Lehto Group Oyj - Inside information

Lehto Group Plc, inside information: Lehto focuses its business on real estate energy solutions and electricity storages

Lehto Group Plc
Insider information
29 May 2024 at 2.55 p.m. (Finnish time)

As Lehto Group Plc ("Lehto") has announced on several occasions, during 2024
Lehto has been evaluating options for moving into new business areas.

Lehto's Board of Directors has decided on a plan according to which Lehto will
focus its business on real estate energy solutions and electricity storages
("Energy Construction Business") and will seek to divest the prefabrication of
building industry components of its subsidiary Lehto Components Oy.

Energy Construction Business

Real estate energy solutions

Lehto has long experience in the development, planning, construction and
maintenance of real estate projects. Together with its partners, Lehto has
implemented various electricity and heat energy solutions for buildings and has
found that the growth of electricity production based on renewable energy
sources and the growth of self-sufficient energy production solutions for real
estate have created needs and opportunities for more efficient use of energy in
real estate.

Lehto aims to develop and implement solutions that achieve energy savings and
improve the balance between energy production and energy use in real estate. The
solutions consist of a combination of geothermal heating, solar energy and the
use of batteries.

Lehto believes that more efficient use of energy will increase the value of real
estate and open up new financing solutions for real estate owners.

Electricity storages

The strong growth of weather-dependent wind and solar power is causing an
imbalance between electricity production and consumption, creating a need for
temporary storage of electricity.

Energy storages allow electricity to be charged and discharged quickly and are
ideal for short term storage of electricity. When electricity production is
high, energy is charged to the electricity storages and when production is low,
energy is drawn from such storages. Control reserves are nowadays already
connected to the electricity grids in order to anticipate changes in frequency,
production and consumption of electricity. However, the need for reserves is
growing rapidly as a result of the growth of renewable energy sources.

Lehto plans to implement electricity storage systems to serve the aforementioned
needs of the electricity market. Lehto's experience in real estate project
development, implementation of construction projects, related planning,
production, procurement and handling regulatory permits, as well as established
partnerships, provide a solid foundation for the implementation of projects.

In the reserve market, Lehto's objective is to serve electricity network
companies, electricity producers and electricity retailers.

Launch of the Energy Construction Business

The launch of the Energy Construction Business will require, among other things,
the approval of Lehto's restructuring programme, new partnerships and key
personnel, and the securing of financing. The initial financing of the business
will consist of Lehto's existing cash resources, proceeds from the sale and/or
lease of the parent company's assets and factory operations, and new equity and
debt financing, which Lehto is currently negotiating. In addition, Lehto is in
talks with convertible bond holders on a model where the existing EUR 15 million
convertible bond will be converted into equity by halving the share subscription
price in accordance with the terms of the convertible bond.

Lehto aims to implement the first battery solutions to be installed in buildings
in 2024. The pilot sites have already been identified and related planning has
started. The energy storages would be either owned or leased.

Lehto will convene an Annual General Meeting to decide, among other things, on
the necessary authorisations and amendments to the Articles of Association for
the transition to the new business area and the necessary cooperation and key
personnel arrangements.

”The ongoing transformation of energy production towards a cleaner future
challenges us to think and act in a new way. Energy must be used and produced
more wisely, which creates new needs, e.g. to real estate. Decentralized energy
production and storage systems will connect buildings as part of the energy
infrastructure in the future. Our extensive experience in all phases of
construction, from project development to maintenance, gives us a good starting
point for this growth sector”, comments Hannu Lehto, CEO and Member of the Board
of Directors of Lehto.

Lehto Group Plc

Board of Directors

Further information:

Hannu Lehto

CEO, Member of the Board of Directors

+358500280448