Using mapping techniques, Rubis annually reviews financial, legal, commercial, technological and maritime risks liable to have a material adverse effect on its business and financial position, including its results, reputation and outlook. In addition to this risk mapping, a comprehensive review of risks by all the relevant departments is organised in order to select the risks that should be included in this chapter. The selected risks are then presented to the Accounts and Risk Monitoring Committee, a specialised Committee of Rubis SCA’s Supervisory Board.

Only those risks deemed specific to the Group and important for investors to know of as of the date of this document are described in this chapter. Investors should take all the information contained in this document into consideration.

Risk factors are divided into four categories based on their nature:

• •industrial and environmental risks;
• •risks related to the external environment;
• •legal and regulatory risks;
• •financial risks.

These categories are not presented in order of importance. Within each category, the risk factor with the greatest impact as of the date of the risk assessment is presented first. Note that the NFIS (Non-Financial Information Statement) contains a description of non-financial risks. Depending on their importance, some of those risks are also included in the risk factors described in this chapter. To avoid unnecessary repetition for the reader and to present each risk factor concisely, this chapter contains references to chapter 4 “CSR”, which includes a detailed presentation of the Group’s management of its environmental, social and societal risks.

The description of Rubis’ main risk factors (see below) presents the possible consequences in the event the risk does materialise and provides examples of measures implemented to reduce such consequences. The assessment of the impact and probability level of each risk mentioned takes the control measures implemented (net risk) into account.

Probability

Low ▲ Medium ▲▲ High ▲▲▲

Impact

Low ● Medium ●● High ●●●

Rubis Énergie’s business lines (Retail & Marketing and Support & Services), which are described in greater detail in chapter 1, entail industrial and environmental risks that may have impacts of varying nature and scope depending on the activities and the type of products handled (fuels, heating fuels, bitumen, liquefied gases). In most countries, these activities are subject to multiple stringent environmental, health and safety regulations requiring the implementation of risk prevention systems (the European Seveso regulations for industrial facilities or the ADR for the carriage of hazardous materials by road, for instance).

Probability: ▲ Impact: ●●●

Due to the nature of Rubis Énergie’s activities, the safety of operations is a constant concern for the Company’s teams. In addition to strict compliance with the applicable Seveso-type regulations, significant resources are devoted to preventing the risk of accidents, and especially major industrial incidents, including:

• •an active risk prevention approach through the implementation of proven HSE (health, safety and environment) and quality management systems, guaranteeing the implementation of rigorous operational processes;
• •investments totaling €133 million in 2021 for the security, maintenance and adaptation of facilities;
• •membership of professional bodies such as GESIP (Groupe d’Étude de Sécurité des Industries Pétrolières et Chimiques – Group for Safety Research in the Petroleum and Chemical Industries) and the Joint Inspection Group (JIG), which provide general operational, training and safety support;
• •the establishment of crisis management units that can be swiftly activated in response to a major event in order to limit its consequences.

Probability: ▲ Impact: ●●

In addition to strict compliance with the applicable regulations, measures put in place to prevent risks, and especially major incidents, include:

• •the establishment of a service station operations document base that is focused on risk prevention/protection, which notably sets out detailed safety instructions and guidelines for operations, the regular training of Managers and staff, and rigorous monitoring of fuel stocks;
• •the implementation of technical compliance programmes for fuel distribution facilities, which notably includes the gradual replacement of underground tanks and pipelines by equipment using double wall technology fitted with leak detectors, ensuring continuous leakage monitoring to guard against any possible pollution;
• •the rollout of preventive maintenance programmes in service stations based on regularly updated descriptive specifications and regular inspections to ensure that maintenance work is carried out properly.

Maritime transportation > Probability: ▲ Impact: ●●●

Road transportation > Probability: ▲▲ Impact: ●●

In its supply and shipping activities, Rubis Énergie operates six fully-owned vessels and a further nine time-charter vessels. Rubis Énergie also charters vessels for single voyages.

A major incident involving a vessel (fire, explosion, pollution, navigation accident), including those resulting from acts of piracy, whose probability of occurrence is low but whose impact could potentially be significant, could cause damage to people, the environment and/or property, as well as to the Group’s reputation. The Group, its officers or its employees could be held liable.

The transportation of products to distribution sites and customers requires numerous trucks to circulate, which is liable to generate risks to people and the environment. The risk of accidents is elevated in certain areas (Africa, certain Caribbean Islands) due to the poor quality of road infrastructures, driving habits, distances traveled and/or population density on roads. The consequences of a road accident involving hazardous materials are generally limited in terms of space, due to the small quantities transported, but could generate damage to people, the environment, and/or to property and to the Group’s reputation in the event of a serious incident such as the explosion of a vehicle, fire or spillage of a vehicle’s cargo.

