‘It would be great to see more companies consider the EOT route’ | Fuel distribution firms transition to employee ownership
The EOA has welcomed the news that northern-based fuel supplier Craggs Energy Ltd and its sister company in Devon, Moorland Fuels Ltd, have transferred ownership of the businesses to their 55-strong workforce.
The directors have transferred 100% of shares in the businesses to their teams by establishing an employee ownership trust (EOT), funded by future profits.
The companies, both of which have been in operation for over 10 years, have grown into significant players in the UK fuel industry, providing fuel delivery services and wider solutions to homes, farms and businesses.
With bases in Hebden Bridge, West Yorkshire, and Padiham in Lancashire, Craggs Energy predominantly serves the North of England, while Moorland Fuels serves the South West from its Okehampton head office.
Group chairman Chris Bingham said: “I’ve been considering the option of employee ownership for quite some time and when we looked into the benefits and alternatives available to us, an EOT was the obvious choice as it allows the existing shareholders to plan their exit over a longer term while transferring the benefits to the employees.
“As successful and ever-growing businesses, we could have sold to a third party, however, I place great value on my team and wanted to be able to reward the people who have grown the businesses to where they are today.
“As far as I am aware, we are the first fuel distribution companies in the UK to transfer 100% of our ownership to an EOT.
“The response from our shareholders and our staff has been extremely positive and there has been an increase in productivity and motivation which I’m sure will help to drive future growth.
“There’s no doubt in my mind, that creating an employee-led business is a good thing, and it would be great to see more companies consider the EOT route rather than a traditional trade sale.”
The Clarion team, led by Kaira Clareghugh and Jonathan Simms, provided legal advice, while Amanda Waterhouse and Lewis Richardson of BHP established the EOT and advised on valuation, structure and taxation issues.
In 2021, Craggs Energy achieved turnover of £33.1m and is forecast to see over 54% growth this year, rising to £51.2m. The company currently has 37 employees and the volume forecast for 2022 shows at least a 15.7% growth to 58.1 million litres.
For Moorland Fuels, turnover in 2021 was £13.7m and this is expected to at least double this year, reaching £27.5m. Employing 18 people, the volume forecast for 2022 shows at least a 47.3% growth to 32.7 million litres.
Abby Turner, sales and marketing director at Moorland Fuels, said: “Moorland Fuels became part of the Craggs Energy Group in December 2020, since then we have invested in the company significantly and grown considerably.
“As a family-run business, I was delighted to see that Chris and his team share our values and I believe this EOT will provide considerable rewards for our staff and the company going forward.”
Richard ‘Bert’ Ingram, who has been with Craggs for 10 years as a HGV Tanker Driver, added: “I’ve been with Craggs for such a long time because it’s a great company to work for and it’s been good to see the company grow over the years.
“The announcement of the EOT reiterates why Craggs is such a fantastic employer, they reward their staff for hard work and eventually we will all reap the rewards.”
Employee ownership is one of the fastest growing business succession solutions in the UK, where there are now more than 800 employee-owned businesses – with more than 300 of those having transitioned since 2020.
The fast pace of growth amongst businesses has taken off with the use of the employee ownership trust (EOT), introduced by the government in 2014 to encourage long-term employee ownership, and one in every 20 private company sales is now to an EOT, with Craggs Energy and Moorland Fuels joining a network of EOTs in the UK that include Richer Sounds and Go Ape.
James de le Vingne, Chief Executive of the Employee Ownership Association (EOA), said: “We congratulate our members Craggs Energy and Moorland Fuels on their transition to employee ownership; securing the ethos, values and culture of the businesses, as well as rooting jobs in the North of England and Devon.
“Businesses that give employees a stake and a say build trust and shared responsibility, uniting leaders and employees behind a common purpose, and leaving businesses in a better position to flex and adapt.”