Risks and uncertainties
Betolar as an investment
Betolar's risk management supports the implementation of the company's strategy, business continuity and achievement of targets in accordance with the risk management policy approved by the Board of Directors.
The risk management policy describes the basis of Betolar’s risk management, the risk environment, the control model and the key risk management processes.
Betolar's current risks, uncertainties and risk mitigation
Risks related to the business environment
Economic cycles and, in particular, the level of activity in the construction market affect the demand for Betolar's products and services. High inflation, rising interest rates and supply chain disruptions have weakened the global economic outlook, posing a risk to the implementation of Betolar's growth strategy.
Scarcity, shocks and cost inflation caused by the uncertainty of the global economy may adversely affect the competitiveness or supply, sales or profitability of Betolar's solution.
However, the uncertainty of the operating environment is not expected to have a significant impact on society, businesses and the climate markets related to the green transition the implementation of plans and programmes.
Changes in the regulatory environment
Betolar's strategic market and operating environment is influenced by regulatory initiatives related to environmental sustainability at both supranational and national level.
Betolar's target markets in Europe and Asia are preparing and implementing significant regulatory packages that aim to accelerate the spread of green and other sustainable investments and financing models, reduce the environmental and climate impacts of different sectors, protect biodiversity and increase the activity of the emission allowance and credit market.
According to Betolar's assessment, the Geoprime solution will particularly benefit from the requirements set by the new and ongoing regulatory projects of the aforementioned entities. However, it is possible that the development of the regulatory environment is neutral from the perspective of the Geoprime solution or that the regulatory environment may evolve in a direction that is unfavorable for the Geoprime solution and the related value chain.
Functionality of the solution in accordance with the customer’s own and national requirements.
Betolar’s solution is based on customer-specific customisation of the technology, formulas, raw material chains and marketing. The aim is to offer the customer an opportunity to manufacture, market and deliver a superior – from the perspective of quality, sustainability and environmental impact – compliant and cement-free concrete product to their own customers.
The meaning of the first customer relationships is central to the popularisation of the Geoprime solution, which is why the success in meeting the customer’s own requirements and the product-specific requirements is of primary importance to Betolar.
Products manufactured with Betolar’s Geoprime technology must meet requirements for each product or product group, which vary depending on the country or region in which the product is manufactured or used. Betolar manages the risk related to the conformity of construction products and materials based on its solution by actively and proactively managing the product development process. At the beginning of each pilot or deployment project, local regulations, standards and other local requirements, guidelines and practices for the targeted Geoprime end product and its manufacture are surveyed. The definition, implementation and reporting of compliance are ensured in stages as the product development process progresses. Separately from this, Betolar implements the necessary testing programmes to ensure long-term durability as early as possible.
Due to the early stages of its business operations, Betolar is dependent on
external financing. The company’s financial situation, readiness and needs are systematically monitored and anticipated as part of the financial process.
New financing may be required, for example, to carry out investments that are significant for the implementation of the growth strategy. Financing may be providedin the form of equity or debt. However, Betolar may not be able to raise the funding it needs or may have to raise funding at a higher cost than in the past. The availability of financing may be affected by several factors, such as the situation on the financial markets, the general availability of credit, uncertainties related to the profitability of Betolar’s business, and creditworthiness.
The company manages the risk related to the availability of financing by actively mapping the sources of equity and debt financing, and green financing in particular, by building its target capability.
The operational risks related to Betolar's operations are related in particular to the functionality and capacity of procurement and supply chains, keeping and attracting the best workforce, personnel and the well-being and safety of those working in supply chains.
Information security and cyber risks related to the digital operating environment are a significant risk category in Betolar's business model, which has recently become increasingly important.
Russia’s invasion of Ukraine and the resulting rise in energy prices have pushed up the price of cement, among other building materials. Therefore, alternative binders have attracted the interest of concrete manufacturers. Betolar’s commercial progress and other market feedback indicate that the construction industry is ready to adopt green solutions quickly.
Geopolitical tensions, increased energy prices and raw material costs and the slow recovery of maritime logistics from the pandemic have also indirectly affected the prices and transport costs of chemical activators used in Geoprime recipes. In Asia, the increase in energy prices has not had a significant impact on the prices of side streams such as blast furnace slag or fly ash. In Europe there will be a growing demand for type approved blast furnace slag, as it can be used in blended cements as a partial substitute for cement.