Workshop - Marseille 24 May 2019 Innovative Financial Solutions

FINANCE & REGULATIONS Harley&Dikkinson Finance for HAPPEN Harley&Dikkinson Finance is involved in HAPPEN as WP leader for Work Package 4. FINANCE & REGULATIONS The WP objective is two-folds: creating and testing innovative financial solutions, on the basis of a state of the art review which will be essential for unlocking the market uptake of deep retrofitting in the Med space. Within this framework, a MedZEB Voluntary Certification Scheme (VCS) will be elaborated, joint to the MedZEB Protocol, intended as the main instrument for de-fragmenting the supply chain, and to recreate trust among all subjects involved in the retrofitting market, also to the extent of facilitating the access to credit at convenient rates.

Harley&Dikkinson Finance Harley&Dikkinson is a consolidated reality which has an important role as Technological, Financial and Guarantee Arranger supported by companies which bring added value to the upgrading building system (Experts, Building Manager, Companies, ..). H&D is the Italian condominium business company leader in the conception and development of financial products and services and in the identification of commercial opportunities and the related business scouting.

Harley&Dikkinson Finance H&D answers to the real estate business needs thanks to the study and realization of the following solutions: ARRANGEMENT AND CONSULTING SOLUTION FINANCIAL SOLUTION GARANTEE SOLUTION

INNOVATIVE FINANCIAL SOLUTION TO SUPPORT HAPPEN VERSATILE MUTUAL ENERGY

VERSATILE MUTUAL ENERGY The innovative financial solution designed for Happen has a Step by Step approach according to the step by step approach of the optimal solution and it is called Versatile Energy Loan because of its elasticity both by the Bank and by the applicant. In practice, it is a mortgage loan that provides for three progress reports (STEP) with three repayment schedules, one for each STEP completed. The objective is to achieve the energy requalification of buildings located in cities in European countries of MEDzone and to use the savings generated as a source of reimbursement of funding obtained to support the interventions. In essence, a technical project is prepared to achieve the total energy efficiency of the building, through three phases of intervention:

VERSATILE MUTUAL ENERGY The HAPPEN consortium studied a possible financial solution of which today we will show you the fluxes and the general principles, but it will be actualized with all the national laws of the countries involved and it will be integrated in the MEDzone. The solution proposed foresees the contractual definition and the writing of a mortgage for a potential total amount for the deep requalification in the year 0. The amount will be based on the optimal solutions package and on the economic return of the energy efficiency in order to make the payment of the intervention sustainable for the owner.

VERSATILE MUTUAL ENERGY The financial solution had been thought to encourage the starting of the process of deep renovation by foreseeing subsidies to foster the owner not to interrupt the process after the first step. The aim is to obtain the maximum possible energy savings arriving to the nZeb. Despite this, the instrument has been thought with maximum characteristics of flexibility and versatility that tend, in their fundamental principles, to indulge the vicissitude of the building (the sale, the heritage ecc..) and its inhabitants, but also the technological progress in terms of materials and restructuring techniques, or in the future cost of energy.

VERSATILE MUTUAL ENERGY STEP 1: The bank will register an appropriate mortgage for the amount of the total costs, allowing for the use to STEP for the first intervention, after which the reimbursement of the amount used (10/15 years) will begin; STEP 2: subsequently the bank (indicatively after having exceeded the 50-60% reimbursement of the first STEP) will allow for the start of the second STEP and therefore the reimbursement of the second amortisation plan will also begin; STEP 3: approximately at the end of the full repayment of the first STEP, the bank will allow for the use of the third and last STEP, with the start of the related amortisation plan, and duration consistent with the additional savings obtained.

