Black cab company Manganese Bronze warned of tough trading conditions ahead as it struggled to keep a Chinese licensing deal on the road.

Manganese secured the agreement for Brilliance China Automotive Holdings to make and sell black cabs earlier this year.

Manganese receives £2.7 million in initial payments and then royalties based on the number of taxis sold.

It has already been paid £900,000 out of the £2.7 million but a change of management at the Chinese company has now thrown the deal into doubt.

The group is locked in talks with Brilliance and a second payment of £600,000, due last month, has not been received.

Chief executive Ian Pickering said: "We continue to believe China represents an exciting new market for our taxis so if Brilliance does not wish to manufacture the vehicles, we will look for a new partner."

Much of Manganese's plans for growth now lie with advanced-technology taxi hailing system Zingo but this too has been hit by problems.

Zingo users call from mobile phones and their position is pinpointed, allowing cabs that are out of sight but nearby to pick them up.

But its development was delayed by problems involving obtaining consistently reliable location data from the mobile phone networks.

Chairman Jamie Borwick said: "The major challenges are to launch Zingo successfully, resolve the China situation, sell more taxis and make profit in the components division. We see no change in market conditions and the result for the year will reflect the performance of Zingo."

The update came as Manganese turnover for the year to July 31 edged up from £115 million to £118.7 million.