Clipper Logistics : Interim Results for the 6 months to 31 October 2020 (PDF)

CLIPPER LOGISTICS PLC

INTERIM RESULTS FOR THE SIX MONTHS TO 31 OCTOBER 2020

Strong momentum continues driven by the structural shift to e-commerce; upgrading full year expectations

Clipper Logistics plc ("Clipper", "the Group", or "the Company"), a leading provider of value-added logistics solutions and e-fulfilment and returns management services to the retail sector, is pleased to announce its unaudited results for the six months ended 31 October 2020 ("H1 FY21").

Financial Highlights

• • Group revenue up 19.8% to £305.2 million (six months ended 31 October 2019 ("H1 FY20"): £254.8 million) with strong revenue growth of 37.7% in e-fulfilment and returns management services.

• • Reported Group EBIT increased 21.7% to £20.2 million (H1 FY20: £16.6 million), due to strong growth in e-fulfilment and returns management services and an improvement in contribution from Clicklink.

• • In H1 of FY20, reported EBIT included the benefit of a negative goodwill credit of £3.5 million ("Non-underlying factor"). Excluding the impact of this Non-underlying factor from the prior year, underlying EBIT increased 54.3%:

  • o E-fulfilment and returns management services EBIT up 36.8% to £14.8 million (H1 FY20: £10.8 million), including £0.4 million positive contribution from Clicklink (H1 FY20: £(0.4) million), and up 63.3% adjusting for the prior year Non-underlying factor;

  • o Non e-fulfilment logistics EBIT up 4.1% to £10.1 million (H1 FY20: £9.7 million), and up 26.9% adjusting for the prior year Non-underlying factor;

  • o Commercial vehicles EBIT up 51.0% to £1.6 million (H1 FY20: £1.1 million).

• • On an IAS 17 basis, in order to provide comparability with historical results, EBIT was ahead 27.0%, with underlying EBIT ahead by 78.4%, and profit before tax was ahead by 118.9% compared to the same period last year.

• • Group Profit Before Tax and Amortisation up 34.7% to £15.0 million (H1 FY20: £11.1 million).

• • Group Profit Before Tax (PBT) up 38.2% to £14.3 million (H1 FY20: £10.4 million).

• • Cash generated from operations of £49.1 million (H1 FY20: £19.1 million), reflecting increased customer activity within UK Logistics and improved working capital position.

• • Significant reduction in net debt since FY20 to £27.7 million (H1 FY20: £64.4 million). Of net debt, £32.4 million is directly recoverable through open book mechanisms.

• • Basic earnings per share up 40% to 11.2 pence (H1 FY20: 8.0 pence).

• • Interim dividend increased by 14.3% to 4.0 pence per share (H1 FY20: 3.5 pence).

Operational Highlights

• • Clipper has continued to see strong trading across the business in H1 FY21, benefiting particularly from the continued structural shift to e-commerce that has been accelerated during the ongoing COVID-19 pandemic.

• • The Group has increased its distribution centre portfolio to accommodate this increased activity and now has 52 sites throughout the UK and mainland Europe with over 14.5 million square feet of warehouse space under the Group's management.

• • Clipper has processed over 7.4 billion items of PPE and issued 3.9 billion items on the NHS contract since its commencement at the end of H2 FY20.

• • Commencement of new operations in H1 FY21 with N Brown, Gordon Bros, H&M, Joules, Linenbundle, Lussostone, Revolution Beauty, T M Lewin and Unipart.

• • This momentum will continue into H2 FY21 as new operations commence with high profile customers.

• • Continued implementation of automation programmes including the use of robotic technology with a number of UK customers. Currently exploring a shared user facility utilising autonomous mobile robots ("AMR") with Geek+.

• • Technical Services continues to perform strongly, processing record volumes, within the UK and Europe.

• • Awards from various logistics institutions, including the Chartered Institute of Logistics and Transport as well as being accredited by the Good Business Charter, the first logistics company to receive this accreditation.

• • Clipper Logistics was named 2020 National Courier Awards Military Collaboration winner for their work with 101 Logistic Brigade in support of the NHS in the fight against COVID-19.

Current Trading and Outlook

• • Full year earnings expected to be ahead of the Board's previous expectations.

• • Shortly after the period end, Clipper has delivered a successful Black Friday weekend, with many sites reporting record volumes.

• • Remains positive about the longer-term outlook and believes the Group is well positioned to achieve further growth both in the UK and internationally.

Commenting on the results, Steve Parkin, Executive Chairman of Clipper, said:

"The Group has successfully chartered the uncertainty and disruption caused by the pandemic to deliver impressive revenue growth of 19.8% and underlying EBIT growth of 54.3%. The Group benefited directly from the structural shift and acceleration of online retail such that our e-fulfilment and returns management division saw underlying EBIT growth of 63.3% which included a positive contribution from our Clicklink joint venture."

"In addition, we are immensely proud of the operations which have commenced in the period with major customers including N Brown, Joules, Linenbundle, Revolution Beauty, T M Lewin and Unipart."

"I would like to thank all colleagues, who have worked tirelessly to continue to support our customers through the pandemic."

"We have a solid new business pipeline in the UK, and we have the infrastructure to deliver innovative, technology-focused omni-channel solutions to retailers."

"Whilst conscious of the UK macro-economic climate, given our strategic positioning in the e-commerce sector, we remain positive about the long term outlook. It is pleasing trading has continued to be positive post-period end, with the key Black Friday trading weekend seeing record daily volumes for many customers. We therefore expect full year earnings to be materially ahead of the Board's previous expectations. Given this financial and operational momentum, Clipper remains confident that the Group is well positioned to achieve future growth, both in the UK and internationally."

