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