In addition to compliance with the regulations applicable to international navigation (mainly the International Maritime Organisation standards), the following measures have been put in place:

• •systematic vetting of chartered vessels by a specialised company, Rightship;
• •membership of Oil Spill Response Ltd, a company that can provide assistance in the event of maritime pollution occurring during the loading/unloading of products at Rubis Énergie terminals;
• •as charterer or ship owner, Rubis Énergie insures its shipping risk with international P&I Clubs.

In addition to applying the regulations governing the transportation of hazardous goods, additional measures are taken to prevent the risk of traffic accidents:

• •driver training programmes (defensive driving), especially in countries where the risk is greatest; special instructions are also applied (prohibition on driving at night, for instance);
• •truck fleet renewal programmes and the installation of surveillance equipment for vehicles on the move, such as video surveillance and/or geolocation tracking.

Probability: ▲▲ Impact: ●

The Group continuously adapts its prevention and detection measures and the measures it applies to protect its information systems and critical data, notably by:

• •conducting audits of computing infrastructure and test campaigns;
• •action plans and investment programmes aimed at continuously enhancing the security and monitoring of information systems and data in order to adapt to constant change;
• •implementation of business continuity plans (BCP)/disaster recovery plans (DRP);
• •information and training campaigns aimed at raising users’ awareness about cyber risks.

Rubis Énergie, and consequently Rubis SCA, is sensitive to cyclical and structural risk factors resulting from its business segment and the countries in which it operates.

Probability: ▲▲ Impact: ●●

• •The geographic diversity of the Group’s operations mitigates its exposure to the risks of a given country by limiting concentration of activities, and as such, dependence on that particular country. Moreover, existing risks are assessed at the time acquisitions are made and are taken into account in the operational management of the subsidiaries, which perform regular monitoring in order to anticipate those risks.
• •In areas that are particularly exposed to security risks, employee and site protection measures are reinforced according to the assessment of the surrounding risks, so as to deal with malicious acts, intrusions, kidnappings, vandalism or theft.
• •To deal with health risks, business continuity plans are established and measures are taken (vaccination, information campaigns, etc.) to combat infectious or viral diseases (the plague, malaria, Ebola, Covid, etc.).
• •Regarding the risk of piracy, the Group’s port facilities comply with the International Ship and Port Facility Security (ISPS) Code. Recommendations relating to countries designated as “high risk areas” by the International Maritime Organisation are also taken into account.

Probability: ▲▲▲ Impact: ●

In a health crisis, the Group focuses on controlling the main risks, namely:

• •protecting the health of its employees and, more generally, that of external service providers working on its industrial sites, by implementing health protocols, constantly monitoring inventories and procurement of protective equipment, banning international travel, and having recourse to teleworking for positions that allow it, etc.;
• •the operational continuity of its industrial and commercial activities with a permanent concern for the safety of facilities and operations, by implementing business continuity plans that take industrial, environmental and other safety requirements into account;
• •following through on its commitments to customers, as well as managing the risk of defaults. However, this risk remains low due to the nature of payments in the main business sectors affected. Small airlines generally pay upfront (no specific customer outstandings), while service stations have no cash flow problems as most customers also pay upfront. In addition, large industrial customers, such as electricity companies, are often guaranteed by states;
• •implementing strict financial discipline in order to maintain a strong balance sheet;
• •monitoring country risks (see the risk factor entitled “Country and geopolitical environment risks”).

Covid-19: the management of the Covid-19 health crisis has demonstrated the effectiveness of the management measures implemented reactively and agilely, both at Group level and by the various entities.

Probability: ▲▲ Impact: ●

• •The Group is committed to monitoring the vulnerability of its existing and future facilities and of its activities, by taking climate change projections into account and by taking all appropriate safety measures, including by factoring natural hazards into the design and operation of exposed facilities.
• •Geographic diversification (presence on three continents) and the broadening of the Group’s scope greatly limit exposure to the climate hazards that may be experienced in any given area.
• •The diversification of business lines and products sold, both by product category and by user (automotive fuel, aviation fuel, diesel, fuel oils, liquefied gases, bitumen and lubricants) limits the impact of a climate event.
• •Setting an objective regarding reducing CO2 emissions (scopes 1 and 2, reference year 2019) by 30% in 2030 and commitment to setting additional objectives (reduction of scope 3A emissions, i.e., excluding products sold, reducing the carbon intensity of products sold, development of an internal price for carbon) in the Group’s CSR  Roadmap, Think Tomorrow 2022-2025. These objectives will be defined upon the completion of an evaluation on decarbonising activities that is in the process of being finalized.
• •The Group has implemented measures to increase the energy efficiency of the most energy-intense industrial facilities, such as Rubis Énergie’s refinery in Martinique, so as to reduce their carbon footprint.
• •The establishment of a governance structure and teams responsible for monitoring climate challenges (regulatory, technical, societal changes) and identifying development opportunities should further reduce these risks in the near future. The Climate & New Energies team created in 2020 supports the Climate Committee and coordinates the operational efforts made by all Group subsidiaries.