A conference call for sell-side analysts only will be held at 09.30am today, 3 December 2020. Please contact Buchanan [e-mail] you wish to attend.

ENQUIRIES Clipper:

[phone]

Steve Parkin, Executive Chairman Tony Mannix, Chief Executive Officer David Hodkin, Chief Financial Officer

Public Relations Advisers: Buchanan:

[phone]

David Rydell Stephanie Watson

This announcement is released by Clipper Logistics plc and contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 ("MAR"). It is disclosed in accordance with the Group's obligations under Article 17 of MAR. Upon the publication of this announcement, this information is considered to be in the public domain.

For the purposes of MAR and Article 2 of Commission Implementing Regulation (EU) 2016/1055, this announcement is being made on behalf of Clipper Logistics plc by David Hodkin, Chief Financial Officer.

About Clipper

Clipper Logistics plc (www.clippergroup.co.uk), which is premium listed on the Main Market of the London Stock Exchange, is a retail logistics specialist, which provides value-added, consultancy-led services to its blue-chip client base. Clipper is a UK leader in its markets, with a long-standing customer base in:

• • e-fulfilment

• • Fashion

• • high-value logistics

A profitable and cash generative commercial vehicles business complements the Group's logistics activities.

Cautionary statement

Any forward-looking statements made in this document represent the Board's best judgment as to what may occur in the future. However, the Group's actual results for the current and future financial periods and corporate developments will depend on a number of economic, competitive and other factors, some of which may be outside the control of the Group. Such factors could cause the Group's actual results in future periods to differ materially from those expressed in any forward-looking statements included in this announcement.

PERFORMANCE AT A GLANCE

6 months	6 months	Year
ended 31	ended 31	ended 30
October 2020	October 2019	April 2020
(unaudited)	(unaudited)	Change	(audited)
£m	£m	%	£m
Revenue	305.2	254.8	+19.8%	500.7
EBIT	20.2	16.6	+21.7%	32.5
EBIT (excluding Non-underlying factors)	20.2	13.1	+54.3%	29.0
Profit before tax and amortisation	15.0	11.1	+34.7%	21.3
Profit before tax	14.3	10.4	+38.2%	20.1
Earnings per share	11.2p	8.0p	+40.0%	15.9p
Cash generated from operations	49.1	19.1	+157.6%	66.8
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ALTERNATIVE PERFORMANCE MEASURES ("APMs")

APMs are used by the Board to assess the Group's financial performance, for analysis and for incentive-setting purposes. These measures are not defined by International Financial Reporting Standards ("IFRS") and therefore may not be directly comparable with other companies' APMs, including those in the Group's industry. APMs should be considered in addition to and are not intended to be a substitute for IFRS measurements. The table below reconciles APMs to statutory measures as defined by IFRS.

Six months ended 31 October

2020	2019
£m	£m
Statutory	Adjustments	Underlying	Statutory	Adjustments3	Underlying
EBIT1	20.2	-	20.2	16.6	(3.5)	13.1
EBIT (IAS 17 basis)2	15.4	-	15.4	12.1	(3.5)	8.6
Net debt4	186.7	(159.0)	27.7	242.0	(177.6)	64.4

1EBIT is defined as operating profit, including the Group's share of operating profit in equity-accounted investees and before the amortisation of intangible assets.

2EBIT (IAS 17 basis) is defined as operating profit, including the Group's share of operating profit in equity-accounted investees and before the amortisation of intangible assets and excludes the impact of IFRS 16.

3The adjustment to EBIT in the six months ended 31 October 2019 was a £3,499,000 negative goodwill release relating to the IFRS 3 business combination.

4Net debt is defined as financial liabilities: borrowings less cash and cash equivalents less non-current financial assets less short-term and long-term lease liabilities. Underlying net debt excludes lease liabilities arising as result of IFRS 16.

OPERATING AND FINANCIAL REVIEW

Group summary

Revenue

Group revenue increased by 19.8% to £305.2 million (H1 FY20: £254.8 million).

Group revenue growth of £50.4 million was wholly attributable to growth in the e-fulfilment and returns management business activity. In the Logistics division, in the UK: approximately 10% of this growth was due to the full six months impact of new contracts won in H1 FY20; approximately 50% was due to revenue growth on new contracts won in the second six months of the prior year ("H2 FY20"); 10% was due to revenue arising from contracts won in H1 FY21; and the remainder was due to organic growth in existing customers in the UK. Within Europe and the Commercial vehicles division, revenue declined in H1 FY21 compared to H1 FY20 and was directly attributable to the impact of COVID-19, with the closure of non-essential retail.

New contracts which commenced in FY20 include Amara Living, Hope & Ivy, Simba Sleep, SLG and the Very Group. New contracts which commenced in H1 FY21 include: H&M, Linenbundle, N-Brown, Next, Revolution Beauty, TM Lewin and a significant increase in supporting Supply Chain Coordination (NHS) with the storage and distribution of PPE. Against this, the following customers have been lost: Antler, M&Co and Secret Sales (due to entering administration).

Please refer to the Segmental Review section for a more detailed discussion on each operating segment.

EBIT

Group EBIT increased by £3.6 million, or 21.7%, to £20.2 million (H1 FY20: £16.6 million), in part due to the strong revenue growth of 19.8% discussed above. In addition to these revenue drivers, included in the prior year is a material Non-underlying factor of £3.5 million from a negative goodwill credit arising on a business combination in H1 FY20. There was no similar contribution to EBIT in