GAS NATURAL SDG, S.A. AND ITS SUBSIDIARIES

Report on limited review of condensed interim Consolidated Financial Statements at June 30, 2017

This version of our report is a free translation of the original, which was prepared in Spanish. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language version of our report takes precedence over this translation.

REPORT ON LIMITED REVIEW OF CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

To the shareholders of Gas Natural SDG, S.A., at the request of the Board of Directors:

Report on the Condensed Interim Consolidated Financial Statements

Introduction

We have performed a limited review of the accompanying condensed interim consolidated financial statements (hereinafter, the interim financial statements) of Gas Natural SDG, S.A. (hereinafter, "the parent company") and its subsidiaries (hereinafter, "the group"), which comprise the balance sheet as at June 30, 2017, the income statement, the statement of other comprehensive income, the statement of changes in equity, the cash flow statement and related notes, all condensed and consolidated, for the six months period then ended. The parent company´s directors are responsible for the preparation of these interim financial statements in accordance with the requirements of International Accounting Standard (IAS) 34, "Interim Financial Reporting", as adopted by the European Union, for the preparation of condensed interim financial information, as provided in Article 12 of Royal Decree 1362/2007. Our responsibility is to express a conclusion on these interim financial statements based on our limited review.

Scope of Review

We conducted our limited review in accordance with International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A limited review of interim financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A limited review is substantially less in scope than an audit conducted in accordance with legislation governing the audit practice in Spain and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion on these interim financial statements.

Conclusion

Based on our limited review, that cannot be considered as an audit, nothing has come to our attention that causes us to believe that the accompanying interim financial statements for the six months period ended June 30, 2017 have not been prepared, in all material respects, in accordance with the requirements of International Accounting Standard (IAS) 34, "Interim Financial Reporting", as adopted by the European Union, for the preparation of condensed interim financial statements, as provided in Article 12 of Royal Decree 1362/2007.

PricewaterhouseCoopers Auditores, S.L., Avinguda Diagonal, 640, 08017 Barcelona, España Tel.: +34 932 532 700 / +34 902 021 111, Fax: +34 934 059 032, www.pwc.es 1

Emphasis of Matter

We draw attention to Note 3, in which it is mentioned that these interim financial statements do not include all the information required of complete consolidated financial statements prepared in accordance with International Financial Reporting Standards, as adopted by the European Union, therefore the accompanying interim financial statements should be read together with the consolidated annual accounts of the group for the year ended December 31, 2016. This matter does not modify our conclusion.

Report on Other Legal and Regulatory Requirements

The accompanying interim consolidated directors' Report for the six months period ended June 30, 2017 contains the explanations which the parent company´s directors consider appropriate regarding the principal events of this period and their impact on the interim financial statements presented, of which it does not form part, as well as the information required under the provisions of Article 15 of Royal Decree 1362/2007. We have verified that the accounting information contained in this directors' Report is in agreement with that of the interim financial statements for the six months period ended June 30, 2017. Our work is limited to checking the interim consolidated directors' Report in accordance with the scope mentioned in this paragraph and does not include a review of information other than that obtained from Gas Natural SDG, S.A. and its subsidiaries´ accounting records.

Other Matter

This report has been prepared at the request of Directors of the Parent company in relation to the publication of the half-yearly financial report required by Article 119 of Royal Legislative Decree 4/2015 of 23 October, approving the revised text of the Securities Market Law developed by the Royal Decree 1362/2007, of 19 October.

PricewaterhouseCoopers Auditores, S.L.

Originally signed by Juan Manuel Anguita Amate

July 26, 2017

Condensed interim consolidated financial statements at 30 June 2017

Contents	Page
Interim consolidated balance sheet	1
Interim consolidated income statement	2
Interim consolidated statement of comprehensive income	3
Interim consolidated statement of changes in equity	4
Interim consolidated cash flow statement	5
Notes to the condensed interim consolidated financial statements	6

Interim Consolidated Balance Sheet (Million Euros)

