PayPoint plc (PAY) Earnings Call Transcript & Summary

Thank you, Emma, and good morning, everyone and welcome to our annual results presentation. As you can see, we've got a full agenda this morning. Our plan is to, firstly, provide a brief overview of our results, then provide some additional detail as to the structural headwinds the businesses have faced this year in addition to the impact of COVID, some high-level comments on our strategy and how we see this evolving. Alan will then take you through the financials. And I will then finish off with an operational review of the business and some high-level thoughts on our developing investment case. Turning to the overview. In summary, strategically, I think we've delivered a step change in our plans to transform business during this year. We have taken some meaningful steps through the acquisition of i-movo, Handepay/Merchant Rentals, taking full control of the Collect+ business and website. And most recently since the year-end, the acquisition of RSM 2000. These businesses bring additional capabilities to our business and create new opportunities for us to grow in growing markets. We've disposed our Romanian business and now banked the GBP 48 million of proceeds, which included the trading year profit of GBP 7.6 million. Financially, we've delivered an underlying pretax profit of GBP 35.5 million from continuing operations, which we see as our reference number as we look forward into the business. And in spite of investing almost [ GBP 100 billion ] from our own resources in the business over the course of the year through acquisition and investment, the balance sheet has remained robust and further strengthened post year by the proceeds from the Romanian sale. We've also increased the final dividend by 6.4%, 16.6p to reflect both our confidence in the progress we've made in the reshaping of our business and our prospects for the year ahead. Operationally, we've made huge strides in closing out our major client renewal program and within this accelerating our drive into digital payments and [indiscernible] payment services. To the positive, we've driven some strong growth in transaction volumes, an increasing number of eMoney partnerships, card processing in our retailer estate and building recovery in our parcel volumes. We are well underway in plans to improve our engagement with retailers and to improve the quality of our service on our overall retailer proposition. And we've seen further growth in a number of our parcel carrier partnerships. And we strengthened our executive team with a focus on operational delivery. Turning to the current Ofgem situation. We remain constrained today in what we are able to say at this stage. I think you're all aware of the background here and the statement of objections raised by Ofgem in September 2020. Since then, we've been actively engaged with Ofgem in response to these objections. As you will have seen this morning, our best estimate for the resolution of this issue with Ofgem is GBP 12.5 million, which we've taken as a provision in the accounts for the 2021 year, which we're reporting on today. We can't add further to what we're saying at this point but look forward to updating the market further as soon as we're able to do so. Turning to the structural changes in our markets and the impact of COVID-19. We felt this was a really important slide to share with the market, and it's one we, as a management team, have been very focused on as we reposition the business. As you can see, in addition to the impact from the loss of the British Gas contract and the decision by utility to take in-house its digital payments, there are, for us, 3 central themes, which are focused as headwinds in our legacy business, which we phased into this year and perhaps have been accelerated by the impact of COVID. Firstly, the decline in energy cash bill payments reflects a change to customer behavior accelerated through the pandemic. Whereby top-up values have been increased, and we've reduced -- and there's been a reduction in the top-up frequency from customers. And similarly, in top-ups, we've seen a reduction in the number of pay-as-you-go subscribers and foreign tourist users. The second headwind has been the impact of rate reductions to a number of our energy clients and their contracts on renewal. And thirdly, the long-term decline of cash, with its impact on the ATM business and more broadly across bill payments. The aggregate of the blue that you see there on the left is almost GBP 20 million. And whilst this is clearly painful in the short term, we do believe the substantive impact of these headwinds has now been felt through the business. And as we describe in a moment, we're already seeing some evidence of some recovery in this in the current year. Nonetheless, our focus is on the actions that we have underway to rebuild growth and opportunity in the business, as you can see from the next slide. And in terms of our response, the focus of our management, the resources and energy is where we can see deliverable new growth opportunities. Our starting point now for every core energy client is to focus on how we can strengthen our relationships and broaden out our digital payment capabilities. And already, we have some great examples of this, such as in OVO SSE. The upside is obvious in terms of creating a broad relationship spanning multiple payment channels. New sectors, such as housing or local authorities, is where we can bring new payment capabilities. Expanding