A robust risk management process.
Effective risk management aids decision making, underpins the delivery of the Group’s strategy and objectives and helps to ensure that the risks the Group takes are adequately assessed and actively managed.
Risk management framework
Identify risk
- Business reviews
- Executive and Non-Executive Directors
- External specialists
Assess risk
- Impact
- Likelihood
Respond
- Avoid
- Mitigate
- Transfer
Implement mitigation
- Controls
- Designated owner
Review performance
- Risk and controls testing
- Updates to Audit Committee
The Board is ultimately responsible for the Group’s risk management framework. The risk management process involves the identification and prioritisation of key risks, and the development of appropriate controls and plans for mitigation, together with a comprehensive system of review. There are a number of ways in which risks are identified and assessed across the Group.
At a business level, the management teams are responsible for identifying and assessing new risks, as well as monitoring existing risks. Risks are assessed using consistent measurements of impact and likelihood. Changes to existing risks, the emergence of new risks and plans for mitigation are discussed at monthly management meetings held with the Executive Directors, and recorded in the respective business risk register, as appropriate. The business management teams are responsible for the maintenance of their risk registers. Each business risk register is reviewed twice a year by the Executive Directors.
At a Group level, there is a continuous process of considering risk. New and emerging risks are identified through the reviews conducted at a business level, the experience brought by the Executive and Non‑Executive Directors and the engagement of certain external specialists in areas including IT security, health and safety, pensions, taxation and climate. At a business level, each risk is assessed based upon its impact and likelihood. The Group maintains a consolidated risk register whereby each recorded risk has a designated owner who is responsible for ensuring that effective controls are in place to mitigate the risk. The consolidated Group risk register is reviewed at least twice a year by the Audit Committee.
The Board obtains assurance that the risk management and related control systems in place are effective through a rolling programme of risk and controls testing across the Group and internal control updates to the Audit Committee at each meeting. Further details can be found on page 54 of our Annual Report and Accounts 2025.
The transitional risk of climate change is considered to be a principal risk. Further information relating to both transitional and physical risks and opportunities of climate change can be found in our CFD reporting on pages 37 to 41 of our Annual Report and Accounts 2025.
As with all businesses, the Group is affected by a number of risks and uncertainties, some of which are beyond its control. The table overleaf shows the principal risks and uncertainties which could have a material adverse impact on the Group. This is not an exhaustive list and there may be risks and uncertainties of which the Board is not aware, or which are believed to be immaterial, which could have an adverse effect on the Group.
Principal risks and uncertainties
Risk description and impact
The Group’s Fuels and Feeds businesses operate in sectors which are vulnerable to volatile commodity prices both for fuel and for raw materials, which will impact performance if not passed on to customers.
Mitigating actions
The Group maintains close relationships with key suppliers, enabling optimal negotiation of prices, and where appropriate implements purchasing framework agreements. The Feeds business utilises forward contracts for key raw materials to ensure that the impact of volatility can be partially mitigated through committed prices and volumes.
Multiple sources of supply are maintained for all key raw materials.
No change
Commodity prices have not fluctuated significantly throughout the year and have been successfully managed.
Key risk indicators
- Brent Crude oil prices
- Raw material commodity prices
Governance oversight
The Executive team meets with the senior management teams in each business each month, to review and discuss performance, including consideration of the impact of input price volatility. Key prices are monitored daily with actions taken on customer price if required.
Risk description and impact
The long-term profitability of our current businesses is more likely to be impacted by Government strategy and policy in relation to the decarbonisation of the economy, rather than as a direct impact of climate change. The view of the Board is that the main risk to the Group is a transitional risk as the Government introduces policies which could negatively impact the Group.
There are also potential additional costs to the Group arising from the need to redesign and replace infrastructure as a result of ambitions towards decarbonisation.
Mitigating actions
The Directors monitor the regulatory environment on an ongoing basis to identify and anticipate changes in requirements which may impact the Group and also consider the impact on the financial statements.
No change
Changes in the regulatory environment and focus on the decarbonisation of the economy may result in long-term risk to Group profitability.
Key risk indicator
- Government consultations and ambitions towards decarbonisation
Governance oversight
The Board is responsible for managing for the long-term transitional risks to the Group.
Risk description and impact
Increases in the ongoing deficit associated with the Group’s defined benefit pension scheme would adversely impact the strength of the Group’s balance sheet and could lead to an increase in cash contributions payable by the Group.