	30/06/2017	31/12/2016
ASSETS

Intangible assets (Note 5)	10,538	10,920
Goodwill	4,953	5,036
Other intangible assets	5,585	5,884
Property, plant and equipment (Note 5) Investments recorded using the equity method	23,125 1,548	23,627 1,575
Non-current financial assets (Note 6)	1,787	1,907
Deferred tax assets	899	872
NON-CURRENT ASSETS	37,897	38,901

Inventories	751	758
Trade and other receivables	4,691	4,999
Trade receivables Other receivables	4,092 456	4,348 489
Current tax assets	143	162
Other current financial assets (Note 6)	306	389
Cash and cash equivalents	1,455	2,067
CURRENT ASSETS	7,203	8,213
TOTAL ASSETS	45,100	47,114

NET EQUITY AND LIABILITIES
Share capital	1,001	1,001
Share premium	3,808	3,808
Reserves	9,894	9,549
Treasury shares	(21)	(21)
Net income for the period attributed to the equity holders of the parent company Interim dividend	550 -	1,347 (330)
Adjustments for changes in value	(623)	(129)
Available-for-sale financial assets	15	7
Hedging operations	(5)	47
Currency translation differences	(633)	(183)
Net equity attributed to the equity holders of the parent company	14,609	15,225
Non-controlling interests	3,637	3,780
NET EQUITY (Note 8)	18,246	19,005

Deferred income	847	842
Non-current provisions (Note 9)	1,236	1,248
Non-current financial liabilities (Note 6)	14,485	15,003
Borrowings Other financial liabilities	14,485 -	14,997 6
Deferred tax liability	2,454	2,509
Other non-current liabilities	1,259	1,331
NON-CURRENT LIABILITIES	20,281	20,933

Current provisions (Note 9) Current financial liabilities (Note 6)	132 2,857	158 2,599
Borrowings	2,737	2,437
Other financial liabilities	120	162
Trade and other payables	3,226	4,072
Trade payables	2,488	3,274
Other creditors	682	692
Current tax liabilities	56	106
Other current liabilities	358	347
CURRENT LIABILITIES	6,573	7,176
TOTAL EQUITY AND LIABILITIES	45,100	47,114

Interim Consolidated Income Statement (Million Euros)

	For the six-month period ended 30 June
	2017	2016
Sales (Note 10)	12,283	11,409
Procurements (Note 11)	(8,726)	(7,556)
Other operating income	115	110
Personnel costs (Note 12)	(501)	(506)
Other operating expenses (Note 13)	(1,080)	(1,163)
Depreciation, amortisation and impairment expenses (Note 5)	(843)	(868)
Release of fixed assets grants to income and others	21	21
Other results	-	-
OPERATING INCOME	1,269	1,447
Financial income	67	60
Financial expense	(412)	(475)
Variations in fair value of financial instruments	-	-
Net exchange gain/(losses)	(2)	-
NET FINANCIAL INCOME/(EXPENSE) (Note 14)	(347)	(415)
Profit/(loss) of entities recorded by equity method	7	(11)
NET INCOME BEFORE TAXES	929	1,021
Income tax expense (Note 15)	(218)	(240)
NET INCOME FOR THE PERIOD FROM CONTINUING OPERATIONS	711	781

Net income for the period from discontinued operations, net of taxes (Note 7)	-	30
CONSOLIDATED NET INCOME FOR THE PERIOD	711	811
Attributable to:
Equity holders of the parent company	550	645
From continuing operations	550	631
From discontinued operations	-	14
Non-controlling interests	161	166
	711	811
Basic and diluted earnings per share in euros from continuing operations attributable to the equity holders of the parent company (Note 8)	0.55	0.63
Basic and diluted earnings per share in euros attributable to the equity holders of the parent company (Note 8)	0.55	0.64

Interim Consolidated Statement of Comprehensive Income (Million Euros)