our cash through the digital payment capabilities through internal investment and acquisition, growing our footprint in card payments, direct debits and open banking is very much the way forward for us. In our retail business, improving service and growing our retail proposition to create more value for retailers through FMCG, eMoney partnerships, home delivery, a competitive card proposition and EPoS is very much the framework in which we will create more value to our retail relationships. Establishing Collect+ as the #1 technology, enabling e-commerce platform, supporting a comprehensive list of carrier partners and delivering the very best in customer experience and developing our ATM estate to an access to cash solution in harmony with our LINK Counter Service, providing cash without purchase offering to create the value, leading cash access point network. The next slide, this is a slide we updated throughout the past 12 months. You will see from a transaction volume perspective, bill payment volumes have consistently been running at circa 20% down year-on-year. Mobile top-ups, circa 17% down and ATM volumes just over 20% down. Each of these have now shown a better performance in the current year, with a modest return -- with a modest year-on-year increase now of between 2% to 5%. To the positive, eMoney has continued to grow, reflecting an increase in the number of our eMoney partnerships and high-quality top-up activity. The strength in our card payment business is obvious and sustained recovery in our parcel volumes post the first lockdown. These are positive trends that have continued to the current year. Turning now to strategy. The key to our strategy as we look forward is to ensure we're doing a number of things. We're assembling the capabilities, the technology and the skills that we need to maximize the growth prospects in the markets we operate in or have the opportunity to move into. We need to organize ourselves as a business in a way which best responds to the macro trends we can see in these markets, and we need to be delivering high-quality operational execution and holding ourselves to account in a way this business has not done before. The output of this thinking is described here. The 3 divisions that respond to this are: payments and banking; shopping; and e-commerce. And dividing the businesses in this way responds to the macro trends of cash through to digital payment, shopping locally and the explosion of e-commerce. Through this clarity, we should be expected to deliver in each of the customer segments. Through these capabilities, we need to deliver the right outcome. And as an example, if we look at payment and banking, this is going to be delivered through MultiPay, cash through to digital, eMoney, cash in and out and banking. If we look at shopping, this is going to be delivered through an improvement in the quality of our retail proposition, higher quality EPoS, a clear FMCG proposition, store-to-door, broadening of our ATMs and a broadening of our card payments proposition. And in e-commerce, it's actually the growth in Collect+. It's the development of a Send proposition and really the development of a high-quality technology platform. And these are great examples of actually how we're thinking about our strategy as we take the business forward, and we'll have more to say on this at the Capital Markets Day later this year. If I turn to the next slide, for us, as a management team, this brings to life what we think the future opportunities for this business really look like. Historically, our business has been confined largely to the inner dark yellow circle of traditional PayPoint legacy proposition businesses. And as we look forward, the really exciting thing to recognize is the expansion of opportunity as we've grown our brands and networks and capabilities such that we've earned the right to enter new sector verticals and payments, banking. And if you look at the payments and banking section here on the top left, we now have the capability to enter the newspaper vouchering market, to support FMCG, to broaden out our utility capability and to begin to think about banking. Similarly, when you look at charities, we now have capability to actually provide a proposition into the charity vertical. And similarly broaden out our service brands into local authorities and into the housing market as well. And that's a really exciting sort of proposition, which takes us well beyond our traditional [ routes. ] Similarly, if you look into shopping, as we said already, we have the addition of the Handepay brand, which has over 21,000 live merchants. We had 30,000 lease terminal relationships through Merchant Rentals. We have the development of our opportunity with Snappy Shopper. We similarly have opportunities to develop into the SME market and also beyond our convenience retailer section. And in parcels, the Collect+ brand now is wholly owned by ourselves. Similarly, we're now developing our website into a Send proposition. And we developed that business beyond a one carrier partnership with the aim into a multi-carrier e-commerce relationship with 8 other partners. So the breadth of this really gives us an entirely new landscape with [ which ] to work where we see really good growth. And with good execution and a proper leverage of our capabilities and network is an entirely new set of opportunities here for us to grow our business into the future. And with that, I'll hand on to Alan, who will take you through the numbers.

