Description of the risk  

Rubis Énergie operates industrial sites where petroleum products (fuels, heating fuels, bitumen, liquefied gases) are the main items handled. Such products are inherently flammable and, in some cases, explosive.

The facilities in question are import or storage terminals for petroleum products, gas cylinder filling plants and a refinery. Fifteen are classified Seveso (high and low threshold) in the European Union; 43 similar sites are operated outside the European Union.

Although the Group’s entities ensure that these facilities and their operations comply strictly with standards predefined by the Group and the regulations applicable to them, a major incident (explosion, fire, massive pollution), including as a result of malicious acts, could occur on a site and cause damage to people, the environment and/or property, as well as to the Group’s reputation. The liability of the Group, its Senior Managers or employees could be incurred. As no single site makes a significant contribution to the Group’s earnings, only the simultaneous shutdown of several of them would have an adverse impact on the Group’s financial position.

  Description of the risk  

Rubis Énergie operates a network of 1,015 gas stations in 22 countries, most often entrusting their management to managers or independent resellers.

Although the quantities of products stored in gas stations are limited (frequently less than 80 m³), the main risk stems from the fact that such facilities are often located in urban or suburban areas and that they are accessible to the public.

An explosion, fire or a massive product leak, including those caused by malicious acts, could result in serious harm to personnel (most often not Group employees), customers and local residents, the environment and/or property, as well as to the Group’s reputation.

  Description of the risk  

The products distributed by Rubis Énergie are considered dangerous insofar as they are flammable or, in some cases, explosive, and may also be subject to accidental spillage liable to pollute the ground and water. Their transportation therefore involves a risk, attributable to both the nature of the product and the means of transportation, mainly maritime or road.

Maritime transportation

In its supply and shipping activities, Rubis Énergie operates five proprietary 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 would be potentially significant, could cause damage to people, the environment and/or property, as well as to the Group’s reputation. The liability of the Group, its Senior Managers or employees could be incurred.

Road transportation

The transportation of products to distribution sites or customers requires the circulation of numerous trucks liable to generate risks for people and the environment. The risk of accidents is heightened in certain areas (Africa, certain Caribbean Islands) due to the poor quality of road infrastructures, driving habits, distances traveled and/or the population density present on roads. The consequences of a road accident involving hazardous materials are generally limited in space, due to the small quantities transported, but could generate damage to people or the environment and/or damage to property and 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.

Description of the risk

The occurrence of a serious health crisis or a pandemic can in the first place affect the health of employees and therefore their availability. It is also liable to lead governments to adopt measures restricting the movement of people and goods, or even lockdown measures in order to reduce the circulation of a serious contagious disease. Depending on their nature, scope and duration, these government measures may thus affect the distribution of petroleum products in a heterogeneous manner depending on the product markets and countries or regions. The distribution of fuels and liquefied gases, some of which meet basic needs (production of cold and heat, cooking, mobility for essential activities, etc.), is considered by governments as essential. While preserving the safety of employees and customers, the continuity of these activities must be ensured in order to meet these needs. As for the distribution of liquefied gases to the agrifood industry and the sales of bitumen (West Africa), these activities are generally less sensitive to the health context. However, sales of jet fuel to airlines may be more severely and durably affected in the event of restrictions on international mobility leading to a decline in tourism and aviation activities. Nevertheless, this activity only represented 2% of Rubis Énergie's total gross margin in final distribution for fiscal year 2020. In addition, the potential long-term shutdown of certain industries that are heavy consumers of LPG (particularly in southern Africa, Morocco and Madagascar for Rubis Énergie) in such a context may lead to a decline in volumes sold and thus impact the Group’s financial performance and cash flow. Lastly, the upheavals related to a major health crisis are also a breeding ground for greater political, economic or social instability, particularly in countries with weaker governance, in some of which the Group operates.

Covid-19: the health crisis linked to the Covid-19 pandemic that has been ongoing since the beginning of 2020 continues to affect the Group’s 41 countries of activity alternately and to different extents (including its Rubis Terminal JV). This pandemic has a more marked impact on subsidiaries that are dependent on the upturn in tourism (particularly in the Caribbean region). However, in general, the Group has seen strong resilience in its activities, as the Group’s global footprint and the diversity of products sold have helped to mitigate the effects of this crisis. The effect of this risk on the results of fiscal year 2020 is detailed in note 2.2 "Accounting standards applied: Information specific to the Covid-19 pandemic” to the consolidated financial statements. Figures for the first quarter of 2021 are broadly in line with the last quarter of 2020; the second quarter of 2021 should mark an improvement compared to the same period of 2020, and the second half should reap the initial effects of the widespread intensification of vaccination campaigns, themselves accompanied by the gradual lifting of restrictions.