	For the six-month period ended 30 June
	2017	2016
CONSOLIDATED NET INCOME FOR THE PERIOD	711	811
OTHER COMPREHENSIVE INCOME RECOGNISED DIRECTLY IN EQUITY	(628)	107
Items that will not be transferred to profit/(loss):
Actuarial gains and losses and other adjustments	(3)	(11)
Tax effect	1	3
Items that will subsequently be transferred to profit/(loss):
Cash flow hedges	(54)	(35)
Available-for-sale financial assets	11	8
Currency translation differences	(552)	166
Tax effect	11	7
Equity-consolidated companies	(42)	(31)
Cash flow hedges	(3)	(16)
Currency translation differences	(39)	(15)
Tax effect	-	-
RELEASES TO INCOME STATEMENT	(9)	71
Cash flow hedges	(13)	92
Currency translation differences	-	-
Tax effect	3	(24)
Equity-consolidated companies	1	3
Cash flow hedges	1	4
Currency translation differences	-	-
Tax effect	-	(1)
OTHER COMPREHENSIVE INCOME FOR THE PERIOD	(637)	178
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD	74	989
Attributable to:
Equity holders of the parent company	54	801
Non-controlling interests	20	188

Interim Statement of Changes in Consolidated Net Equity (Million Euros)

		Net equity attributable to the Company's equity holders
	Share capital	Share premium and reserves	Treasury shares	Results	Adjustments for changes in value	Subtotal	Non controlling interests	Total Net equity
Balance at 01/01/2016	1,001	12,477	-	1,502	(613)	14,367	4,151	18,518
Total comprehensive income for the period	-	(10)	-	645	166	801	188	989
Dividend distribution (Note 8)	-	909	-	(1,502)	-	(593)	(114)	(707)
Other changes	-	-	-	-	-	-	(7)	(7)
Balance at 30/06/2016	1,001	13,376	-	645	(447)	14,575	4,218	18,793
Total comprehensive income for the period	-	(20)	-	702	318	1,000	282	1,282
Dividend distribution (Note 8)	-	(330)	-	-	-	(330)	(100)	(430)
Other changes	-	1	(21)	-	-	(20)	(620)	(640)
Balance at 31/12/2016	1,001	13,027	(21)	1,347	(129)	15,225	3,780	19,005
Total comprehensive income for the period	-	(2)	-	550	(494)	54	20	74
Dividend distribution (Note 8)	-	676	-	(1,347)	-	(671)	(147)	(818)
Other changes	-	1	-	-	-	1	(16)	(15)
Balance at 30/06/2017	1,001	13,702	(21)	550	(623)	14,609	3,637	18,246

Interim Consolidated Cash Flow Statement (Million Euros)

	For the six-month period
	ended 30 June 2017	2016

Income before tax	929	1,021
Adjustments to income:	1,152	1,240
Depreciation, amortization and impairment expenses	843	868
Other adjustments to net income	309	372
Changes in working capital	(258)	199
Other cash flows generated from operations:	(675)	(661)
Interest paid	(490)	(502)
Interest collected	15	13
Dividends collected	21	36
Income tax paid	(221)	(208)
CASH FLOWS FROM OPERATING ACTIVITIES	1,148	1,799

Cash flows into investing activities:	(1,005)	(912)
Group companies, associates and business units	(14)	(2)
Property, plant and equipment and intangible assets	(945)	(857)
Other financial assets	(46)	(53)
Proceeds from divestitures:	34	32
Group companies, associates and business units	-	-
Property, plant and equipment and intangible assets	-	9
Other financial assets	34	23
Other cash flows from investing activities:	24	24
Other proceeds/(payments) from/(of) investing activities	24	24
CASH FLOWS FROM INVESTING ACTIVITIES	(947)	(856)

Receipts/(payments) on equity instruments:	(2)	-
Issue	-	-
Acquisition	(2)	-
Receipts/(payments) on financial liability instruments:	140	501
Issue	3,956	3,900
Repayment and amortisation	(3,816)	(3,399)
Dividends paid and remuneration on other equity instruments	(805)	(1,026)
Other cash flows from financing activities	(54)	(46)
CASH FLOWS FROM FINANCING ACTIVITIES	(721)	(571)

Effect of changes in exchange rates	(92)	1
VARIATION IN CASH AND CASH EQUIVALENTS	(612)	373
Cash and cash equivalents at beginning of the period	2,067	2,390
Cash and cash equivalents at the end of the period	1,455	2,763

Notes to the condensed interim consolidated financial statements

Note 1. General information

Gas Natural SDG, S.A. is a public limited company that was incorporated in 1843. Its registered office is located at 1, Plaça del Gas, Barcelona.