Yes. Thanks, Nick, and good morning, everyone. The full year detailed numbers are provided in the RNS release this morning, and so I will be concentrating on the key points in this presentation. The key metrics being reported all reflect the impact of the headwinds discussed by Nick, as well as the impact of COVID on our transactions and the early contribution from our new acquisitions. Profit before tax from continuing operations declined by 61.1% as a result of these impacts and GBP 16.1 million of exceptional costs, which include the provision in respect to Ofgem. This year, we have revised the treatment of Romania to that of a discontinued operation whilst awaiting completion of sale, which now gives a clearer view of the U.K. businesses being our continuing operations. Romania profit before tax increased due to improved margins for transactions [ planned. ] The key number I want to focus on is the GBP 35.5 million underlying profit before tax from continuing operations. This excludes Romania's performance and the exceptional costs and is analyzed in the next slide. Cash generation remains strong, and new financing facilities have been put in place to fund the net GBP 60.8 million used for the 3 acquisitions. At year-end, we had net debt of GBP 68.2 million, which has since reduced due to the GBP 48.3 million proceeds from the disposal of Romania, which completed on 8th of April. A 16.6 final dividend is declared, a 6.4% increase consistent with the previously announced policy, and this will be paid in 2 equal installments. Turning now to the underlying profit before tax from continuing operations, this has decreased by 19.3% compared to the prior period. To pull out the underlying performance from last year's profit before tax, we have firstly excluded Romania to focus on the continuing U.K. business. We then adjust for the impact of the [indiscernible] British Gas contract. As that was our biggest client, it means the years would not be comparable. We've also then adjusted for the one-off benefit in the prior year of canceling bonuses and pay rises. This gives a prior year starting point of GBP 44.1 million. The changes in underlying profit have 4 main drivers. Retail Services net revenue has pleasingly grown GBP 1.5 million overall. However, you can see bill payments and top-ups have suffered from the headwinds and COVID we have discussed. The GBP 9.9 million decrease in this category has driven the reduction in underlying profit. I will review these changes in net revenue in the next slide. We now have our new acquisitions contributing to our underlying results, with Handepay and Merchant Rentals providing GBP 0.5 million for their first 2 months. Finally, costs have increased GBP 0.7 million overall, in line with expectations, and these are reviewed in a later slide. Reflecting the exceptional items arising in the year brings us back to profit before tax from continuing operations. Now let's just review the changes in underlying net revenue, which is similar to those reported at half year. Bill payments decreased 25.3%, and top-ups decreased 10.4%. Nick has explained the structural changes we have faced with the annual decline in cash usage, but COVID has probably accelerated this with a step change in the period. As you have seen in the earlier transactions analysis, bill payments and top-ups have suffered as a result of COVID impacting consumer habits. We have seen less frequent visits and increased average transaction values affecting volumes along with consumers using digital more. MultiPay and eMoney, which we included in this business area, demonstrate the switch of consumers to paying digitally. MultiPay had a 6.8% decline due to utility taking their business in house. But other MultiPay grew by 14.1%. eMoney continued its strong performance and grew net revenue by 25.8%. Our core growth area, Retail Services, continued to show underlying net revenue growth with GBP 4 million or 10.6% to reach GBP 45 million. Service fee revenue increased by GBP 1.5 million or 11.5%, driven by an increase of 1,700 PayPoint One sites since this time last year. Site increases in the higher revenue points of Core and Pro and despite waiving the annual RPI increase to help our retailer partners in COVID times. Card payments increased by GBP 3.4 million, benefiting from the COVID changes in the convenience sector, with cards being the preferred method of payment and PayPoint being well positioned to take advantage of this. The new card business acquisitions contributed GBP 2.5 million for 2 months to net revenue, a very positive start. ATM net revenue reduced by GBP 2.2 million, primarily due to COVID-led transaction volume decreases with reduced demand for cash. Parcels net revenue decreased by 10.1% due to COVID impacts on transactions with many consumers being at home and less demand for typically deliver [indiscernible] parcels. Transactions have steadily increased year-on-year after the first quarter, but many were at lower margins. Turning now to analysis of our U.K. cost base, where we have worked at keeping a tight control within the COVID situation. We are focused on the underlying view. And for prior year starting position, we adjust for the one-off variable pay benefit. We then start with the increases in depreciation and amortization costs from our [indiscernible] investments in our CRM system, which wasn't live for most of last