The value-added mobile phone reseller Mobi Market Limited filed a notice of intention to appoint an administrator on 22nd January 2024.
Red Flag Alert users enjoyed over 8 months of warning of this collapse as well as the fact an ultimate beneficial owner took out a cross-company debenture in late 2022. Which is often a key indicator of financial distress.
Mobi Market was among the fastest-growing companies in the refurbished mobile phone market and had seen a period of strong turnover growth from 2018 – 2021. They were acquired by the London-based circular economy fintech company Twig Group Limited for £8 million in early 2022, but this new ownership did not see this upward trend of turnover continue and less than two years later its directors felt it could not continue.
Mobi Market did not source phones directly from the public, instead buying in bulk from businesses. Similarly, they did not sell to the public but rather functioned as a supplier to other businesses, mainly in the retail industry.
Mobi Market was like all UK businesses in that they faced a large amount of macroeconomic pressures in 2023, compounded by the several years proceeding also being highly challenging.
Soaring energy costs, inflation, rising interest rates, and price rises all had a detrimental effect on UK businesses but for Mobi Market which sourced a large number of phones from abroad, the rising cost of shipping and the used phones themselves are likely to have placed considerable pressure on the company.
This is paired with the cost of living crisis bringing consumer confidence to its lowest point in a decade, which saw a decrease in demand for many goods and a large increase in the rates of business distress and insolvency in the retail sector.
As previously mentioned Mobi Market Limited saw very good turnover growth from 2018 – 2021; with turnover tripling from £5.2 million to £15.5 million. However, this figure dropped significantly the following year to £11.4 million.
Whilst the eventual drop in turnover showed signs of distress, Mobi Market’s post-tax turnover had been poor for quite some time. They recorded a very modest profit in 2018 but had been running at a loss since then, with their best year of turnover, 2021, also recording their biggest loss (£259,834).
2022 was the last year that Mobi Market filed an account. Despite filing every year on 31st March, they neglected to do so last year. Delayed accounts are a clear sign of poor results and business distress as companies delay revealing information that is potentially damaging to their reputation and perceived creditworthiness.
This delay in filing became increasingly concerning especially in the context of Mobi Market taking out a cross-company debenture with one of their ultimate beneficial owners, Fasanara Capital Limited. This debenture contained fixed charges, which would place Fasanara Capital Limited and by extension Twig Group Limited, who they are also a UBO of, in a primary position to recoup money in the case of a liquidation.
This information would not be available outside of the Red Flag Alert platform as the rest of the market only lists UBOs who control 25% or more. We understand that only by having all the pieces can you see the full picture and that when it comes to business risk, close enough is not good enough.
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