    Description of the risk    

The Group (excluding the Rubis Terminal JV) operates in 38 countries. In 2020, it generated 14% of its revenues in Europe, 48% in the Caribbean and 38% in Africa. Part of Rubis Énergie’s activities are exposed to risks and contingencies in countries that may experience, or have experienced, political, economic, social and/or health situations that can be described as unstable, or in countries with fragile governance (notably Haiti, Nigeria and Madagascar). In addition to the usual consequences, this instability can in particular have an impact on Rubis Énergie through a unilateral review of fuel distribution margins, with many states regulating the prices of petroleum products. The point of equilibrium nevertheless remains the granting of sufficient margins to operators to ensure a long-term supply of essential products and to maintain adequate safety standards. Another aspect of geopolitical risk is the safety of Group employees, for which strict protection measures are in place in high-risk countries. Personal safety is becoming a priority management issue in certain countries, as is the security of petroleum product storage facilities.

Except in extreme cases, continuity of the subsidiaries’ fuel distribution activities is in principle secured, as these products meet the essential needs of populations. The simultaneous occurrence of such events in several countries could have an unfavorable impact on the Group’s earnings.

Lastly, shipping activity may be exposed to acts of piracy in certain areas in which the Group operates (in particular in the Gulf of Guinea or the Indian Ocean). Such acts could cause harm to the people on board, damage to the vessel itself and to the cargo, as well as cause financial losses due to delays in expected deliveries, or even the inability to deliver cargoes.

NB: risks related to the Covid-19 pandemic are discussed in this section 3.1.2.2.

    Description of the risk    

Physical risk

In 2020, the Group (excluding the Rubis Terminal JV) generated 48% of its revenues in the Caribbean zone, which is particularly exposed to natural and climatic risks, the intensity of which is tending to increase (earthquakes, hurricanes, etc.). The occurrence of extreme events could affect the integrity of the sites, in particular the import terminals necessary for the supply of petroleum products, which are generally located in coastal areas. This could disrupt the operations of the subsidiaries in question and in turn cause operating losses. The most recent cyclones in the Caribbean nevertheless had a moderate affect on the Group’s earnings.

To a lesser extent, Rubis Énergie’s distribution activity is exposed to changes in temperature, mainly during mild winters in Europe (14% of Group consolidated sales revenue), affecting volumes of fuel sales in the heating market.

Transition risk

Rubis is exposed to the challenges of its sector in terms of energy transition. Occasionally rapid shifts in the regulatory environment and policies in support of a low-carbon economy (carbon tax, energy saving certificates, obligation to blend fuels) could impose a significant reduction in CO₂ emissions and make other less carbon-intense energies more competitive in the long term. In addition, growing concern among stakeholders (customers, investors, etc.) about climate change is liable to have an adverse effect on the Group’s petroleum product distribution business, its financial position, its reputation and its outlook, with varying levels of uncertainty that are sometimes hard to measure over the long term. The immediate impact is considered to be low to moderate depending on the products and areas covered.

    Description of the risk    

The retail & marketing business operates in an intense competitive environment. The profile of competitors is changing with the entry into distribution of players from trading, who have a competitive advantage over a larger part of the value chain in markets highly dependent on the import of petroleum products, or local actors supported by governments. In addition, the use of fossil fuels is gradually facing competition from other energies, although this phenomenon is to date still confined to a few regions in which the Group operates, mainly in Western Europe.

Failure to take these various developments into account in the Group’s strategy could have an impact on its development outlook, earnings financial position and reputation.

    Description of the risk    

Given the geographic location of a large part of its activities, the Group pays particular attention to the risk of breaches of ethical and compliance rules. Rubis ensures that all of its employees act in accordance with the values of integrity and in compliance with applicable internal and external standards, and ensures that the same standards are respected in the entities in which it holds significant interests (primarily the Rubis Terminal JV). In a context of increased judicialization, with supervisory authorities enjoying broad powers, non-compliance with laws and regulations (such as anti-corruption laws, international economic sanctions, the GDPR, competition) or claims against the Company and/or its Senior Managers could expose the Group to consequences harmful to its financial equilibrium (administrative, civil, criminal sanctions), its reputation, its attractiveness, its values, its sources of financing and, ultimately, its growth and earnings.

    Description of the risk    

Rubis operates in France and internationally, in complex legal and constantly changing regulatory environments.

Loss of an operating license

Rubis Énergie’s activities are generally subject to strict and complex regulations in the field of environmental protection and industrial safety. Compliance with these regulations is the condition for obtaining or renewing operating licenses, port concessions or leases concerning the land on which facilities are located.

The loss of authorization to operate a major site, such as the Martinique refinery, a key import site for the supply of a country or any other essential infrastructure, for which the contribution to Group earnings is significant, could have adverse consequences on the Group’s earnings or outlook.