year and the Collect+ brand to grow our parcel business. These are partly offset by cost efficiencies and lower depreciation due to a number of assets reaching their end of life. We then have a number of one-off savings where our transactional costs have decreased, reflecting a decrease in revenue in MultiPay and ATMs. Financing costs were higher due to the full drawdown of the RCF facility at the end of last year to provide comfort against the potential COVID impacts on our businesses and then financing our acquisitions. Total underlying costs for the 2021 were GBP 59.5 million, an increase of 1.1% from the prior period. To get back to the reported costs, we then add the GBP 2 million costs contributed by new acquisitions and the GBP 16.1 million in exceptional costs. The exceptional costs are one-off in nature and consists of the GBP 12.5 million provision for Ofgem that Nick had talked to and costs relating to our new acquisitions and refinancing in support of the acquisitions. With our cash generation, the key point is that we still have strong cash generation from our continuing operations. The profit before tax from continuing operations of GBP 19.4 million has been adjusted for depreciation, amortization, the Ofgem provision and working capital to arrive at a strong continuing operations cash generation of GBP 44.1 million. The cash generated was primarily used to pay dividends of GBP 21.4 million and a net GBP 60.8 million on our acquisitions. As a reminder, Romania proceeds of GBP 48.3 million were received after the year-end. This, therefore, means that our RCF facility of GBP 75 million is largely, as of today, unutilized. Here on Slide 18, you will see that our balance sheet remains strong with net assets of GBP 39.5 million. You can see the revised treatment for Romania, whereby all of its assets and liabilities, including goodwill, are now reflected on one line, net assets held for sale. Notable changes are the increased goodwill and intangible assets arising from our acquisitions in the year. Other changes include the net investment in finance leases and related block loans that come in via the Merchant Rentals acquisition. We also now show the contingent consideration, which relates to i-movo and the provision in relation to Ofgem. The sale of our business in Romania completed on 8th of April with proceeds of GBP 48.3 million. These funds were reduced -- used to reduce the borrowings, and we have shown an adjusted balance sheet to help understand the impact of the disposal. On this basis, net assets increased by GBP 31.8 million, reflecting the estimated gain of GBP 29.6 million from the Romanian disposal. The dividend and financing slide covers a number of topics. Our dividend policy targets a cover ratio of 1.2 to 1.5x earnings. Consideration is also to be given to future investment [indiscernible] acquisition opportunities or CapEx to drive future revenue or provide resilience and efficiency. Consistent with that, we're declaring a final dividend of 16.6p, an increase of 6.4% payable in 2 installments on 29th of July, 2021 and 30th of September, 2021. This dividend reflects the confidence we have in the business for the future. Just as a reminder, when considering comparators, we announced at the previous year-end the ending of the additional dividend program. We have also set out our new increased financing structure that can support future growth. Since the year-end, we have paid GBP 6 million to acquire RSM 2000 for a further GBP 1 million deferred. And have recognized a deferred liability in respect to i-movo, of which GBP 4 million could be payable in cash. With regard to CapEx, based on current plans, we expect to be spending GBP 10 million to GBP 12 million. This outlook slide summarizes our current views for the financial year ending March 31, 2022. The current year has seen a step change in strategic delivery, whilst delivering a solid financial performance against the backdrop of structural changes to our legacy markets and the impact of COVID-19. The business has proved its resilience with network recovery and employees adapting to new working practices. We have strategically repositioned our business for growth, driven through acquisitions of Handepay, Merchant Rentals, i-movo, RSM 2000 and investments in our core U.K. market. The disposal of Romanian businesses completed in April with the proceeds of GBP 48.3 million, with GBP 29.6 million estimated gain on disposal. We now have an enlarged PayPoint group reach with an expanded addressable universe of over 60,000 retailer partner and SME locations across multiple sectors. The business is better positioned to take advantage of the trends accelerated through COVID-19, including the continued shift from cash to digital payments, the growing demand for online shopping fulfillment and the increase in shopping local. A final dividend of 16.6p per share declared, the increase reflecting confidence in the business and the enhanced growth prospects. We've had a positive start to the new financial year with a number of encouraging trends. Our growth revenue drivers of card payments, MultiPay, eMoney and parcels are progressing well. All of this underpins the Board's confidence in a positive underlying performance as an overall expectation for the year to 31st of March, 2022. So now I will turn over to Nick to start talking you through the operational review.

