The Board maintains a Group level risk register which is discussed at each Board meeting.

The impact of each risk and the likelihood of it occurring are assessed periodically. Divisional management maintain their own sub-registers which feed into the Group register.

In common with any organisation, the Group can be subjected to a variety of risks in the conduct of its normal business operations that could have a material impact on the Group’s long-term performance. The Board is responsible for determining the level and nature of risk accepted that is felt to be appropriate in delivering the Group’s objectives and for implementing an appropriate Group risk management framework.

The Group seeks to mitigate exposure to all forms of risk where practical and to transfer risk to insurers where cost effective. In this respect the Group maintains a range of insurance policies against major identified insurable risks, including (but not limited to) business interruption, damage to or loss of property and equipment, and employment risks. The major risks are outlined here.

The Group, like many other businesses, is likely to be impacted by the need for a fundamental shift to a sustainable future and by the increasing focus on ESG performance which has the potential to affect corporate reputations and access to finance. During 2021 the Group assessed its current ESG performance as described on pages 22 to 24 and during 2022 it will be conducting a thorough review of the longer-term risks and opportunities of the energy transition. The Group is active in the power reliability sector which is likely to grow as a result of the energy transition. The Group does not itself generate power other than solar energy from panels on its facilities and does not use significant amounts of power in its own operations. The Group is seeking to increase the percentage of power it uses which is generated from renewable sources. It is also investigating opportunities to reduce the amount of fuel it uses in its operations through replacing ICE engines with electric vehicles. The Group does not rely in its business on the use of significant water, on agricultural products or on commodities other than steel. The Group is proactive in extending the lifecycle of its products where possible thus reducing consumption of both raw materials and energy.
The Group has had minimal revenue from either Russia or Ukraine in recent years. However, the Group does use material quantities of steel. Steel is exported in significant quantities by both Ukraine and Russia and these exports are being or may be impacted by the illegal invasion and devastating conduct of the war in Ukraine and by sanctions on Russia, which are likely to increase prices. The attempts to replace Russian gas and oil may result in even greater increases in energy and fuel prices across Europe. It is possible that the longer-term impact of these changes could be economic recession in Europe and beyond. The Group is seeking to find alternative sources of all of its raw materials and components to reduce the risk of shortages or delays in delivery. It has been able to put through a number of price rises during 2021 and 2022 to reflect increasing commodity and component costs arising as a result of Brexit, COVID-19 and the increase in the oil price. The Group considers that its customers would be likely to accept additional price rises that it could demonstrate were due to increases in its input costs. While a period of recession might delay some larger projects, experience through the pandemic suggests that overall requirements for loadbanks are liable to remain steady, as many of the uses of loadbanks are business critical and projects related to the energy transition may even be accelerated due to the imperative to reduce reliance on Russian hydrocarbons.
The Group’s revenues are derived from some labour-intensive activities such as the manufacture of loadbanks and the commissioning, service and maintenance of equipment both within the Group’s depots and on site. Pandemics such as COVID-19, which restrict the movement of people, in terms of being able to be physically present at work, social distancing, and the freedom to travel to customer sites across the world, will affect the Group’s ability to produce loadbanks for third-party sales and service rental contracts. This may result in lower revenues, profits and cash flows. The Group’s activities are diverse, both in terms of industries and geographies and sales, with the exception of a short-term reduction in major hire contracts due to constraints on international travel, have stood up well during the pandemic. Loadbanks are used to test critical infrastructure such as data centres, hospitals and national electricity grids and a base level of revenue can reasonably be expected to continue. The main manufacturing facility in Burton on Trent followed all Government advice on social distancing and continued to function, albeit on a reduced capacity at times. The engineering support teams managed to service customers remotely through video conferencing but are now able to return to face to face service. 
The Group’s hire equipment is involved in safety-critical environments where a fault with the equipment or its misuse could cause serious injury or death. Crestchic equipment is involved in electrical testing that can produce lethal voltages. Crestchic has detailed QHSE policies which are communicated to all staff. Crestchic is certified under ISO 9001, ISO 14001 and ISO 45001. Accident (and near-miss) reports are continually monitored and appropriate staff training is completed. QHSE statistics are gathered and the Group’s record is extremely good.
The global nature of its business exposes the Group to risk of unethical behaviour. The Group operates in countries with perceived high levels of corruption and tenders for projects and uses third-party sales agents in some countries where it does not have a permanent presence. The Group has a clear bribery policy which is available on the website. All third-party agents are thoroughly vetted and are closely monitored. The Group has a whistleblowing process in place which is continually reviewed.

As evidenced by the impact of the sharply declining oil price in 2015 and early 2016, and again in 2020, a downturn in global economic conditions or volatility in commodity prices creates uncertainty and may result in lower rental activity and equipment sales levels. This may result in a poorer performance than expected, impacting revenues and margins. 
In the execution of its corporate strategy, the Group from time to time buys and sells businesses, an activity which brings attendant transaction risks.