Major litigation

The other major legal risks relate to litigation between the Group and its customers, suppliers and service providers, or local residents in the event of major pollution. Litigation may also occur following acquisitions of companies or in joint ventures. In tax matters, the Group’s subsidiaries may be subject to tax and customs controls or be subject to procedures conducted by the national authorities, within the framework of which there is no guarantee that the tax authorities will validate the positions taken by the Group, even if it deems them correct and reasonable in the context of its activities. Disputes of that nature could bear on significant amounts, liable to affect the Group’s earnings, particularly in terms of transfer pricing policy between countries.

To date, there are no governmental, legal or arbitration proceedings, including any proceedings of which the Company is aware, either pending or with which the Group is threatened, that are liable to have or have had in the last 12 months a significant impact on the financial position or profitability of the Group.

    Description of the risk    

The growing trend towards stricter environmental and industrial safety regulations for both the retail & marketing and support & services businesses could generate significant additional costs to bring facilities into compliance, which could have an impact on the business of the entities and on the Group’s earnings. Both in France and internationally, sites and products are subject to increasingly stringent rules governing environmental protection (water, air, soil, noise, nature protection, waste management, impact studies, etc.), health (workstation, product chemical hazards, etc.) and the safety of employees and local residents.

In addition, for most of the Group’s activities, closure would necessitate compliance with applicable regulations including the securing and then dismantling of sites and their rehabilitation in environmental terms after they are shut down. The associated costs could significantly exceed the provisions set aside by the Group, and could therefore have a negative impact on its operating results. Future expenses for site restitution are recognized by the Group in accordance with the accounting policies indicated in note 4.11 to the consolidated financial statements.

    Description of the risk    

Due to its international footprint and its business segment, Rubis is naturally exposed to fluctuations in foreign currencies (excluding the euro, its functional and reporting currency), primarily those of the US dollar, most of the Group’s revenue being 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). Currency fluctuations are liable to impact the Group’s earnings, both upwards and downwards.

Moreover, in some countries (Jamaica, Nigeria, Haiti, Madagascar, Suriname), the lack of foreign currency cash (shortage of dollars) can cause temporary difficulties in supplying petroleum products, purchased on international markets in dollars, impacting the activity of the subsidiaries located there.

    Description of the risk    

With a few exceptions, Rubis Énergie’s business is not very sensitive to product prices and their variations. In a significant number of areas where Rubis Énergie operates, prices are administered (the Caribbean and Réunion Island). However, in some countries, administered price structures are not always applied or take insufficient account of variations in product prices on international markets, especially during pre-electoral periods, generating a shortfall for the relevant entities (Madagascar, Haiti).

The LPG distribution business is more exposed to the risk of product price variations. As it can take longer to pass change on to customers in certain markets, temporary shifts can arise including both rises and falls.

    Description of the risk    

Acquisitions are an integral part of Rubis’ growth strategy. The risks in transactions of this nature are mainly related to difficulties or delays in the Group’s integration of acquisitions and, in particular, the implementation of the Group’s management standards. Risks relating to the measurement of assets and liabilities may also emerge after the completion of an acquisition, as the quality of the information transmitted is sometimes limited in view of the local regulatory framework. Lastly, external environmental factors could affect the achievement of the expected benefits, including the macroeconomic environment, country risks as described in section 3.1.2.2, changes in the specific markets in which the transaction takes place, the response from or changes in the competition, or the loss of a competitive advantage in logistics. There is a risk of impairment related to these risks.

Following major acquisitions in recent years, the Group has recorded significant goodwill (€1,220 million as of December 31, 2020).

    Description of the risk    

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 (see organization chart in chapter 1, section 1.5). Due to the loss of exclusive control by Rubis SCA, this activity has been accounted for using the equity method in Rubis SCA’s consolidated financial statements since April 30, 2020 (see note 3.2.2 to the consolidated financial statements).

The partnership’s aim is to support the development of the bulk liquid storage business (operated by Rubis Terminal Infra and its subsidiaries, formerly Rubis Terminal) by strengthening its existing positions on its markets (ARA zone, France, Spain and Turkey), by diversifying its offer, and by enabling it to consider new development opportunities outside Europe. It allows the economic and financial risks to be shared by limiting the amount of capital committed.

As a partner in this joint venture, Rubis SCA could be exposed to a risk of loss of value of its investment in the event of 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, country and geopolitical risks) or legal and regulatory risks (such as the loss of an operating license, major litigation, significant changes in environmental regulations) liable to influence the development of Rubis Terminal Infra, deadlock in the event of disagreement between the partners on the decisions to be taken or the failure of the partner to respect its commitments and obligations could have unfavorable consequences on the expected results. The success of this partnership therefore depends in particular on the efficiency of the Governance framework in place.

In addition, Rubis could be exposed to image risk following the occurrence of a major operational risk (particularly industrial risk) due to the name of the joint venture being associated with the Group. Lastly, as Rubis SCA holds 55% of the capital of the joint venture, it may be liable in the event of non-compliance by RT Invest with regulations applicable to entities considered as subsidiaries within the meaning of Article L. 233-1 of the French Commercial Code.