Thanks, Alan. Turning to the next slide, I think it's fair to say our offering has moved on materially over the year. I'm breaking it down into 3 areas. Firstly, with PayPoint One, we've made significant progress in the enhancement of our retailer proposition. We're engaging better with our retailers, providing a higher level of service, hopefully a better retailer experience. Our new initiatives include the rollout of an FMCG proposition, our home delivery partnership due to roll out with Snappy Shopper later in the current year, better EPoS adoption, an overall better feel to the way that we're working day-to-day with our retailers. In cards, we're seeking to enhance our card proposition with better onboarding, net settlement and soon to be announced a card switching proposition. And in ATMs, we're actively managing our estate with enhanced cash availability in-store through the planned rollout of our cash with our purchase proposition, following changes to legislation, such that we'll become a network of cash availability points. If you look at the table on the top right, you see the growth in our sites. You see the improvement in our mix, and you see a growth in the average service fee from GBP 15.40 up to GBP 16.30. And importantly, you will see an improvement in our Trustpilot score, which now sits at 4.8. Turning to our Parcels business. I think we're now really getting it right with our parcel proposition. We have strong parcel partnerships. We're improving our parcel journeys and customer experiences. We've got additional new partnerships coming onstream. We're adding technologies, such as Zebra printers to improve the in-store experience, and we're in the process of launching -- [ porting ] with marketing our Send service driven through our website. In our cloud business, we've perhaps seen the biggest step change over the past year. We've seen a major expansion of our digital services and capabilities that we can offer our clients. We've seen a strong diversification from our cash-to-cash digital solutions. We've continued to grow strongly in our eMoney volumes and partnerships, and we responded to the high demand for our Cash Out service, both for governments and local authorities. And we've launched a number of new MultiPay portfolio enhancements. As you can see from the pie chart on the top right, one of the really encouraging things is the strength of our new business mix and diversification from our real legacy energy [ routes. ] And you can see the growth in housing, you can see the opportunities arising in charity, e-money in memberships and financial, mobile and in parking. And as you can see, overall, a much broader mix to our business, which we expect to continue into the year ahead. Turning to the contribution for our acquisitions. I think it's fair to say each of our acquisitions are integrating really well. It enhanced our capabilities and opportunities in the new sectors or plants. i-movo's brought a voucher innovation, innovations in the area of cash deposit and withdrawal, an entry point into a number of additional government contracts in addition to new sectors, such as the newspaper digital vouchering. Handepay, Merchant Rentals has had a terrific start since acquisition, and the recovery in transacting merchants and process card volumes have been really strong, and that's continued with force into the current financial year. And we believe there are significant opportunities to grow our merchant estate beyond our traditional grocery retailer network through the acquisition of Handepay and Merchant Rentals. And we've made real strides in building the organization and culture needed to deliver the future opportunities in our business. Our executive team has been materially strengthened. We have a greater focus now on our systems resilience and service delivery. And overall, the focus is very much on operational delivery. Just for a moment, I just wanted to turn to really our investment case. And I think as I've already shared with you this slide earlier in the presentation. But what it really does do is highlight the step change and opportunity our business has as we look forward. The expansion of our brands and our network beyond our traditional legacy in the dark yellow is really significant. In each area, there are now new opportunities for growth as we explore, where we can take the business in payments and banking, where we can take the business in terms of supporting shopping and how we can develop further our e-commerce fulfillment with our partners centered around the Collect+ brand. And I think there's real excitement from our team as we look at actually how we've really got an expanded universe here where markets are growing and opportunities are really abound for us for the capabilities we've got within our network today. If you see what that means, really, as we think about the priorities for the year we're now in, our priorities are really aligned to our growth opportunities. And I think that the 4 strategic priorities you see here are ones that you should be familiar with. And I think what is new is the alignment of these to our business divisions being shopping, e-commerce and payments and banking. And I think really the macro trends that they're responding to in terms of shopping locally, e-commerce and cash through to digital. And increasingly, you will hear us talk about this structure in the way that we actually describe our business. And as the year progresses, I think it's our intention really to disclose our numbers in this way as we get to the half year. As we said already, we'll talk further about that in our Capital Markets Day later in the year. If you look at the shift, as it relates to the investment case and look at it in the context of the business, you can see there are some really fundamental things happening in our business today. In retail services, we're embedding combined and restructured sales teams across both PayPoint and our new businesses. And to that end, we're really developing much stronger and broader retailer relationships. As I've said already, we're really enhancing our retailer proposition, including the launch of an FMCG proposition. We're launching new money, eMoney clients, and probably the best example of that is our partnership with Appreciate and Love to Shop. And we'll continue to strengthen our EPoS adoption and supporting new channels to deliver support and service to our retailer partners. Underway already is the next-generation of development for our terminal strategy, to create an easier-to-use platform on which we can actually build further services and products. As we've said, we're working in partnership with Snappy Shopper to deliver for our retailers a home delivery and Click & Collect proposition, which we're rolling out through the summer of this year. And actually, our LINK Counter Service supported by an extension to our trial to the end of October, will be deployed in scale from November, providing access to cash and supporting government initiatives for an access to cash in the community. In card payments, we're bringing whole new business across both PayPoint Retail and Handepay under a single acquiring service from the middle of this year. We're launching our PayPoint switching proposition in the second quarter of this year, and we're driving further value with the introduction of relationships into Merchant Rentals as we actually sign new introducer partnerships. I've talked a lot about parcels already. But we're really establishing a parcel business today, which has a best-in-class technology platform. We're scaling our send service, we're adding further partners during the course of this year ahead of peak, and we're expanding our service proposition to our existing partners, with things like staged send in store -- in-store printing and leveraging our Zebra printing investment that we made in the last year. And all this is around improving the in-store consumer experience and our partner retailer experience and a great platform service. And then finally, turning to what we're doing with our client business. I've already talked a lot today about the enhancement of our digital capabilities and the opportunities this created in this sector as we look to new verticals within this market. We're leveraging the RSM 2000 acquisition, which will enhance our digital payments capability, give us new sector reach. We are, as I said, already, investing in new verticals, deliver new business wins, particularly within housing, within events, within charities and the not-for-profit sectors. We've put together a bid management team such that we can focus on larger and more complex tenders, which really center around the digital payments capability that we've developed. And as you could see here on the right, we're launching a comprehensive digital payment offering through MultiPay, which really allows a full deployment of digital payment channels. And you can see in the bottom box here that we're really accessing customers and clients through a range of channels, offering a range of payment capabilities in a way that we just haven't been able to do before. And I think this is incredibly exciting as we look at new opportunities in new markets. And I think really what brings us all together is a reinvigoration of the business culture and based on which we're doing business day-to-day. I think we've redefined our purpose, we've really sharpened our vision, and we really, really refocused our values in the business. Because to deliver the synergies we need and the growth opportunities available to us, we need to have a really tight, well organized team that's really focused on operational delivery. And I think that we're really embedding the purpose and values that we've described here in the business today in a way we haven't done before. And this you see through our approach to ESG and how this response to the sustainable approach will deliver value for our shareholders. So I think with that, really, I would like to pull together the thoughts really and actually invite questions.