Probability: ▲▲ Impact: ●

• •Rubis Énergie favours markets in which the Group enjoys a leading position, controls its supplies and/or has strategically located logistics facilities (maritime import terminals, refinery, pipeline connection). External growth around its areas of activity helps increase intra-group synergies and boost competitiveness.
• •The regular extension of Rubis Énergie’s portfolio of suppliers (stockists, refiners, traders) contributes to the competitiveness of supplies.
• •In Europe, Rubis Énergie’s activity is mainly focused on the distribution of liquified gas, which is considered to be a transitional energy.
• •Compliance with high safety, product quality and ethics standards is a differentiating competitive advantage, especially in markets where local players are unable to meet the requirements of international customers.

Probability: ▲ Impact: ●●

The Group closely monitors ethic and non-compliance risks by establishing measures designed to prevent such risks from materialising:

• •a specific system for preventing the risk of corruption and non-compliance with international economic sanctions, which includes in particular a documentary framework that formalises the ethics guidelines in accordance with which all Groups employees must carry out their professional activities; training dedicated to these issues; an internal “Rubis Integrity Line” whistleblowing system allowing each employee to report breaches of ethics rules (described in chapter 4, section 4.5.1.1). The governance rules in place within the Rubis Terminal JV provide for the application of ethics standards that are at least equivalent to those applied within the Rubis Group;
• •Group-level governance including: the creation in 2017 of a CSR & Compliance Department tasked with overseeing and coordinating the development and implementation of the Group’s compliance policy and managing risks and issues relating to CSR; the appointment of a Compliance Manager for each division; a network of 35 Compliance Advisors (including four within the Rubis Terminal JV) in each of the countries where the Group operates.

Probability: ▲▲ Impact: ●

• •These risks are primarily managed and monitored by Rubis Énergie’s Finance and Legal Departments in collaboration with the subsidiaries and with the assistance of external specialised consultants and firms. Rubis SCA’s Corporate Secretary works closely with the subsidiaries’ Legal Departments regarding any significant issues or disputes that are liable to have a material impact on the Group.
• •In tax matters, Group companies ensure that tax returns and payments are submitted in accordance with local regulations. Moreover, the Group does not have any subsidiaries that are not underpinned by economic activities (essentially, local commercial operations).
• •The Group assesses the risks associated with pending litigation and sets aside provisions in accordance with applicable accounting policies to cover risks that it is able to assess reliably (see note 4.11 to the consolidated financial statements).

Probability: ▲ Impact: ●

• •The teams carry out constant regulatory monitoring. In addition, the situation of each site is regularly reviewed as regards existing or future regulatory obligations.
• •The Group contributes to developing standards adapted to the challenges facing the industry, notably through sector-based professional bodies or unions.
• •Rubis’s assessment of the associated risks has led the Group to recognise provisions totaling €29 million for clean-up and renewal of fixed assets (see note 4.11 to the consolidated financial statements).
• •Group companies ensure that tax filings and payments are made in accordance with local regulations. They prepare the necessary tax filings depending on the countries in which the Group conducts its activities.
• •In accordance with its legal obligations, Rubis has carried out its country-by-country reporting by declaring the breakdown of its profits, taxes and activities by tax jurisdiction and has established documentation regarding the transfer pricing applied between Group companies (Transfer Pricing Documentation – Master File).

Probability: ▲▲ Impact: ●● 

Due to its international footprint and its business sector, Rubis is naturally exposed to fluctuations in foreign currencies (excluding the euro, its functional and reporting currency), and mainly fluctuations in the US dollar, as most of the Group’s revenues are generated in that currency. Rubis Énergie buys petroleum products on international markets in US dollars, whereas the sales and expenses of the Group’s international subsidiaries outside the euro zone are generally expressed in their local currency, which fluctuates widely for certain countries (e.g., Nigerian naira and Haitian gourde). Consequently, currency fluctuations are liable to impact the Group’s results, both upwards and downwards.

Moreover, in some countries (Jamaica, Nigeria, Haiti, Madagascar, Suriname), the lack of foreign currencies (shortage of dollars) can cause temporary difficulties in petroleum product supplies, which are purchased on international markets in dollars, thereby impacting the activity of the subsidiaries located there.

• •Except for specific cases, end customers are invoiced in the functional currency of the distributing entity.
• •Where possible, foreign exchange hedges on product purchases are put in place if the US dollar exchange rate used to establish the product’s sales price in local currency is fixed in advance, in order to preserve the margin.
• •The depreciation of local currencies is reflected in selling prices to the extent possible when currency hedging is not possible.
• •Letters of credit are negotiated with the banks of the relevant countries in order to guarantee that US dollars can be obtained at the official rate.

