# Universe Group plc Q&A with CEO Jeremy Lewis (LON:UNG)

- Link: https://www.directorstalkinterviews.com/universe-group-plc-qa-ceo-jeremy-lewis-lonung/412737045
- Published: 2017-09-28T11:35:04+01:00
- Author: Amilia Stone

**Universe Group plc** (LON:UNG) Chief Executive Officer Jeremy Lewis caught up 
with DirectorsTalk for an exclusive interview to discuss what the Group does, the
key markets & key customers, the highlights of the last 6 months, the development
of EPOS products and why it’s more attractive than their competitors

 

**Q1: First off, for those that don’t know, can you explain for us what Universe
Group does?**

**A1**: We’re a UK based software business, we write software, put it onto hardware
and then sell systems into retailers to help them do their point of sale payment
and loyalty schemes and we focus specifically on two retail verticals, petrol forecourts
and convenience stores.

Our market share is approximately 50% in the forecourt area so we’re on about 3,500
out of 8,000 gas stations and we’ve just started moving into convenience stores 
where we’re currently on about 2,000 out of 56,000 convenience stores.

 

**Q2: What are the key markets and who are the key customers?**

**A2**: The customers, as you would expect, on the convenience side are the major
chains so Londis, Budgens, Costcutter and Nisa’s of this world and on the petrol
side, most of the forecourts in the UK are actually owned by large groups which 
are not household names such as Certas, MRH and MFG, who between them have anything
between 200 and 500 gas stations each. So, those are actually the clients we serve
into and our focus is really staying with those particular verticals because there’s
a lot of growth for us to have there. It’s worth bearing in mind that of course 
we could take our technology and sell it into other verticals such as hospitality
or pharmacy’s however the low hanging fruit is in our current areas so we’ll focus
on that.

I would say, for anyone that’s new to Universe Group, if you go to our website there’s
actually a 3.5-minute animation on the home page which explains what all of our 
products are doing and shows how they sit together. It’s a good, quick, easy way
of getting up the kerb and understanding who we are.

 

**Q3: Can you talk me through the highlights of the last 6 months?**

**A3**: We had revenues just under £9 million for the first 6 months which was in
line with the previous year and we managed to improve our gross profit margin a 
little bit so it’s now sitting at 31.8%. We have been investing in expanding our
development workforce and adding to our sales teams, our total headcount by the 
way is 250 people and we’re all based down in our headquarters in Southampton. Our
operating profit came out at just over £200,000 versus circa £400,000 the previous
year.

The key takeaway for these results is as in all the previous years and will be the
same for the next couple of years, our business is very second-half weighted so 
we do about a third of our business in the first half and two thirds in the second
half. The reason for that is whilst we’re not actually a seasonal business because
we’re selling in mission-critical, real-time systems into retailers but what tends
to happen is that retailers don’t like playing with their IT systems over the key
selling period which is the Christmas period. So, they never do anything past November
which means we’re extremely busy from August through to November to put all the 
systems in.

Cash generation has been very strong, Universe Group are net cash at any given moment
of about £3 million sitting on the balance sheet and we’ve been generated at least
£1.5 million of cash in the first half, all of which we invested into additional
R&D and capex and to additional products.

 

**Q4: What can you tell us about the development of the next generation of EPOS 
products?**

**A4**: Well, we’ve been very busy for about 3 years now working on our next generation
EPOS product and I’m pleased to say that it’s now live in the marketplace with two
customers, one is a main deployment and one is a pilot deployment. The key thing
when you’re building an EPOS system is you have to be absolutely reliant so you 
have to have all the capabilities that the client wants, he wants to be able to 
push promotions down there, he wants to have links all the way through to his suppliers,
it needs to be robust, your payment systems need to be secure, your loyalty system
needs to be on tap 24/7. All of that is extremely important and the thing that sometimes
takes the time is when we go in and install systems into a retailer, what you’re
really doing is getting into the plumbing of their ERP systems and their accounting
systems. It’s quite a intrical operation to do that and that sometimes takes a little
more time than previously planned.

Now we’ve got the product out there, we’re extremely pleased with it and we will
be doing some customisation with existing clients as we go forward from this point.
I think it sets us there for being able to sell this into additional clients as 
we move into the earlier part of 2018 so we’re pleased where we’ve got to with that
product.

 

**Q5: What is it that makes Universe Group plc’s products more attractive than its
competitors?**

**A5**: It’s about product innovation and it’s about customer service so it’s not
just all around the product. As I said a little bit earlier, you simply cannot have
a point of sale system or a payment system fail because as a retailer you can’t 
trade and if you can’t trade, you’ve got all the costs and none of the revenues.
So, we have invested extremely heavily around 35 engineers pre-positioned in vans
all up and down the UK so we can get on site when we need to very very quickly and
we have a 70-man onshore UK based customer support unit which works 24/7 for 365
to ensure that the customer is always able to trade.

In terms of the actual products themselves, we use the very latest technology stacks
for all of our products, we make it as modular as possible, we’ve invested very 
heavily in development and testing capabilities so we make sure that we’re launching
products right at the optimum moment. We work very closely with clients to bespoke
the systems and give them all the capabilities that they want.

The only area where we don’t really compete with competitors is on price, we are
not the cheap option, we tend to think of ourselves are the ‘Stella Artois’ of this
space. We can charge a little bit more because of the robustness and that’s how 
we like to keep it.

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