Clipper Logistics boosted by new contracts

The group, which provides its services to big e-retailers including Zara and Asos, reported a 22 per cent rise in adjusted pre-tax profits from its e-fulfilment business in the reported period. With revenue of £58.9m, this relatively new division of the group is fast becoming its most prolific. New contracts are coming in thick and fast and the click-and-collect services contract with John Lewis has been extended to full national coverage and formally transferred into a joint venture arrangement.

The original logistics business also performed well in the period, with cash profits up just under a fifth. Here packaging and transport operations for tobacco companies are growing fast, thanks in part to opportunities arising from plain packaging laws.

A sharp increase in net debt due to rising capital expenditure comes as no surprise and is a reflection of the start-up investment required to fulfil two contracts, the largest of which was the new John Lewis distribution hub in Northampton. But its open book payment mechanism means the group will recoup the costs throughout the lifetime of the contracts.

Broker Numis expects pre-tax profits of £16.6m and EPS of 12.7p for the year to April 2017 (from £13.3m and 10.3p in FY2016).