Probability: ▲▲ Impact: ●

• •Rubis Énergie’s diversification, both geographically and by product category, makes it possible to reduce the consequences of the materialisation of this risk on results.
• •Increases in product costs are generally passed on to the customer, either contractually or unilaterally, market conditions permitting. Failing this, temporary mismatches may arise.
• •Product purchases may be hedged when the product selling price is fixed and determined in advance.
• •Rubis Énergie has a Supply Department that allows physical flows of product supplies to be secured and optimised upstream.

Probability: ▲ Impact: ●

Moreover, the Group’s strategy to diversify in favour of less carbon intensive energy resulted in two operations in 2021:

• •the acquisition of a stake of 18.5 % in HDF Energy at the time of that company’s IPO. This investment is classified in the Group’s consolidated balance sheet as a financial asset evaluated at fair value through other comprehensive income. As such, the Group is exposed to a loss in value;
• •the announcement of the acquisition of 80% of Photosol France, (completed on 14 April 2022) which is one of the leading independent developers of renewable electricity in France.

• •Rubis SCA’s Managing Partners and Rubis Énergie’s General Management conduct a detailed examination of the companies or assets they plan to acquire as part of the due diligence process, in order to better understand the contingencies, anticipate risks and integrate those risks into the valuation of the project.
• •A structured acquisition integration procedure is implemented, including in particular the appointment of a Chief Executive Officer familiar with the Group’s rules and processes and the relevant business line.
• •In accordance with IFRS, Rubis tests goodwill for impairment at least once a year, and whenever Management identifies an indication of loss of value (see note 4.2 to the consolidated financial statements). Impairment is recognised if the recoverable value falls below the net book value, with recoverable value being the greater of the value in use and fair value, less costs to sell.
• •Rubis SCA’s Managing Partners and Rubis Énergie’s General Management conduct a detailed analysis of the investment programmes of the various Group subsidiaries to ensure that the expected value creation is realistic.
• •Regarding the Photosol France acquisition: keeping management teams who have in-depth knowledge of their business in order to ensure business continuity and development.

Probability: ▲ Impact: ●

The Rubis Terminal JV, created as part of the partnership concluded in April 2020 between Rubis SCA and an infrastructure fund, is 55% and 45% owned (respectively) and jointly controlled by the two partners. Due to Rubis SCA’s loss of exclusive control, this activity has been accounted for in Rubis SCA’s consolidated financial statements using the equity method starting 30 April 2020 (see notes 3.2.2 and 9 to the consolidated financial statements).

This partnership aims to support the development of the bulk liquid Storage activity (operated by Rubis Terminal Infra and its subsidiaries, formerly Rubis Terminal) by strengthening its existing positions on its markets (ARA zone, France and Spain), diversifying its offering, and enabling it to consider new development opportunities . The partnership makes it possible to share economic and financial risks by limiting the amount of capital committed.

As a partner in this joint venture, Rubis SCA could be exposed to a risk that its stake loses value if there are difficulties in implementing the strategy defined with its new partner, which could affect the achievement of the expected benefits.

In addition to the usual factors relating to the external environment (such as changes in competition and country and geopolitical risks) and legal and regulatory risks (such as the loss of an operating license, major litigation, significant changes in environmental regulations) that are liable to influence the Rubis Terminal Infra’s development, a deadlock should the partners disagree on decisions to be adopted or the partner’s failure to respect its commitments and obligations could have unfavourable consequences on expected results. This partnership’s success therefore depends in particular on the efficiency of the governance framework put in place.

Furthermore, Rubis could be exposed to image risk if a major operational risk materialises (particularly an industrial risk) as a result of the joint venture’s name being associated with the Group. Finally, as Rubis SCA holds 55% of the joint venture’s capital, it may be held liable if Rubis Terminal Infra fails to comply with regulations applicable to entities considered as subsidiaries within the meaning of Article L. 233-1 of the French Commercial Code.

Rubis SCA has chosen as its partner a major infrastructure fund that has a long-term investment policy. This fund, which has a global footprint, invests in line with the best international ESG standards.

The Group ensures that its interests as a partner are protected, notably through the signature of a shareholders’ agreement, its representation on the joint venture’s governance bodies (Board of Directors) and regular reporting from Rubis Terminal Infra’s Management (see section 3.2.4).

Contractual arrangements enabling conflicts and deadlocks within the partnership to be resolved are included in the shareholders’ agreement.

Rubis ensures that the same level of standards as those implemented in its controlled entities are complied with by Rubis Terminal Infra’s Management teams by monitoring indicators and reports submitted by Management.