David Massie, chairman of AIM-quoted Scott Tod, says that Nick Tod, who holds 27.4 per cent of the company, is leaving as chief executive officer because of a disagreement with fellow directors over how to lift the company out of its deteriorating financial situation. After making £399,000 pre-tax in the year to June 2004, the company, which leases 2,200 cash machines to pubs and other outlets, had been expected to make £1 million in the 2004-05 financial year.
However, a warning in January put paid to such hopes and the bleak message was reinforced by another warning in the wake of interim figures showing at mere £56,000 half-time profit. According to Massie, the problem was that too many of the machines were in lightly-used pubs, where they were little used.
He says Nick Tod’s suggested recovery strategy involved ‘trading out’ of these difficulties by expanding the network even further. The other directors, including chairman Massie, disagreed, preferring to consolidate, renegotiate terms and relocate.
Meanwhile, the company’s annual audit suggests a loss of between £1 million and £1.1 million, compounded by the loss of some big contracts and accounting problems over cash machine installation costs. The boardroom impasse has now been resolved by Tod’s decision to go.
He is now ‘on gardening leave’ and operations director Lawrence Watts has become ‘interim chief executive’, while Massie looks for a full-time replacement. Tod and others will now receive nothing instead of a hoped-for deferred payment agreed when their company reversed into the AIM vehicle that became Scott Tod.
With the shares down 5.5p to 20.5p, Massie comments hopefully: ‘if the phone rings and someone makes an offer, I’d have to consider it’.