News that Torex Retail plc was being investigated by the Serious Fraud Office, shortly after it had announced a dire profits warning followed by a suspension of share dealing, has sent shivers down the spines of the many forecourt operators who use the company’s retail systems.
There are estimated to be around 1,500 of them, including some of the most leading edge retailers in the industry.
After all, the company’s systems have been at the heart of their operations for several years, going back to when the original systems were developed by Exeter-based epos and back-office systems supplier Arciris, which was founded in 1996, and acquired by Torex plc in August 2002. Eighteen months after that, following a management buyout, it became part of Torex Retail plc’s Petroleum and Convenience (P&C) division.
Arciris had worked hard over the years to establish itself as ’the dealers’ friend’, and at the time of the takeover was keen to reassure customers that the business intended to stay that way. "We’re here for the long haul," said a spokesman at the time. "We want to enhance our offering to the independent retailer and provide a one-stop-shop - it doesn’t end at epos and back office systems, there’s much more we can do."
Since then Torex Retail has been extremely acquisitive, buying up Micrelec NV of Belgium; wet-stock management company Mercury Petroleum Systems - whose customers included Sainsbury’s and Statoil; Flexiline Forecourt Services; and the retail division of Alphameric, with the aim of using it as a springboard for Torex to develop into a major European force. In May 2006 it bought forecourt builder TQIPS.
Thus far the only comment coming from Torex Retail is from Richard Quarmby, managing director of Torex Retail’s UK P&C division, who said: "We can’t comment on the plc issues, but from an operational perspective, it’s business as usual."
That, however, was of no comfort to independent dealer Jonathan James, who has three service stations in Cambridge: "I’ve heard that before. That’s what businesses always say when they’re in trouble. I’ve taken things to a higher level and approached the ACS and the IT director at Budgens to see if they, as bigger players than us, can help."
Jonathan describes the current situation as "really scary": "Once you hear that the Serious Fraud Office is involved and has visited three director’s houses, you know that’s pretty serious stuff. It’s very worrying and suggests there’s something sinister going on."
All the tills and back-office systems in Jonathan’s forecourts, as well as his supermarket, are Arciris-badged. "I think we were one of the first forecourts to have the Arciris system," he confirms.
"We’ve had no official statement from Torex. I thought it would have been common etiquette to have been told something.
"Communication has been horrendous. It’s better to say something than to say nothing at all at a time like this. Putting out a formal statement would put an end to all the Chinese whispers."
Jonathan said he’d spoken to Torex about an operational matter since the company had hit the headlines and it had been dealt with normally.
Meanwhile, Ron Haacke, director and general manager of Petrol Express, which has 10 Torex Iridium epos systems, said he’d "dumped the Torex forecourt services contract a couple of months ago", having previously signed up to the third-party maintenance business, launched after Torex took over Flexiline Forecourt Services.
Haacke, who was unhappy with the subsequent service provided, said he’d ended the business relationship at the same time as Tom Ellicock, managing director of Flexiline, also parted company with Torex.
While no-one knows at this stage what the outcome of last month’s activities are likely to be, the key concerns for retailers are support for their systems in case of any operating problems; and those wanting to develop their businesses and integrate new elements into their systems.
Some in the industry however, felt retailers should not be too alarmed. Susie Hawkins of the Simon Smith Group, says: "From what I’ve been told, the P&C division is very profitable and the stable side of the business.
"Obviously we are worried because we’ve got a considerable investment in our epos and back office systems, all of which are with Torex.
"I believe the epos business will continue, whether or not it’s under Torex or another guise. The worst-case scenario, as I see it, is that we could end up with software that is no longer supported and might no longer be kept updated.
"But I can’t believe that will happen - Torex will either continue as it is or be bought out, either through a management buy-out or through acquisition by another software company.
"We’re currently experiencing the same service as normal - the helpdesk is still there and we’re still getting the support we need. It’s the future that we’re most concerned about, and whether or not the support will still be there and the systems developed in the longer term.
"I do think Torex need to put out some kind of statement to their customers, as there’s a lot of scaremongering going on at the moment. Torex did call me to tell me about the involvement of the SFO, but I am on the Budgens retailer IT committee, so perhaps I am lucky to have been kept more up to date."
David Dovey, facilitator for the Lakeside Group - which represents the best part of 100 sites owned by 28 companies, around 80% of which have Torex epos systems - said he had had reassurance from a senior manager at Torex that all was well with the P&C division.
"Torex customers do deserve to be communicated with as fully as is possible at the moment and as early as is possible," he says.
"I have been promised a written statement from Torex about its position which should have arrived yesterday," says Dovey. "But I suspect the company has been overtaken by events.
"I will be pushing to get information for my members as quickly as possible."
=== Torex timeline ===
- 1996 - Epos specialist Arciris founded by Billy Tank, Peter Harding, John Treasure, Miles MacEacharn and David Willis.
- August 2002 - Arciris acquired by Torex plc and 18 months later becomes part of Torex Retail plc’s Petroleum and Convenience division after management buyout.
- Feb 2003 - Torex Retail acquires Micrelec NV of Belgium.
- June 2003 - Torex Retail buys wet-stock management company Mercury Petroleum Systems.
- Jan 2005 - Flexiline Forecourt Services and the retail division of Alphameric are acquired as part of Torex Retail’s continued expansion.
- May 2006 - TQIPS, specialist in forecourt construction, acquired.
- Jan 2007 - Torex Retail issues profit warning nine days after new contract wins. Shares suspended. Serious Fraud Office begins investigation. Chief executive Neil Mitchell and non-executive chairman Chris Moore step down. Restructure specialists appointed.