ATM maker Scott Tod yesterday confirmed forecasts with a full year to June pre-tax loss before amortisation of goodwill of £1.1 million, compared with the previous year's profit of £399,000.
The result follows the loss of two major customers, delays in rolling out contracts, and costs associated from the 'Chip & Pin' technology during the year. As a result, no dividend is payable for year. A dividend of 0.75 pence was paid in 2004.
The drop into losses did not reflect growth in turnover in the year under review to £ 10 . 26 million from £6.7 million.
Problems have continued in the current year with the group incurring a loss for the first three months and chairman David Massie said he does not believe a turnaround can be achieved overnight.
"At one level it can be considered the group expanded very successfully over the last two years," he said.
"At 30 June 2003 it had approximately 700 ATMs. This had grown to over 1,900 ATMs by 30 June 2004 and increased further to over 2,000 ATMs by 30 June 2005, even after the loss of a major contract.
"However, a significant number of the new ATMs installed were in underperforming sites and not generating sufficient revenues to justify the capital expenditure incurred. Much of our current emphasis is to relocate as many of those machines as possible, rather than focus upon growth in absolute numbers and there is evidence that this is producing a significant benefit in terms of increased transaction numbers.
"The group still has further work to do in improving its systems for evaluating potential sites."
However, he also said the group does have a "core" ATM estate, considerable customer goodwill and a reputation for excellent service.
"We need to build on these foundations and, with the application of better business skills, I hope the group can return to profitable growth and become cash flow positive in the not too distant future."
To that end the group is splitting the business into distinct profit centres and has eliminated certain obvious areas of waste.
Further work is necessary to balance resources, Mr Massie said. The emphasis is in building better controls, redeploying unprofitable ATMs and increasing transparency and reporting of the different business lines. "By the time of our interim results in March 2006, the results of the actions taken should be very much clearer," he added.
The group has appointed John Dixon, former finance director with Public Group, as Scott Tod's finance director from December.