Clipper Logistics receives requests for logistics support from non-retail sectors

Volume reductions have resulted in modest impact on performance to date

Clipper Logistics has received notable additional requests from several of its grocery-related customers to provide supply chain support to their existing infrastructure as a result of the demands placed upon them by COVID-19.

This includes warehousing, cross-dock, picking and transportation, and Clipper is now actively engaging with all the major food retailers to provide such support services.

In addition, Clipper has received further requests for logistics support from other sectors of the economy, and will update the market as these are formalised. COVID-19 has resulted in a fast-changing environment and Clipper is developing solutions to resolve the challenges placed upon non-retail supply chains caused by the virus.

The Board is continuing to monitor the overall impact of COVID-19 on the business, both in terms of its operations and the effect on its customers. The Company will update the market in due course when the position becomes clearer. However, it should be noted that the Group’s contract mechanisms in the logistics sector both in the UK and Europe provide a good degree of profit protection and cash generation in the event of volume reductions, and this has resulted in only a modest impact on the Company’s performance to date.

The Company is expecting net debt at its 30 April 2020 year end to be c.£42.0 million, slightly more than 1x EBITDA (pre-IFRS16 adjustments). At that level, it would have headroom of over £30.0 million in its banking facilities, and very substantial headroom against its net debt covenant of 2.5x EBITDA.

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In addition, Clipper is owed £29.0 million from its open book customers in respect of capital expenditure funded on their behalf and due to be repaid over the balance of their contracts. Such asset funding only takes place where a customer’s credit status warrants this. The Company’s ‘look through’ year-end net debt, adjusting for these sums, is therefore expected to be c. £13.0 million.

Clipper will continue to provide support through utilising and mobilising its Europe-wide sites, personnel and fleet thereby alleviating significant supply chain pressure which benefits retailers and consumers alike.

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