The Group constantly monitors market conditions and can flex capital investment into the hire fleet accordingly. The Group’s exposure to the cyclical nature of the oil and gas industry has been reduced by the disposal of its Tasman business although some exposure remains as loadbanks are used in testing FPSOs and the commissioning of new fossil fuel power stations. The hire fleet can be relocated to mirror changes in localised utilisation, although equipment in the US (specific frequency) and China (permanently imported) is less flexible. As the Group’s global business continues to develop this will naturally increase and broaden both the market and revenue base, placing reduced reliance on specific markets and regions. Though much of the cost base of the Group is fixed, as recently shown, the Group is prepared to take prompt and effective action to exit underperforming activities and reduce overhead costs to mitigate the impact of market downturns. 

Management and the Board implemented and continue to refine measures to mitigate the impact of post-Brexit restrictions on the ability of the Group to move goods and services from the UK into the EU, including moving assets to be permanently stored within the EU, employing further EU-based staff and establishing an import/export centre in Antwerp. These measures continue to be successful in avoiding significant delays or cost increases resulting from such restrictions.

The composition of the Board is continually reviewed to ensure that it brings the right complement of skills to manage transaction risk, both through its own direct involvement and through the engagement of suitably qualified advisors.

The Group’s revenues are derived from the sale and rental of specialist complementary industrial equipment and services which can be impacted by competitor activity. There is a relatively small number of significant competitors serving the markets in which we operate, although we often compete against larger and better capitalised companies which could pose a significant threat because of financial capability, which may result in lower pricing and margins, loss of business, reduced utilisation rates and erosion of market share. Competition for products and services provided by the Group varies by subsidiary with some of our products and services being subject to less market competition than others. As the Group’s global business continues to develop this increases and broadens both the customer and revenue base, placing reduced reliance on individual customers. Our use of international hubs holding significant levels of equipment available for rent has enabled us to provide an enhanced and efficient customer service, and the ability to readily transport our hire fleet enables us to respond to changes in localised utilisation. 
The Group is dependent on its information technology (“IT”) systems to operate its business efficiently, without failure or interruption. Whilst data within key systems is regularly backed up and systems are subject to virus protection, any systems failure, cyber-attack or other major IT interruption could have a disruptive effect on the Group’s business.  The geographically diverse nature of the Group reduces the global risk associated with IT failure or disruption. The use of recognised service providers and operating and communication platforms has strengthened the Group’s technological infrastructure and reduced the risk of loss due to failure, breakdown, loss or corruption of data. Staff are given training and regular reminders of good IT hygiene. 
The Group delegates day-to-day control of its bank accounts to local management. All bank borrowings attract variable interest rates. The Board accepts that this policy of not fixing interest rates for all borrowings neither protects the Group entirely from the risk of paying rates in excess of current market rates nor eliminates fully cash flow risk associated with interest payments.  The Group maintains strong relationships with all banking contacts. Group borrowings are reviewed, arranged and administered centrally with day-to-day control of bank accounts by local management being restricted to operating within agreed parameters.
The Group has recently redeemed/converted its convertible notes and refinanced its bank loans which has resulted in a significantly simpler and more cost-effective arrangement with HSBC.
Retaining and attracting the best people is critical 
in ensuring the continued success of the Group. There is currently significant wage inflation among skilled workers.
Crestchic offers well-structured reward and benefit packages, including share options, which are regularly reviewed. Crestchic has recently been successful in recruiting a number of highly qualified senior managers which suggests that these packages are competitive. A competitive pay increase was given to all staff on 1 January and pay will be reviewed throughout the year. We also try also to ensure that our people fulfil their potential to the benefit of the individual and the Group by providing appropriate training and offering the possibility of career advancement on an intercompany basis within the Group. 
The Group is exposed to movements in exchange rates for both foreign currency transactions and the translation of net assets and income of foreign subsidiaries. Local management has responsibility for its own bank accounts, with bank balances held in Euro, US Dollar, Australian Dollar, Singaporean Dollar, New Zealand Dollar and UAE Dirham accounts. Outstanding balances for trade receivables, trade payables and financial liabilities are also held in these currencies.  The Board manages this risk by converting surplus non-functional currency into Sterling as appropriate, after allowing for future similar functional currency outlays. The Board will seek the opinion of foreign currency professionals to advise on potential foreign currency fluctuations if it is aware of future foreign currency requirements. It does not currently consider that the use of hedging facilities would provide a cost-effective benefit to the Group on an ongoing basis.
Exposure to credit risk arises principally from the Group’s trade receivables. At 31 December 2021 the Group had £5,639,000 (2020: £7,945,000) of trade receivables and an expected credit loss provision of £898,000 (2020: £1,383,000). The Group increased provisions by £45,000 (2020: £167,000) during the year. The Group’s trade receivables are managed through stringent credit control practices both at a local and Group level, including assessing all new customers, requesting external credit ratings (which are factored into credit decisions), regularly reviewing established customers and obtaining credit insurance where it is felt appropriate. The Group trades in regions such as the Middle East and Africa where formal credit ratings are not always readily available. In these situations, trading history with the Group and market reputation are given greater weighting in credit decisions. Over and above our credit control to mitigate exposure, we take a prudent approach to provisioning against potential bad debts, while still continually following up to maximise recoveries of any debts which have been provided.