Mitigating actions
The defined benefit pension scheme has been closed to new entrants since 2002 and closed to future accrual from April 2016. Regular meetings are held with both the scheme’s trustees and professional advisors to monitor and review the investment policy, the Group’s funding requirements and any other available opportunities to mitigate this risk. The deficit on the scheme fell to £2.3 million at 31 May 2025. The next triennial valuation will take place as at 31 December 2025 and is expected to be complete in the first half 2026 during which time the future strategy of the scheme will be reviewed.
No change
Remains a principal risk.
Key risk indicators
- RPI/CPI inflation rates
- Mortality rate assumptions
- Scheme asset performance
Governance oversight
The Executive team provides the Board with regular updates from meetings with the scheme trustees and advice taken from professional advisors. The Board meets with professional advisors once a year.
Risk description and impact
IT system failures or business interruption events (such as cyber incidents) could have a material impact on the Group’s ability to operate effectively.
Mitigating actions
To ensure strong IT infrastructure and security, the Group maintains dedicated internal IT support teams and cultivates close relationships with leading software vendors and consultants. Proactive measures include significant investment in upgrading and maintaining core IT systems across all three operating businesses, a direct response to a past cyber incident. The Group’s strategic approach to IT is led by a Chief Information Officer (‘CIO’) and supported by an ongoing partnership with an external Chief Information and Security Officer (‘CISO’) (Grant Thornton).
No change
Remains a principal risk.
Key risk indicator
- IT investment as a proportion of Group operating profit
Governance oversight
The Group Chief Information Officer (‘CIO’) and Chief Information and Security Officer (‘CISO’) provide regular updates to the Executive team and the Board.
Risk description and impact
The Group operates in diverse markets and each sector has its own regulatory and compliance frameworks which require ongoing monitoring to ensure that the Group maintains full compliance with all legislative and regulatory requirements. Any incident of major injury or fatality or which results in significant environmental damage could result in reputational or financial damage to the Group.
Mitigating actions
Expertise within the businesses is supplemented by ongoing advice from professional advisors and the involvement of the Head Office function which closely monitors existing business practices and any anticipated changes in regulatory practices or requirements. The Group employs appropriately qualified and experienced health and safety personnel and retains health and safety specialists to ensure compliance.
No change
Remains a principal risk.
Key risk indicators
- Number of LTIs/RIDDORs
- Employee training hours
- Number of HMRC inspections
Governance oversight
Business Managing Directors are responsible for compliance with laws and regulations and provide regular updates to the Board via the Company Secretary.
Risk description and impact
The demand for both the Fuels and Feeds businesses is impacted by weather conditions and the severity of winter conditions, which directly affect the short-term demand for heating oil and animal feeds. The inherent uncertainty regarding weather conditions represents a risk of volatility in the profitability of the Fuels and Feeds businesses.
Mitigating actions
Whilst the Fuels business seeks to mitigate this risk through the provision of a range of fuels, including commercial fuels, there will always be volatility in the profitability of the Fuels business related to weather. The Feeds business seeks to mitigate the extent of weather conditions on the profitability of the business through its concentration on the key dairy sector where there is strong underlying demand.
No change
Remains a principal risk in Fuels and Feeds.
Key risk indicators
- Volatility of earnings
- Number and severity of weather events
Governance oversight
The Executive team meets with the senior management teams each month to review and discuss performance, including consideration of the impact of weather events on earnings volatility.
Risk description and impact
Significant development of the Group is only achievable via a significant acquisition, several smaller transactions or a material investment.
Mitigating actions
The Board maintains oversight of Group strategy development. The Group management team is engaged in ongoing review of competitor activity, development, acquisition and market opportunities. All potential investments are subject to a review of their ability to generate a return on capital employed and their strategic fit with the Group. The Group conducts appropriate internal and external due diligence prior to completing any acquisition.
No change
Remains a principal risk.
Key risk indicator
- Performance of acquisitions against business case
Governance oversight
The Executive team performs periodic strategic reviews of the Group and presents these to the Board for discussion and debate.
Capital risk
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns to shareholders and benefits to other stakeholders, and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The Group monitors capital risk on the basis of the net debt/EBITDA ratio. This ratio is calculated as net cash (excluding lease liabilities) divided by headline operating profit before interest, depreciation and amortisation as shown below:
| 2025 | 2024 | |
|---|---|---|
| Cash and cash equivalents (£m) | £10.9m | £16.4m |
| Net (cash) (£m) (excluding lease liabilities) | £6.3m | £10.0m |
| Headline EBITDA (£m) | £22.2m | £19.4m |
| Net cash EBITDA ratio | 0.3x | 0.5x |
