Campaign against fee-charging ATMs hits Scott Tod profits

Campaign against fee-charging ATMs hits Scott Tod profits

Shares in AIM-listed independent ATM operator Scott Tod fell 26% to 38 pence yesterday and continued to slide this morning after the firm warned that second-half results would be substantially below market expectations.

In the trading update, Scott Tod says transaction revenues in the pre-Christmas period had been affected by bad publicity surrounding fee-charging cash machines. The group's 2466 ATMs are mainly located mainly in pubs and clubs and charge for cash withdrawals.

Nicholas Tod, chief executive of Scott Tod, told reporters that the sector had attracted a lot of bad press and the dips in transactions coincided with Nationwide building society's campaign against fee-charging machines and coverage of a governement inquiry into ATM charges.

Tod says the bad press persuaded customers to withdraw cash for free before they went into the bars.

In addition to the bad publicity, the company says a delayed start of a major contract from May to November and problems encountered by some suppliers in implementing chip and PIN technology also hit revenues. Furthermore, the disappointing results mean that Scott Tod executives are likely to miss out on a deferred takeover payment.

Scott Tod stock fell a further 5.10% in morning trading to 37 pence.

Research released by Nationwide in December shows that customers are paying £140 million a year to withdraw money from ATMs, an increase of 133% on the previous 12 months.

Nationwide says five years ago virtually all ATMs in the UK were free but now more than a third charge a fee for cash withdrawals. The building society has called for an introduction of a code of practice for cash machine operators in order to avoid government-imposed regulations.

The Nationwide's campaign has also had an adverse effect on UK ATM operator Moneybox which has called off talks with potential suitors pending the outcome of the government inquiry into ATM fees.

The only independent ATM operator that seems to be weathering the storm is Cardpoint which issued an upbeat first quarter trading update last week. The company also managed to save £26 million on the estimated purchase price of the HBOS cash machine estate it acquired in May 2004.

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