  financial  statements consolidate the trading activities of Marlwood plc, The  Licence  Factory
   Limited (formerly New BAI International Limited) and The New Licence Factory Limited.
   
   Segmental analysis by subsidiary has not been produced as the only trading companies are The Licence
   Factory  Limited  and The Licence Factory (HK) Limited, with the financial results  of  The  Licence
   Factory (HK) Limited being immaterial to the overall results of the group.
        
   The Group is organised on a worldwide basis into two main segments:

   -    design, sourcing, distribution and wholesale of licensed goods: and

   -    sourcing, distribution and wholesale of clearance / end of line closeout stock.
     
   As  disclosed  in  Note  4,  the Group has reclassified the clearance  division  as  a  discontinued
   operation  during the period ended 30 June 2010 following the disposal of these activities  and  the
   income statement therefore reflects the results of the licence division and head office only.

   The segmental results for the Group for the period ended 30 June 2010 are as follows:
   
                                                Period 1 January 2010 to 30 June 2010

                                       Licensed        Clearance         Unallocated               Total
                                       division         division
                                            GBP              GBP                 GBP                 GBP
  
     Revenue                          1,669,591          749,386                   -           2,418,977
                                                                                       
     
     EDITDA                            (489,868)         109,292            (221,394)           (601,970)
     Depreciation of tangible     
     assets                             (32,633)               -                   -             (32,633)
                                       ________          _______             _______           _________
     
     Operating profit/(loss)           (522,501)         109,292            (221,394)           (634,603)
                                                                                       
     Profit on disposal of                                                                     2,050,109
     discontinued operation
 
     Net finance costs                                                                          (112,353)
                                                                                               _________

     Profit before income tax                                                                  1,303,153
     Income tax expense                                                                         (326,351)
                                                                                               _________

     Profit for the period                                                                       976,802
                                                                                               =========
   

     The segmental results for the Group for the period ended 31 December 2009 are as follows:
   
                                                      Period 15.08.08 to 31.12.09

                                     Licensed          Clearance         Unallocated               Total
                                     division           division
                                          GBP                GBP                 GBP                 GBP
     Revenue                        2,016,972          2,290,565                   -           4,307,537
                                                                                       

     EDITDA                            55,309            487,924            (418,938)            124,295
     Depreciation of tangible         (18,569)                 -                   -             (18,569)
     assets
                                    _________          _________             _______           _________

     Operating profit/(loss)           36,740            487,924            (418,938)            105,726
     Net finance costs                                                                           (62,245)
                                                                                               _________

     Profit before income tax                                                                     43,481
     Income tax expense                                                                            3,637
                                                                                               _________
 
     Profit for the period                                                                        47,118
                                                                                               =========

     The segment assets and liabilities at 30 June 2010 are as follows:
        
                                               Licensed      Clearance     Unallocated          Total
                                               division       division
                                                    GBP            GBP             GBP            GBP
                                                                                                     
      Assets                                  8,549,685              -          39,387      8,589,072
      Liabilities                             2,266,210              -       2,357,531      4,623,741
                                              =========       ========       =========      =========


     The segment assets and liabilities at 31 December 2009 are as follows:
        
                                               Licensed      Clearance     Unallocated          Total
                                               division       division
                                                    GBP            GBP             GBP            GBP
                                                                                                     
      Assets                                 10,162,856        789,576          39,387     10,991,819
      Liabilities                             3,222,761              -       4,780,529      8,003,290
                                             ==========        =======       =========     ==========  
                                                                                                     

6. Profit for the period

   Profit for the period includes the following items, which are unusual because of their nature,  size
   or incidence:
   
                                                                           Unaudited six         Audited
                                                                            months ended    period ended
                                                                            30 June 2010     31 December
                                                                                                    2009
                                                                                     GBP             GBP
                                                                                                        
  Profit on disposal of discontinued operations                                2,050,109               -
                                                                               =========        ========

   As disclosed in note 4, the Group disposed of the clearance division on the 24 June 2010 for a total
   consideration of GBP2,500,000 plus the transfer of the stock at cost value.  Under the terms of  the
   disposal agreement the GBP2,500,000 consideration was satisfied as follows:

   *    the assumption by the Buyer of the obligation to pay the aggregate amount of GBP965,722 owed
        by The New Licence Factory Limited to the preference shareholders of Hannah Martin Holdings Limited,
        which is currently repayable on demand; and
   
   *    the  assumption by the Buyer of the obligation to pay the sum of GBP1,534,278 owed  by  The
        Licence Factory Limited to M&K International Limited.
   
