Kyoto Group AS

Regulatory Filings • Jun 22, 2023

Kyoto signs strategic investment agreement with Iberdrola and Spirax-Sarco Engineering to accelerate electrification

Kyoto signs strategic investment agreement with Iberdrola and Spirax-Sarco Engineering to accelerate electrification

Oslo, Norway 22 June 2023 - Iberdrola, Europe's largest electricity utility by

market capitalization, and Spirax-Sarco Engineering, a world-leading specialist

in thermal energy management, join Kyoto Group as strategic investors and

commercial partners in an alliance to accelerate the decarbonization of

industrial process heat with Kyoto's Heatcube, a thermal energy storage

solution.

"This is a defining moment for Kyoto Group. Beyond the increased equity, having

Iberdrola and Spirax-Sarco Engineering put their plans, market access, and

credibility behind the commercialization of Heatcube opens huge market

opportunities and provides us with world-class technological backing. We are

already working on several specific commercial customer projects with Iberdrola

and expect positive results shortly," says Camilla Nilsson, CEO of Kyoto Group.

Iberdrola will invest NOK 35.1 million in return for a 12.8 percent share of

Kyoto's issued share capital, while Spirax-Sarco Engineering will invest NOK

41.0 million in return for a 15.0 percent share. Both will join the Kyoto board,

pending approval by Kyoto's annual general meeting on 30 June.

In addition, the agreements outline extensive commercial and technical

cooperation on the commercialization and market adoption of Heatcube.

Iberdrola

The commercial agreement with Iberdrola builds on the memorandum of

understanding reported by Kyoto on a no-name basis on 20 April 2023. Iberdrola

and Kyoto are cooperating on introducing Kyoto's thermal energy storage

solutions to both Kyoto's and Iberdrola's industrial customers and have already

submitted co-developed offers to several specific customers.

"The partnership with Kyoto and its Heatcube thermal storage solution is a

further step for Iberdrola in its mission to decarbonize the economy through

electrification. Storage is one of the major challenges in the energy

transition, hence this collaboration with the Norwegian group will be key to our

strategy," said Fernando Mateo, Global Head of Industrial Decarbonization at

Iberdrola.

With this step, Iberdrola advances in the strategy to provide industrial

customers with solutions to decarbonize their heat demand. Industry heat demand

represents more than 50 percent of the final energy needs for industry, and

thermal storage solutions is a key technology to supply green heat at

competitive cost. This technology, jointly with green hydrogen, ammonia and

other derivates where Iberdrola is a world leader, complements the portfolio of

solutions that Iberdrola offers to its industrial customers.

Headquartered in Bilbao (Spain), for over 20 years Iberdrola has been committed

to clean energy with the goal of exceeding 52,000 MW of renewable capacity by

2025. Iberdrola recently presented its Climate Transition Plan to the United

Nations, in response to the UN Secretary General's call, with the goal of

achieving net zero emissions by 2040 following a realistic, ambitious and

responsible path.

Spirax-Sarco Engineering

The partnership agreement with Spirax-Sarco Engineering covers commercial and

technological development of electrical heaters for existing and future

generations of Heatcube, with the opportunity to expand the cooperation to other

key technologies.

Spirax-Sarco Engineering is a UK-listed multi-national industrial engineering

Group providing thermal energy management and fluid technology solutions for

critical industrial processes and equipment.   The Group has a direct presence

in 67 countries worldwide, including 40 manufacturing plants and employs more

than 10,000 people. Through its One Planet: Engineering with Purpose

Sustainability Strategy, the Group is committed to achieving net zero emissions

for scopes 1 and 2 by 2030 and for scope 3 by 2050.

"Spirax-Sarco Engineering is actively investing in developing new-to-world

solutions to decarbonize industrial heat and steam generation to meet our

customers' changing needs. Kyoto's Heatcube fits perfectly with this strategy,

and we are pleased to support its entry into the commercial market and to invest

in Kyoto Group," says Nicholas Anderson, Group Chief Executive of Spirax-Sarco

Engineering.

Heatcube

Kyoto Heatcube provides thermal energy storage and heat generation in one

product. It supplies industrial customers with the technology needed to lower

both their costs for producing process heat and their CO2 emissions using

intermittent renewable energy sources instead of fossil fuels for heat

production.

Heatcube can be configured with storage capacities from 16 MWh to over 96 MWh,

with a discharge effect for each Heatcube of up to 20 MW. It is an innovative,

low-cost, and modular storage solution for thermal energy that can use multiple

renewable energy sources to heat molten salt to over 415 degrees Celsius. The

high-temperature salt is then used to produce steam for industrial production

processes.

Details on the contemplated investment

Upon the terms and subject to the conditions of the investment agreement, the

investors shall invest in the company through a directed share of 4.620.646 new

shares in the company at a subscription price of NOK 16.4847 per share, which

corresponds to the volume weighted average price traded in the shares on

Euronext Growth Oslo in the period from 1 January 2023 until the date of the

investment agreement, raising gross proceeds of NOK 76.2 million.

The net proceeds from the investment will be used to (i) cover the company's

liquidity needs, including pre-ordering of long lead-time items for production

of Heatcube, continued market expansion and the related upscaling activities,

building project execution capacity combined with partnering setups, (ii)

repayment of below mentioned short-term financing provided by two shareholders,

and (iii) general corporate purposes.

