So this is mostly me talking to myself and keeping notes, but Company sent this out the other day - basically confirms that they aren't very affected by coronavirus so far due to the above mentioned open book contracts. I don't know many other business with such a large TAM, such a high growth rate, just a high ROIC and such a low valuation (and apparently rejecting a PE suitor two months ago for twice the price of where it trades today). With a large founder at the helm. They've gotten some criticism recently for still operating their warehouses when something like online apparel sales isn't necessarily urgent. Understand the criticism but it's probably near impossible to refuse to handle their customers' logistics without a government order in hand:
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.
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.