   The resulting profit on the disposal of the discontinued operations has been calculated as follows:
   
                                                                                 GBP                 GBP
                                                                                                        
Disposal proceeds                                                                                       
M&K International Limited loan note waiver                                 1,534,278                       
Preference dividend loan note waiver                                         965,722                         
                                                                            ________                    
                                                                                               2,500,000
                                                                                                        
Less: Goodwill allocated to the clearance division                                              (449,891)
                                                                                               _________

Profit on disposal                                                                             2,050,109
                                                                                               =========

7. Taxation

                                                                        Unaudited six      Audited period
                                                                        months ended   ended 31 December
                                                                        30 June 2010                2009
                                                                                 GBP                 GBP
                                                                                                        
  Current tax                                                                326,351                   -
  Deferred tax                                                                     -               3,637
                                                                            ________            ________

  Total                                                                            -               3,637
                                                                            ========            ========

   The  tax position for the period is based on the anticipated effective tax rate for the year  to  31
   December 2010.
   
   
8. Dividend

   No interim dividend is proposed.


9. Earnings per share

   The  calculation of basic earnings per ordinary share of 0.10p each (2009: 0.01p per share) is based
   upon  the  profit  after taxation for the period of GBP976,802 (2009: GBP47,118)  and  the  weighted
   average number of ordinary shares in issue during the period of 970,900,000 (2009: 477,976,355).
   
10. Cash and cash equivalents

                                                                                  At     At 31 December
                                                                        30 June 2010               2009
                                                                                 GBP                GBP
                                                                                       
Cash at bank and in hand                                                      70,118             50,599
                                                                            ________           ________

                                                                              70,118             50,599
                                                                            ========           ========  

11.Share capital
    
                                           Number of         Ordinary           Share           Total
                                              shares           shares         premium
                                                 No.              GBP             GBP             GBP
    At 19 August 2008                                                                                
    Shares issued in the period                                                                      
    19 August 2008                                 2                2               -               2
    17 November 2008                     135,999,998          135,998               -         135,998
    8 December 2008                       30,000,000           30,000         270,000         300,000
    16 September 2009                    117,900,000          117,900       1,061,100       1,179,000
    16 September 2009                    630,000,000          630,000       5,670,000       6,300,000
    11 December 2009                      57,000,000           57,000         513,000         570,000
                                         ___________         ________       _________       _________

                                         970,900,000          970,900       7,514,100       8,485,000
                                                                                                     
    Costs directly attributable to                                                                   
    share issue                                    -                -       (370,191)       (370,191)
                                         ___________         ________       _________       _________

    At 31 December 2009                  970,900,000          970,900       7,143,909       8,114,809
                                         ===========         ========       =========       =========

    At 30 June 2010                      970,900,000          970,900       7,143,909       8,114,809
                                         ===========         ========       =========       ========= 

    The  total authorised number of ordinary shares is 2,000,000,000 with a par value of 0.01 pence per
    share.  All issued shares are fully paid.

12. Cash generated from operations

                                                                 Unaudited six months           Audited
                                                                                ended   period ended 31
                                                                              30 June          December
                                                                                 2010              2009
                                                                                  GBP               GBP
Continuing operations                                                                  
Operating loss                                                               (743,895)         (401,465)
Depreciation of PPE                                                            32,633            20,629
Profit on disposal of PPE                                                           -            (1,295)
Foreign exchange movement                                                           -              (156)
Decrease/(increase) in trade and other receivables                          1,491,390        (1,321,302)
Decrease/(increase) in inventories                                            108,708          (223,819)
Decrease in trade and other payables                                         (392,484)         (476,009)
                                                                            _________         _________

Cash utilised from continued operations                                       496,352        (2,403,417)
                                                                            =========         =========                
                           