[Operator Instructions] We will now take our first question from Kai Korschelt from Canaccord.

I have 3 questions, if that's okay. The first one relates to the Ofgem situation. So my understanding is the, sort of, penalties are typically capped at 10% of sales, and it looks like the GBP 12.5 million provision you booked, I assume the sort of worst-case scenario. So I guess my question is, is that a fair assessment without you obviously being able to provide a lot of extra detail? And then secondly, also in terms of the timing, would you expect a final resolution of this matter in the current financial year? That's the first one. The second one was around the dividend policy. I think you have a sort of small net debt underlying if you factor in the Romania proceeds. How do you balance, I guess, going forward, the desire to accelerate the strategic transformation of the business with the dividend. So if you have any color or comments on that, that would be great. And then the third one was just around e-commerce. My understanding is Handepay does have an e-commerce gateway for some of the SME customers. I'm not sure how large that is. But is there any desire to pursue the e-commerce opportunity outside of Collect+, so perhaps more on the payment side in the future? And that's it.

Thank you, Kai. I'll just deal with the Ofgem question, if I may, first. I mean, with the position, Kai, which I hope have been clear is that we really can't add any color or commentary to what we have said formally. We have, as I said in the presentation, been in active engagement with Ofgem. Clearly, in closing our accounts for the year, this is our very best estimate as to the resolution of this matter. And I can't give you absolute guidance as to the timing of this. But clearly, we're closer to the end than we are at the beginning of this. And this is very much our best estimate of, of where we're likely to land in terms of the financial impact of this to the business. But I really can't comment further on that. And I certainly can't relate that to whether it's a fair assessment or whether it's in relation to the turnover or any other measure. So I'm sorry, I can't be more helpful on that at the moment. Alan, do you want to comment on dividend policy?

