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Strategic report
OCU Group | Annual report and financial statements 2025
Governance
Financial statements
SECR statement for accounting period May 2024 – April 2025 Reporting and performance
Risk management continued Market continued Risk continued
Risk OCU Group, as a result of progressive decarbonisation policies, will be required to shift to lower‑carbon technologies leading to potential transition technology risks. OCU Group’s 2,330‑strong fleet ranges from light‑duty vans to heavy‑duty plant, with 8% already plug‑in hybrid or fully electric. While heavy‑plant electrification remains constrained by current technology and cost, our phased decarbonisation program, aligned with regulatory milestones and market readiness, will advance as solutions become available. Our asset renewal strategy and supplier partnerships will ensure we are ready to respond to government emissions targets. The main challenges to this include: • The technology for battery-powered alternatives, especially for vans and trucks, is not considered satisfactory to meet our requirements at this stage. • Hydrogen plant and transport is not as readily available as electric and the availability and infrastructure for green and blue hydrogen refuelling is not in place. • Lack of availability of infrastructure to charge vans and a lack of network capacity. OCU has not yet found an electric towing vehicle with a sufficient range that meets our needs. When considering larger vehicles, such as 18-tonne HGVs, the cost has been nearly three times that of their diesel counterparts. Our supplier mandates that we purchase at least 10% of our fleet as electric vehicles annually. While this is manageable in the short term, allowing us to transition our smaller vans in urban areas, it presents a challenge for our larger vehicles due to the current limitations in technology. Whilst technology is still evolving and national infrastructure is limited, OCU Group continues to investigate alternative options for the short term whilst it monitors wider technology trends. We completed our rollout of Samsara and are continuing to install it within all new vehicles as they come online. This is enabling us to operate more efficient route planning, reduce idling time and identify those vehicles that are suitable to be swapped out for an electrical alternative. We have made significant progress in decarbonising our fleet. All new company cars for our employees are now either plug-in hybrids or fully electric. Additionally, we are currently operating 18 fully electric vans as part of our efforts to decarbonise our commercial fleet. We have also conducted trials of fully electric equipment, such as mini-excavators, to assess their operational capabilities and build confidence in the technology from an operational standpoint. To enable this transition, we have grown our charging network and currently have 45 chargers installed at our facilities in strategic locations. We are continually reviewing the options to install charge points at other facilities where the power is available, and we have the landlord’s permission.
OCU is further supporting clients with their exposure to costs associated with increased capital and operational expenditure and is facilitating the implementation of low-carbon alternative items, such as new technology, plant and equipment, as they come to market. This is in conjunction with supporting government and local authorities with the adoption of low-carbon technologies which can be trialled and implemented, further de-risking the Group’s exposure to both commercial and operational risk from future climate changes and government-led legislation changes. Over the last financial year, we have observed a reduction in the cost of non-fossil fuel alternatives, specifically sustainably sourced hydrotreated vegetable oil (HVO), which is now approximately £0.03 per litre more expensive than traditional diesel. However, ongoing uncertainties in the media regarding its sustainability, the need for additional infrastructure such as extra tanks, and the fact that not all equipment can utilise HVO, continue to pose challenges. These factors complicate the inclusion of HVO in our tender submissions and affect profit margins, unless clients explicitly require it in their specifications. Specifying virgin materials for backfill in highway reinstatement works makes it challenging to use lower‑carbon recycled materials. This issue is further compounded by central government legislation, such as SROH4 (Specification for the Reinstatement of Openings in Highways Fourth Edition). This legislation only permits OCU Group to consider recycled materials with explicit permission from local authorities, which is often denied due to concerns about potential failures and the need for rework. Without the support of central government and local authorities, and the widespread adoption of alternative materials, our ability to implement lower-carbon solutions will remain constrained by client specifications. To enhance collaboration with our clients, we utilise the New Engineering Contracts (NEC4). This approach not only safeguards our clients’ interests but also opens up more opportunities to adopt lower-carbon technologies, all while ensuring our profitability. We continue to offer lower-carbon solutions to our clients and collaborate with them to carry out trials, ensuring we are effectively positioned to adopt these more widely as clients become more able and confident in the technologies.
Technology
Significance
Likelihood
Timeframe
Significant unknowns due to upcoming changes in technology
Medium term
Moderate
Very likely
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