Settlement of the new shares is expected to take place on or about 5 July 2023,

but not before the share capital increase pertaining to the Investment has been

registered with the Norwegian Register of Business Enterprises (NRBE), and

subject to correct information on VPS account or nominee account for delivery of

the new shares.

Completion of the investment is conditional upon (i) necessary corporate

resolutions by the company to consummate the investment and allocate the new

shares, such as the resolution by the AGM to resolve the share capital increase

pertaining to the new shares, and election of the two new board members, (ii)

the share capital increase pertaining to the new shares being registered with

the NRBE and the new shares having been validly issued in the VPS.

In consultation with the company's management, the board has considered various

transaction alternatives to secure new financing. Based on an overall

assessment, considering inter alia the need for funding, execution risk and

possible alternatives, the board has on the basis of careful considerations

decided that the investment is the alternative that best protects the company's

and the shareholders' joint interests. By structuring the transaction as a

directed share issue, the company was able to raise capital in an efficient

manner with significantly lower completion risks compared to a rights issue.

Thus, the waiver of the preferential rights inherent in a share capital increase

through issuance of new shares is considered necessary.

As part of and subject to completion of the directed share issue, the new

investors Iberdrola and Spirax-Sarco together with the existing shareholders KM

New Energy AS, Valinor AS, Altitude Capital AS (for 800,000 shares), KB

Management and Møsbu AS have all agreed to a lock-up on their shareholding with

customary exceptions for a period of 180 days after the date of the annual

general meeting.

The annual general meeting will be held on 30 June 2023. The notice will be

published in due course.

Short-term shareholder loans

Two existing shareholders have agreed to grant the company short-term financing

to cover potential funding needs in the period up to completion of the

investments and payment of the funds pertaining thereto. The shareholder loans

have been entered into on market terms and otherwise in accordance with market

practice for such agreements. The shareholder loans amount to NOK 9 million.

Reference is also made to the separate announcement published today regarding

the significant increase in discharge capacity of Kyoto's Heatcube, as a result

of the collaboration with Steinmüller Engineering.

This information is considered to be inside information pursuant to the EU

Market Abuse Regulation and is subject to the disclosure requirements pursuant

to Section 5-12 the Norwegian Securities Trading Act. This stock exchange notice

was published by Håvard Haukdal, CFO of the Company, on 23 June 2023 at the time

set out herein.

Kyoto Group will host a webcast to elaborate on the new agreements on Tuesday 27

June at 14:00 CEST. A separate notice with login details will follow.

For further information, please contact:

Håvard Haukdal, Kyoto Group CFO

havard.haukdal@kyotogroup.no

+47 48 10 65 69

About Kyoto Group

Heat accounts for two thirds of industrial energy consumption. Traditionally,

nearly all of it is based on fossil fuels. Kyoto Group's Heatcube, a thermal

energy storage (TES) solution, provides a sustainable and cost-effective

alternative by capturing and storing abundant but variable energy from sources

such as solar and wind. Founded in 2016, Kyoto Group is headquartered in Oslo,

Norway, and has subsidiaries in Spain and Denmark. The Kyoto share is listed on

Euronext Growth (ticker: KYOTO). www.kyotogroup.no

About Iberdrola

Iberdrola, Europe's largest electricity utility by market capitalization and one

of the world's top three electricity companies, is a leader in renewables,

spearheading the energy transition to a low carbon economy. The group supplies

energy to almost 100 million people in dozens of countries. With a focus on

renewable energy, smart networks and smart solutions for customers, Iberdrola's

main markets include Europe (Spain, the United Kingdom, Portugal, France,

Germany, Italy and Greece), the United States, Brazil, Mexico and Australia. The

company is also present in growth markets such as Japan, Taiwan, Ireland, Sweden

and Poland, among others.

The company has a workforce of over 40,600 and assets in excess of

Euro 154.6.billion. In 2022, Iberdrola posted revenues of nearly Euro 54 billion, net

profit of Euro 4.34 billion, with Euro 7.5 billion paid in tax contributions in the

countries where it operates. The company helps to support more than 400,000 jobs

in communities across its supply chain, and global supplier purchases topped

Euro 17.8 billion in 2022. A benchmark in the fight against climate change,

Iberdrola has invested more than Euro 130 billion over the past two decades to help

build a sustainable energy model, based on sound environmental, social and

governance (ESG) principles. www.iberdrola.com/home

About Spirax-Sarco Engineering

Spirax-Sarco Engineering plc is a leading global thermal energy management and

fluid technology solutions Group that aims to deliver sutainable value to all

its stakeholders through engineering a more efficient, safer and sustainable

world.  Headquartered in Cheltenham (UK), the Group comprises three

world-leading Businesses: Steam Specialties, for the control and management of

steam; Electric Thermal Solutions, for advanced electrical process heating and

temperature management solutions; and Watson Marlow, for peristaltic pumping and

associated fluid path technologies.  In 2022, the Group launched its TargetZero

solutions for the decarbonisation of critical industrial processes.

The Company's shares have been listed on the London Stock Exchange since 1959

(symbol: SPX) and it is a constituent of the FTSE 100 and the FTSE4Good Indexes.

www.spiraxsarcoengineering.com