Yes. Thanks, Nick. Yes, I'd say the dividend, we've laid out, I'd say, the range we're going to work with in guiding earnings, which is 1.2 to 1.5. You point out, say as from the balance sheet slide on 18, after we use the remaining proceeds, our net debt is down to GBP 27.8 million. Yes. We've also said with our dividend policy, we will consider investments, both maybe acquisitions and investments to grow our business. So therefore, we're kind of balancing all of the use of our cash. But we will stick within those kind of 3 guidelines.

And then your final question around e-commerce. I mean, clearly, our ambitions are focused around the e-commerce fulfillment comes with operating in Collect+ and the huge opportunities we see there. In terms of our payments capabilities, more broadly, we see some real opportunities working with those clients and SMEs that are operating online that need support through payments. And we've had a number of material conversations already where we can demonstrate payment capabilities, which open up opportunities for us there. And already, we're interested actually in where some of those may lead. But I mean that's more in terms of digital payments rather than going beyond that.

We will now take our next question from Joe Brent from Liberum.

Three questions, if I may, and perhaps do them in turn, make it a bit easier. The first one, you talked a little bit about the FMCG proposition. Could you just expand what you mean by that?

Yes. I mean, look, one of the really interesting things -- I mean, people talk about data and about sort of understanding what flows the convenience sector see on what opportunities they see around, sort of, promoting products from the key brands and the key brand owners. And I think that if you go to the malls and to the major grocers, there's sort of -- there's so much data available to brand owners as to how they position their brands in the multiples that they rather take it for granted. And then the one area of the market, which they've been most challenged by, is actually to find data and an understanding of customer behaviors through the convenience sector. And one of the things that we've been working with a number of brands on is developing a better understanding for them of what sits in what baskets with our customers through the convenience sector, and how they better position their brands and promote their brands actually through our network. And we're working with a number of quite big brand owners at the moment actually, well how we can begin to work with them to develop brand propositions, promotions, vouchering all through our own network. And clearly, there's a value there to the retailer in terms of preferential pricing. There's value to us in terms of actually driving footfall and potentially revenue actually from those relationships. And we're talking about the likes of BAT and Nestlé and other major brand owners.

[indiscernible]

[indiscernible] data.

Yes. Understood. And secondly, you talked about 60,000 retail partners. Do you know what the prior year equivalent number was roughly?

Well, it has been before the Handepay, Merchant Rentals.

It's about 28,000 so far.

27,000.

27,000, the old year number. And then finally, on Handepay, I mean, that crops up a lot in the presentation. And I think is your largest acquisition recently. Can we just focus on that for a second, identify some of the growth opportunities that you see for that business.

