REN Redes Energeticas Nacionais : First 3 months 2019 consolidated results report

RESULTS REPORT

1Q19

03rd MAY

1Q19 HIGHLIGHTS

MAIN INDICATORS

	€M	1Q19	1Q18	%	Abs.
	EBITDA	125.3	128.4	-2.4%	-3.0
	Financial Results	-15.5	-16.6	6.8%	1.1
	Net Profit	13.2	13.1	1.3%	0.2
	Recurrent Net	37.6	38.4	-2.0%	-0.8
	Profit
	Average RAB	3,743.0	3,877.8	-3.5%	-134.7
	CAPEX	16.8	13.9	21.1%	2.9
	Net Debt	2,613.9	2,643.7	-1.1%	-29.8

The first quarter of 2019 ended with EBITDA reaching €125.3M, a decrease of 2.4%. The main reason for this fall was lower assets' remuneration. Natural gas distribution business contributed with an additional €0.5M versus last year;

Despite the decrease in EBITDA, Net Profit amounted to €13.2M, which was in line with what REN presented in 1Q18;

For this stability in Net Profit, there were positive contributions from Financial Results, that improved by €1.1M, reaching -€15.5M, from the extraordinary levy (CESE), with a €0.9M decrease, and from taxes (-€1.0M). The effective tax rate, excluding the levy, was 26.6% while in 1Q18 it was 27.7%;

Recurrent Net Profit got to €37.6M, -2.0% than last year;

Net Debt decreased to €2,613.9M (-€29.8M) year on year. The average cost of debt remained mostly unchanged at 2.3%.

2

CAPEX INCREASED BY €2.9M TO €16.8M

In 1Q19, the electricity sector benefited from the construction of a submarine cable (€1.2M)

CAPEX and RAB

€M	1Q19	1Q18	Δ%	Abs.
Average RAB	3,743.0	3,877.8	-3.5%	-134.7
Electricity	2,036.9	2,117.8	-3.8%	-80.9
Land	235.1	247.6	-5.1%	-12.6
Natural gasT	1,003.0	1,048.3	-4.3%	-45.3
Natural gasD	468.1	464.1	0.9%	4.0
RAB end of period	3,718.1	3,856.9	-3.6%	-138.9
Electricity	2,020.8	2,101.4	-3.8%	-80.6
Land	233.5	246.1	-5.1%	-12.6
Natural gasT	996.0	1,041.3	-4.3%	-45.3
Natural gasD	467.8	468.1	-0.1%	-0.4
CAPEX	16.8	13.9	21.1%	2.9
Electricity	12.1	8.7	39.1%	3.4
Natural gasT	1.0	1.3	-27.6%	-0.4
Natural gasD	3.7	3.8	-2.6%	-0.1
Other	0.0	0.0		0.0
RAB variation e.o.p.	-49.6	-41.7
Electricity	-31.9	-32.8
Land	-3.1	-3.1
Natural gasT	-14.0	-13.9
Natural gasD	-0.6	8.1

CAPEX rose to €16.8M, €2.9M more than in 1Q18, with higher investments being deployed in the electricity business;

Within the scope of electricity transmission infrastructures, one new 400 kV line bay was concluded at the Tavira substation to link the Solara 4 photovoltaic park;

Within Natural Gas transportation and storage, investment was mainly focused on the refurbishment of equipment;

Investments in Portgás targeted network expansion and densification, mostly for B2C.

3

Note: T - Transmission; D - Distribution.

AVERAGE RAB WAS 3.5% BELOW 1Q18

Positive evolution of Portgás (€4.0M)

(€M)

5.3%1

0.3%

5.1%

5.8%

5.4%

5.7%

5.2%1

3,877.8

-12.6

-48.0

-33.0

4.0 3,743.0

-45.3

Average RAB decreased by €134.7M year-on-year, penalized by the negative trend of natural gas transportation and electricity transmission;

In the electricity transmission, the base rate of return (RoR) decreased by 0.1p.p. to 5.1%. The electricity with premium declined by €33.0M YoY, while lands, the category with the lowest RoR (0.3%), was down by €12.6M to €235.1M;

In natural gas transportation, the average RAB decreased by €45.3M (RoR 5.4%) to €1,003.0M. On April 1st ERSE made public some parameters for the 2020-2023 gas regulatory framework. They proposed that for an average ten-year bond yield of 1.5% the rate of return shall be 5.0%. The new rules will be set for four years instead of the former three;

Average RAB	Lands	Electricity	Electricity	Natural	Portgás	Average RAB
1Q18		without	with premium	gasT		1Q19
		premium

By year-end, electricity accounted for 54.4% of the average RAB, natural gas for 39.3% (Portgás included) and lands for the remaining 6.3%.

4

1)RoR is equal to the specific asset remuneration, divided by the average RAB.

EBITDA STOOD AT €125.3M (-2.4%YOY)

The decrease in the transmission business (-€3.5M) was partially offset by the growth in Portgás (€0.5M)

EBITDA
(€M)	€-3.0M
	0.5	(-2.4%)
128.4

				0.4
		-2.7
			-0.3			-0.4			125.3
								-0.6

EBITDA	EBITDA Portgás	Asset	Recovery	OPEX	Electrogas'	Other	EBITDA
1Q18		remuneration	of	contribution	Net Profit		1Q19
			amortizations	(1)	proportion

5

(1) Includes €0.08M of OPEX own works.