Universe Group plc (LON:UNG) Chief Executive Officer Jeremy Lewis caught up with DirectorsTalk for an exclusive interview to discuss their next generation EPOS solution and the recent agreement with NetPay
Q1: We’ve just seen that you’ve installed your next generation EPOS solution to the 70th site for a leading patrol forecourt operator, Rontec. Can you tell us a bit more about that Jeremy?
A1: Just to remind everybody who Universe Group plc are, fundamentally we’re makers of retail technology and we sell specifically into the petrol forecourt and convenience store marketplace, with a particular focus on the UK. Our products really divide down into three specific areas:
• EPOS, or electronic points of sale which includes point of sale, that’s the touchscreen that the cashier uses plus all the back-office systems
• Second area is payments where we do indoor and outdoor payment terminals as well as payment switching
• Thirdly, loyalty where we run the loyalty programmes for the likes of Exxon for example, around not just UK but also Europe
What we’re announcing this morning is that our next generation EPOS solution, we’ve been quietly installing that into Rontec, starting at the back end of the last year and moving through the first few months of this year and we’ve just gone through our 70th site so that’s what we’re announcing.
This generation of EPOS is an upgrade on our previous versions, it’s on new architecture, it’s much more flexible than previously done, it’s got a lot more supplier links, and by supplier links I mean all the important links that you have out the back end of these things to the wholesalers so that’s the Londis, the Budgens, the Nisa’s and the Morrisons of this world, so, we’ve done a lot of work on that.
Rontec themselves are a very go-ahead retail organisation, they’ve got 240 gas stations across the UK and they’ve actually been a client of ours for quite a few but really in the payment space, they’ve been using our payment terminal and our payment services for quite a few years. They approached us last year looking to upgrade their existing EPOS and we were fortunate enough to be selected by them.
We worked very closely with them to mould the operation to their particular requirements because these sorts of installations, you can’t do EPOS to a client, you have to do it with the client, so it was very much a partnership. So, we’ve been quietly working with them for some time and having successfully installed the 70th site, we thought that was worthy of a press release which is what we put out this morning.
Q2: So, in what kind of situations if your next gen EPOS solution used and who’s it used by?
A2: Our specific focus is very much on petrol forecourts and convenience, now those two markets obviously overlap to a far degree so if you look at the UK, there are 8,500 gas stations, about just under 8,000 of that 8,500 have convenience stores on them and in addition to that, there’s probably 56,000 convenience stores around the UK. A definition of a convenience store in this regard is anyone smaller than a big supermarket chain and everybody a little bit bigger than a singe corner shop so we’re talking about the big guys like Londis, Budgens, Costcutter, Nisa and some of the smaller stores.
So, when you come to look at our particular forecourt market, there are some peculiarities around petrol forecourt trading, you need to have integration to the petrol pumps, you need forecourt protection systems and you need what’s called site controllers which are the boxes that basically tell the point of sale how much gas has actually been vended and how much to charge. You also need the outdoor payment terminals, those are the boxes that you put your credit card in a 2am if you want to actually pay at the pump or whether you do that midday because you don’t want to go into the kiosk and queue up, you just want to get some fuel and drive off.
All of that infrastructure, we provide, so we’re a non-stop shop for any retailer, be it in the payment piece, the loyalty piece or the EPOS piece, that wants to set up and run a forecourt that’s got a convenience store as well.
So, classically, if you look at the big operators in petrol forecourts, it tends to be names that us consumers don’t come across often, MRH, MFG, Rontec, Euro Garages but between they all own between 2-500 gas stations in the UK. When you drive onto those gas stations, you will see a Shell sign or a Texaco sign or a BP or an Exxon, and the convenience store you’ll see a Morrisons or a Costcutter or you’ll see a Budgens, but the actual owners of those sites are these big independents and they’re actually our clients. So, those are the people that are actually using our technology.
Q3: Now, you also recently signed an agreement with NetPay to offer their acquiring and onboarding solutions to the Group’s retail clients, what are the benefits of this agreement and how will this benefit the retail clients?
A3: Well, it’s a question of really filling in a small gap that was in our payments offering, I said a little bit earlier that we’ve got three major areas of activity, that’s the EPOS piece, the payment piece and the loyalty piece and if you look at the payment piece, what we do there is we have indoor payment terminals which we call Gempay 3 which has got about a 50% share of all the payment markets on gas stations in the UK.
We also do the outdoor payment terminals and we also do what’s called switching, so we actually process all the files for large supermarket groups on their petrol forecourts so if you take any given supermarket with a couple of hundred gas stations, they probably have about £5-6 billion worth going through their gas stations every year. The money itself doesn’t come through us but the files come through us and all the settlement is passed on to the likes of Barclays Merchant Services or Worldpay for settlement, that’s known as PSP or Payment Service Provider, that’s what we do.
The only little piece that was missing from all of that, and this is why we’ve done a deal with NetPay last week is we like to be able to go to some of the smaller merchants and be able to say, look here’s our payment terminal but do you know what, we’ll connect you up to the payment switch, we’ll do all your payment processing for you and we’ll charge you a fee for that, all in one. So, that merchant doesn’t have 2 or 3 counter parties, he’s not buying his terminal from us, he’s not getting his acquiring fees and his service from someone else, we’re doing it all in one go. For many, particularly the smaller merchants and they’re not particularly small, they can have 5/10/20/50 stores, to be able to have one phone number, one maintenance person to call if there was a particular issue, that’s obviously very helpful.
So, by partnering up with NetPay, we’ve been able to just cover that gap in our offering as a one-stop shop.
Q4: Can you expand on your relationships with both Rontec and NetPay a little, how did they come about and how are they progressing?
A4: Very different in those two cases.
Rontec, as I said earlier has been a customer of ours for quite a few years particularly in the payment piece, this EPOS piece started last year and, as I said, is ongoing and we’ve got 70 sites.
NetPay we’ve known and liked for a long time, not done a lot with them, they’re actually based quite close to us down here in Southampton and we looked around at two or three players in that particular space to see if they were the optimum partner for to allow us to give that offering in the payment piece. We liked what NetPay were doing, we liked the rates they were getting, and we liked their onboarding technology so that’s just a classic case of us getting together with the best of breed to improve the client offering that we currently have.
Q5: What do these recent announcements mean for Universe Group?
A5: I think it means two different things.
The Rontec one is the first time that our next generation EPOS technology has gone out to the marketplace, we’re not the sort of organisation that likes to do an awful lot of press releases, actually arguably we should do more press releases than we do, but when we do do them, we like to announce something tangible, something that’s actually happened. So, we don’t tend to put out a press release where there’s a new piece of technology that we’re just finishing developing and we might be selling a year from now, we like to develop stuff and get it into the marketplace and then talk about it. So, I think the significance of the announcement, regarding Rontec, is it’s the first time our next generation technology has got into the marketplace and has been running along now successfully for quite some time now so that is good news.
I think the NetPay one shows that we have ambition in the payment space, it’s a tricky field, there’s a lot of players in the payment space. If you pick your niche, you pick your collaboration partners and you never lose track of exactly what your client’s problems are and what your client’s needs are then you can bring on new revenue streams and increase the stickiness of your clients That’s really the significance behind the NetPay one and the NetPay one is more embryonic because we intend to be upselling that as we go through the next 2 or 3 months so time will tell about that one. It is a classic area where whenever we see a gap in our offering, do we buy something, do we build something, or do we collaborate, we specifically took the decision, after much consideration, to actually collaborate with NetPay in that particular regard.