Well, historically, our card proposition was very focused on our retail to PayPoint One estate. And I think as a business, we've been really challenged to think about how we broke out of that sort of [indiscernible] estate, if you like. With Handepay and Merchant Rentals and particularly Handepay, you've got a very different approach to the ISO and prospective merchants and card merchant market. They have a much broader sector base. They've got a very proactive sales team, and they've got a very proactive way of actually, sort of, pricing and onboarding, all of which is incredibly sensitive to potentially switching business in actually the card market. They've actually bounced back very strongly from COVID. They now have more than 15,000 active versions purely off the EVO book alone, over 21,000 in total. And they're right at the sharp end of actually what's seen as sort of the consumer spending recovery that we've seen over, really, the last sort of couple of months. And I think that's very much reflective in actually the growth we're seeing in the card processing that they've actually been managing. And I think it's a very, very encouraging start to the ownership of that business. I mean, longer term, as we said already, there's the opportunity to really have all new business across both the PayPoint estate and also the Handepay estate under 1 acquirer. And with that, bringing additional sort of opportunity, particularly around sort of onboarding settlement and also other sort of things which come actually with a strong relationship with the right acquirer. So I think Handepay has a really strong position in the card merchanting market. And I think there's real growth opportunities there as more and more merchants embrace the breadth, actually, of card processing.

In terms of verticals, probably most exciting for Handepay, would that be hospitality?

I think you probably would. And actually, with that, bear in mind, in due course, as the opportunity to broaden out the product offer there and broaden out the proposition and you can see how parcel sits with some of the Handepay merchants. You can see how EPoS -- or [ flavor ] EPoS sits for some as well, an integration into Snappy Shopper potentially, whether it's actually sort of eMoney partnerships that could work there, or indeed actually sort of other actually parts of the proposition. So you can actually see developing here a menu of proposition, which can be sort of altered to actually sort of suit whichever aspect of the estate that we have. So from a very sort of narrow perspective, the Handepay card relationship today, could be a much broader one in the future where you have got Handepay merchants who want to take off, off that PayPoint menu of proposition to work and enhance our own proposition on the ground.

[Operator Instructions] We will now take our next question from [ Thomas Kunkel ] from Jefferies.

[ Tom Kunkel ] here on behalf of Will Kirkness of Jefferies. Unfortunately, he can't make it, so he passes on his apologies to you both. I've just got a couple of questions, if I may. The first being, where do you see the mix of EPoS in terms of the base core and pro. Do you think they're at the right levels? Or will you be targeting a different mix in those for the coming up year? And then also in retail, do you feel that the pricing is at the right level?

Yes. I mean, look, I think if you look at Page 22, one of the things we've tried hard to do is to move base up to core and core up to pro. And we will continue to work with our retailers. And I think that's very much been the thinking behind our Try Before You Buy initiative where essentially we offered our retailers the opportunity to move up to the higher price points for free for a period of 3 months to try what that price point came with in terms of, sort of, additional sort of opportunity. And we will continue to push on with that. As you know, we only bring change of ownerships [ in ] a new PayPoint in core now. And I think really, the way that we look at it, actually, is that we want as many pushing on and using the functionality of EPoS to the highest point. And hopefully, they will see -- the retailers will see the value of that and actually be willing to pay for it. In terms of service fees, I think the reality is that what we see increasingly is that we will drive revenue from driving a richer retailer proposition. And I think the things that we've described today will be the principal drivers of revenue from our retailer network over the next period. And I don't think that our intention is to drive service fees. But certainly drive more quality and more value through the retailer proposition, whether that's with the LINK Counter, whether that's with Snappy, whether that's with eMoney partnerships or with parcels, such that the retailers get more opportunities to generate commission. And clearly, we get more opportunity to generate revenue.

That's great. Sorry, just one final one here. Regarding Merchant Rentals and Handepay, are you able to give us any more information on the expected revenue and cost synergies coming from that?

Yes. Thanks, Thomas. It's a bit early to say. As I say, in the results presentations, we've shown that net revenue was GBP 2.5 million for 2 months. And overall, there were contribution of GBP 0.5 million. You got to think about what business lines they're in for those 2 months, February and March, we were still coming out -- very much coming out of lockdown. So I expect greater things, say, in the future for those. I think the good thing is we brought their people back from furloughs, so their sales force can hit the ground running, as the economy opened up after COVID. So I would expect better than what you've seen for those 2 months. But I think it's still early days to actually be any more precise. But I'm very happy what I've seen in April, whether -- I'd say merchants have come back. So the EPoS book, which is the main new business book, has been doing very well.

We will now turn the call back to Mr. Nick Wiles for any closing remarks.

Thank you, Emma, and thank you very much, everybody, for joining us today, and we look forward to updating you further at our AGM at the end of July. Thank you. And have a good day.