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Robert.Jervis_43227 Jun 07

Wippet acquired by Clipper Logistics

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Yorkshire-based company also announces trading update & ASOS contract extension
Clipper Logistics has provided a post-close trading update for the year ended 30 April 2021 ("FY21").

Steve Parkin, Executive Chairman commented:

"FY21 has been an unprecedented year which demonstrates again the strength and resilience of our model and the ability of Clipper to deliver a strong performance in the rapidly changing e-commerce and retail environment.  We have enabled retailers to overcome challenges and adapt quickly by rethinking the way to operate both their online and bricks and mortar channels. Additionally, we have entered the life sciences sector in support of the NHS and care sectors, providing fulfilment of vital supplies.  The uniqueness of our full end to end solutions combined with our agile and able culture has accelerated our contract wins in the UK and mainland Europe which is testament to our expertise and execution of our strategy. We are very well positioned to further accelerate growth by capitalising on the structural shift to online and to position Clipper as a global e-commerce and retail logistics enabler. As such, we are pleased to upgrade our guidance for both FY22 and FY23.

"Our key priority throughout this year has been to ensure the safety of our staff and their families and on behalf of the Board I would like to thank all our colleagues across the Group for their commitment and dedication to deliver a very strong year."

“The Group has continued to perform strongly throughout FY21 and full year EBIT (IAS17 basis) is expected to be in line with expectations of £31.6m, an underlying increase of 53% on the £20.6m achieved in FY20 (excluding the negative goodwill which arose in FY20). We expect revenue for FY21 of £698m, 39% ahead of the prior year driven by a combination of organic growth and new contract wins.

“EBIT on an IFRS16 basis is expected to be in line with the market consensus of £40.2m, 39% higher than the £29.0m achieved in FY20 (again excluding the negative goodwill arising in the prior year).

“The structural shift to online accelerated during the year due to the pandemic and we expect to see continuing momentum in e-fulfilment activities post pandemic. Non e-fulfilment also performed strongly driven by new contract wins as retailers looked to outsource, collaborate, and share costs, which plays well to Clipper's shared-user network in its role as an enabler of retail.

“The Company's strong track record of providing innovative solutions, and supporting online retailers in driving growth, cost efficiency and excellent customer service has strategically positioned us well to seize further opportunities. Feedback across our customer base has highlighted the strong level of support we have been able to provide due to our agility and ability to offer adaptable working solutions and services in short timescales.

“Our core e-fulfilment and returns management services saw a significant number of new contract wins during the year including River Island, Mountain Warehouse, Joules, Revolution Beauty and JD Sports in the UK. We have extended into a new geography with a new contract with FarFetch in the Netherlands which commenced in April 2021, as well as recording strong e-commerce growth in mainland Europe and have supported a number of retailers in delivering into Europe efficiently, post Brexit.
 
“The Group continues to have a strong new business pipeline and we look forward to updating the market in due course.”

To further support and extend its reach into the life sciences vertical, Clipper has announced the acquisition of Wippet Ltd.

Wippet will launch an online B2B marketplace to service the broader health care sector in the UK. This new investment is aligned to the Company's strategic intent to extend its penetration into the life sciences sector, which we have previously highlighted as a potential significant growth opportunity for the Company.

Wippet will launch in September 2021 as a B2B online marketplace initially targeting buyers from the fragmented elderly care market, which is a sector worth up to £2.5 billion per annum, alongside vendors who sell to more than 5,500 care homes across the UK.

Orders through the B2B platform can either be fulfilled by Clipper or directly by the vendor. Over time there are potential opportunities to expand the Wippet platform internationally, and also to extend the marketplace platform to other sectors.

Wippet will offer the convenience of a single-portal access to category-specific and specialised products in a highly fragmented market. Vendors to the Wippet portal will benefit from easier access and reduced costs to their target customers.

Wippet will be led by a highly experienced management team with Matt Oxley as Managing Director. Matt has previously held executive positions in major healthcare organisations.

Clipper has also announced a new three-year extension to its contract which will see ASOS further consolidate its mainland European returns into Clipper's facility. As a result, Clipper will grow its ASOS headcount from 350 full-time equivalents (FTE) to 700 FTEs at the Poznan site.

This extended contract with ASOS demonstrates the strength of its European management team which underpins its European growth ambitions.

The Board remains confident in Clipper's prospects for the new financial year and over the medium term and expects that the current momentum from new and existing contract wins will continue given the acceleration in the structural shift to online:
  • as a market leader in e-fulfilment and returns management services, we expect further continued growth in this area
  • we expect to benefit from the mega-trend towards outsourcing as retailers seek to share resources and collaborate to improve service, reduce costs, and focus on their core business. This plays to Clipper's strength in providing shared user infrastructures
  • we expect continuing growth in demand for Click & Collect services as the UK high street re-opens
Given the continued strong trading momentum and pipeline of contracts wins, Clipper expects EBIT (under both IAS 17 and IFRS 16) for FY22 and FY23 to be ahead of Company-compiled consensus (https://www.clippergroup.co.uk/analyst-consensus/) by mid-single digit percentages in both years.

Underpinning the Group's ambition to become a global leader in end to end ecommerce and retail, the Company continues to explore potential M&A opportunities in both mainland Europe and North America.

Given the strong trading momentum and cash conversion, Clipper has reduced net debt (IAS 17 basis) from £45.1m (30 April 2020) to £17.0m (30 April 2021), a net debt / EBITDA ratio of 0.4x, representing significant headroom against its net debt covenant of 2.5x.

Steve Parkin, Executive Chairman of Clipper, added:

"Clipper continues to demonstrate its agility and ability to focus on providing innovative solutions in a rapidly evolving and dynamic environment. As the Company continues to scale up both in the UK and in Mainland Europe, over 70% of our revenue is now derived from online retail. Given our trading momentum and upgraded guidance for both FY22 and FY23 we look to the future with confidence."