Despite the appointment of Peter Dodd as Finance Director, and the adoption of a range of his stringent, budgetary improvements, UniChem’s overall position continued to deteriorate. In addition there were continuing, serious operational problems at both the Croydon and Kingston warehouses.
In October 1969, full control of UniChem (Northern) Ltd was obtained by buying out the minority shareholders. Additionally a large IBM mainframe computer was ordered, to modernize the invoicing system in preparation for Currency Decimalisation in 1971.
Peter Dodd was soon appointed Company Secretary, in addition to being the Finance Director, and a harsh programme of staff redundancies was carried out at Croydon and Walthamstow warehouses. Company sales turnover for 1969, at £5.9m, were just above budget, but profits were very disappointing.
By early 1970, Tom Reid, a former president of the Pharmaceutical Society, had joined the Board, and Peter Dodd had brought in two of his former work colleagues from Crittals Ltd. They were Ray Monaghan, a qualified accountant, to reorganize the finance division, and John Thompson, to oversee the installation of the new computer.
1970 proved to be a very poor sales year for the company. Turnover was more than 10% below budget early in the year, and this had worsened to 15% by the time the new Willesden branch was opened in July.
By September, the computerized invoicing system was seen to be reducing delays, but sales were still running at 15% below budget. Once the 1970 accounts were finalised, they showed a loss on the year of £23,000 and obviously a crisis point had been reached. Despite all the improved financial management, things had still failed to show any real improvement. Membership had fallen to around 500, and was still falling. The only bright spots were provided by an improved performance at the branches at Walthamstow and Leeds. Total sales continued to run below budget throughout the first half of 1971.
Finally, things came to a head at a board meeting in the Autumn. There Peter Dodd informed his colleagues that the losses being made by the company had wiped out all of the company’s reserves, and that unless urgent action was taken, they would be guilty of fraudulent trading within three months. (It should be noted here that throughout this time, UniChem (Northern) Ltd had continued to be profitable).
After some discussion, the meeting was adjourned for a week, to consider action plans. At the reconvened meeting, no such plan could be agreed upon, whereupon the Managing director, Gordon Smith, and one non-executive director resigned. Following a motion put by Geoff White, Peter Dodd was appointed as Managing Director, charged with the task of saving the company.
Although his first actions as Managing Director involved further reductions in staff, and much other vigorous cost-cutting, it could soon be seen that the first and most vital piece of the recovery jigsaw had been put in place.
In the aftermath of this seismic change in the management structure, Kelvin Hide, who had been a member of the Robson Morrow consultancy team in 1969, joined UniChem as Internal Auditor, and Michael Palmer was appointed Chief Accountant.
Almost as an aside, during this same turmoil, Peter Dodd was able to snap up a small wholesaler in Sheffield called Holdens, and this was incorporated into UniChem (Northern). It wasn’t vitally important, but it showed that UniChem meant business.
The delivery service from all warehouses was reorganized and greatly improved. The only real black-spots left, were the problems of the company’s new Willesden warehouse operation, in particular, and the counter products service, in general, but these could be addressed later.
Naturally, it took some time before the changes which had been instituted were to bring about any noticeable improvement, and for the remainder of 1971 sales remained dismal. By the end of November, sales at £7.15m were nearly £1m below budget, and the final accounts showed a loss of £53,000 against a budgeted profit of £95,000. Things were obviously still bad !
However the first quarter of 1972 did show some improvement, with sales and profit being both just above budget, and there was certainly a better feel in the air.