Discontinued operations                                                                
Operating (loss)/profit                                                       109,291           507,191
Decrease/(increase) in inventories                                            339,685          (189,685)
                                                                            _________         _________

Cash utilised from continued operations                                       448,976           317,506
                                                                            =========         =========
                                                                                       
Cash generated/(utilised) from operations                                     945,328        (2,085,911)
                                                                            =========         =========

13. Related party transactions
     
    The  Group  is  controlled by M Abramson by virtue of his majority shareholding in  Hannah  Martin
    Holdings Limited and BAI International Limited.  M Abramson has a controlling interest in a number
    of  other  companies of which the Group undertook transactions and had balances  outstanding  with
    during the period as follows.
     
    The period to 30 June 2010
     
                              Sale of      Trade & other    Purchase of        Trade and          Loans &
                                goods        receivables       services   other payables       borrowings
                             30.06.10           30.06.10       30.06.10         30.06.10         30.06.10
                                  GBP                GBP            GBP              GBP              GBP
    RMS International UK                                                                                   
    Limited                         -                  -             50           12,949                -
    M&K International Ltd                                                                                  
                                    -                  -         48,258                -          715,545
    Benjamin David                                                                                         
    Holdings Limited                -                  -        127,252           33,870                -
    Magenta Group                   -                  -              -                -                -
    Bloomoon                                                                                            
    Consultants                     -                  -          8,813            5,875                -
                              _______            _______        _______           _______         ________
   
    The period to 31 December 2009
   
                              Sale of      Trade & other    Purchase of        Trade and          Loans &
                                goods        receivables       services   other payables       borrowings
                              31.12.09           31.12.09       31.12.09         31.12.09         31.12.09
                                  GBP                GBP            GBP              GBP              GBP
    RMS International UK                                                                                   
    Limited                   313,236            313,236         12,899           12,899                -
    M&K International Ltd           -                  -        804,718                -        2,449,171
    Magenta Group             203,005             13,208        485,358                -                -
    Bloomoon Consultants            -                  -          7,500                -                -
                              _______             _______       _______          _______         ________
       
    Goods  are  sold based on the price lists in force and standard terms that would be  available  to
    third parties.  Goods and services are acquired on normal commercial terms and conditions.
     
    M  Abramson  is a majority shareholder of Hannah Martin Holdings Limited, the ultimate controlling
    party  of  the  Group.   M Abramson is the majority shareholder in M&K International  Limited  and
    Benjamin  David Holdings Limited and a significant shareholder in RMS International  (UK)  Limited
    and the Magenta group of companies.
     
    V  Bloom,  a  director, is a shareholder and director of Bloomoon Consultants Limited,  a  company
    providing consultancy services to the Group.
     
    All  amounts  due  to  and  from  related parties are unsecured with  the  exemption  of  the  M&K
    International stock finance facility which grants a legal title over the stock in the event  of  a
    default.
     
    There  are no provisions made against amounts receivable from or payable to related parties.   The
    amounts  carry no fixed repayment terms.  Balances bear no interest with the exception of the  M&K
    International loan which bears interest at 6.75%.
   
14. Directors interests
   
    Details  of the directors' interests in the Company's ordinary share capital at the 30  June  2010
    are disclosed below:
     
    Directors                    As at 30.06.10     Shareholding     As at 31.12.09     Shareholding 
                                         Number                %             Number                %

    E Basso*                         10,439,100             1.1%        10,439,100               1.1%
    V Bloom                          52,500,000             5.4%        52,500,000               5.4%
    A Conrad                                  -                -                 -                  -
    P Hulme*                         10,439,100             1.1%        10,439,100               1.1%
                                                                                               

     *  Elliot Basso and Pamela Hulme are beneficially entitled to 20,878,200 Ordinary Shares which are
     owned by Hannah Martin Holdings Limited and BAI International Limited.
     
     There  have  been  no changes in the above interests between 30 June 2010 and  the  date  of  this
     report.
     
15.  Availability of information

     The interim results are being circulated to all shareholders.  Further copies can be obtained from
     the  Registered Office at Unit 38, Newby Road Industrial Estate, Hazel Grove, Stockport,  Cheshire
     SK7 5AS.


Contact Information

  • Marlwood Plc