VERSATILE MUTUAL ENERGY development of financial commitment step by step and total STEP 1 PLUS of the product is represented by the fact that the time required to pay back the financing is diluted in inverse proportion to the energy savings generated by the intervention carried out. STEP 2 STEP 3 Single MORTGAGE registered in year 0

VERSATILE MUTUAL ENERGY development of financial commitment step by step and total STEP 1 PLUS of the product is represented by the fact that the time required to pay back the financing is diluted in inverse proportion to the energy savings generated by the intervention carried out. STEP 2 STEP 3 50% 30% 20% Single MORTGAGE registered in year 0

VERSATILE MUTUAL ENERGY development of financial commitment step by step and total STEP 1 PLUS of the product is represented by the fact that the time required to pay back the financing is diluted in inverse proportion to the energy savings generated by the intervention carried out. STEP 2 STEP 3 50% 25% 0% Single MORTGAGE registered in year 0

VERSATILE MUTUAL ENERGY development of financial commitment step by step and total STEP 1 PLUS of the product is represented by the fact that the time required to pay back the financing is diluted in inverse proportion to the energy savings generated by the intervention carried out. STEP 2 STEP 3 50% 30% 25% 15% 0% 0% Single MORTGAGE registered in year 0

VERSATILE MUTUAL ENERGY development of financial commitment step by step and total STEP 1 PLUS of the product is represented by the fact that the time required to pay back the financing is diluted in inverse proportion to the energy savings generated by the intervention carried out. STEP 2 STEP 3 50% 30% 25% 20% 15% 0% 0% 0% Single MORTGAGE registered in year 0

VERSATILE MUTUAL ENERGY development of financial commitment step by step and total STEP 1 PLUS of the product is represented by the fact that the time required to pay back the financing is diluted in inverse proportion to the energy savings generated by the intervention carried out. STEP 2 STEP 3 50% 30% 25% 20% 15% 0% 0% 0% 50% 55% 35% 0% 0% Single MORTGAGE registered in year 0

VERSATILE MUTUAL ENERGY FINANCIAL SOLUTION TOP The customer receives the financial in 3 steps Financial: Duration: Date of distribution: Date of expiration: €100.000 30 anni 01/01/2019 31/12/2033 01/01/2027 31/12/2041 01/01/2034 31/12/2048 € 50.000 1°(STEP) EURIRS (2019)* + SPREAD** € 30.000 2°(STEP) EURIRS (2027)* + SPREAD** € 20.000 3°(STEP) EURIRS (2034)* + SPREAD** * ESTABLISHED BY THE BANK ** ASSOCIATED WITH THE TIME OF DISBURSEMENT AND DURATION OF FUNDING

VERSATILE MUTUAL ENERGY € 50.000 1°(STEP) EURIRS (2019) + SPREAD € 30.000 2°(STEP) EURIRS (2027) + SPREAD € 20.000 3°(STEP) EURIRS (2034) + SPREAD Today, we cannot know the value of the EURIRS index for 2023 and 2026. So: if the index were to be much higher than the current one if the cost of energy were to be reduced If the cost of carrying out DEEP RETROFITTING interventions is reduced thanks to new, unknown technologies it may be uneconomic to go ahead with the proposed investment program.

VERSATILE MUTUAL ENERGY € 50.000 1°(STEP) EURIRS (2019) + SPREAD € 30.000 2°(STEP) EURIRS (2019) + SPREAD € 20.000 3°(STEP) EURIRS (2019) + SPREAD OBJECTIVE ARRIVING AT THE European Investment Bank (EIB) or another financial European institute TO APPROVE A FINANCIAL PRODUCT TO DEVELOP NATIONAL BANKS IN WHICH, IF THE RELEASE OF A MedZEB CERTIFICATE IS REQUIRED, IN GAP BETWEEN THE COST OF MONEY OF THE YEAR 2019 (FIRST DISBURSEMENT) AND THE COST OF MONEY OF 2027 AND 2034 (SECOND AND THIRD DISBURSEMENTS) IS INSURED BY THE EIB ITSELF FOR SOCIAL PURPOSES BY DERIVATIVE PRODUCT (IRS) AND ALIGNMENT WITH THE EUROPEAN OBJECTIVES OF ENERGY EFFICIENCY

Thank you for your attention. Contacts: info@harleydikkinson.com; TEL : +39 0225712599 linkedin.com/in/happen-project @HAPPEN_PROJECT