Gas Natural SDG, S.A. and its subsidiary companies ("Gas Natural Fenosa") form a group that is mainly engaged in the supply, liquefaction, re-gasification, transport, storage, distribution and commercialisation of natural gas, as well as the generation, transport, distribution and commercialisation of electricity.

Gas Natural Fenosa operates mainly in Spain and also outside Spain, especially in Latin America, in the rest of Europe and Africa.

Note 4 includes financial information by operating segment and geographic area.

The shares of Gas Natural SDG, S.A. are listed on the four official Spanish stock exchanges, are traded simultaneously on all four ("mercado continuo"), and form part of the Ibex35.

Note 2. Regulatory framework

Concerning the regulatory framework described in the consolidated annual accounts for the year ended 31 December 2016, the following should be noted in relation to the first half of 2017:

In Spain, Order ETU/130/2017 of the Ministry of Energy, Tourism and the Digital Agenda (MINETAD) which updated the remuneration parameters for standard facilities applicable to certain facilities that generate electricity from renewable sources, cogeneration and waste, for the purposes of their application to the regulatory semi-period commencing on 1 January 2017, was published on 22 February 2017.

Order IET/258/2017 of the MINETAD, laying down obligations relating to contributions to the National Energy Efficiency Fund in 2017, was published on 25 March 2017.

Royal Decree 359/2017, which provides for an auction for assigning the specific remuneration regime for new facilities for the generation of electricity from renewable energy sources in the mainland energy system, up to a maximum of 3,000 MW, was published on 1 April 2017. Subsequently, Order ETU/315/2017 regulating the assignment procedure was published on 8 April 2017. The auction was held on 17 May 2017, with 2979 MW being allocated to wind energy facilities, 1 MW to photovoltaic facilities and 20 MW to other technologies. GNF was awarded 667 MW, i.e. 22% of the energy auctioned. The Resolution containing the results of the auction was published on 26 May 2017.

The Resolution of the Secretariat of State for Energy laying down the procedure for the assignment of basic underground storage capacity and injection and extraction rights was published on 1 April 2017.

Royal Decree-Act 10/2017, which adopts urgent measures to palliate the effects of the drought in certain watersheds and amends the consolidated text of the Water Act, was published on 10 June. This Royal Decree-Act updated the rate of the levy for the use of inland waters for electricity production, as set out in the Water Act, from 22% to 25.5% in all districts that are the competency of the State (i.e. that fall in more than one autonomous region), so as to give the competent authorities and watershed bodies the necessary resources for the purposes of environmental protection and enhancement of public domain water resources. Subsequently, on 30 June, a Resolution of the Congress of Deputies was published which ratified that Royal Decree-Act and initiated the process of submitting the text to Parliament as an urgent bill.

Order ETU/555/2017 laying down the remuneration parameters for standard facilities applicable to facilities for the treatment and reduction of animal waste approved by Order IET/1045/2014, and which have been updated for the 2017- 2019 semi-period, was published on 15 June 2017.

Royal Decree 650/2017, which provides for a new quota of 3,000 MW of installed capacity for new facilities for the generation of electricity from renewable energy sources in the mainland energy system, to which the specific remuneration regime may be granted, was published on 17 June 2017. Order ETU/615/2017 which lays down the procedure for assigning the specific remuneration regime and the relevant remuneratory parameters was published on 28 June 2017. Finally, the decision to convene a new auction to be held on 26 July 2017 was published on 1 July 2017.

In Argentina, a resolution establishing new natural gas and propane distribution prices was published on 30 March 2017, urging Enargas to release the tariff lists resulting from the comprehensive tariff review. In addition, on 30 March 2017 Enargas resolution No. I/4354-17 was published, which approved the distribution tariff lists arising from the comprehensive tariff review of Gas Natural BAN, S.A. effective from 1 April 2017, and a rise in the average tariff of 123% compared with the tariff in effect prior to that date.

In Moldova, the ANRE resolution was published on 24 March 2017, which included the electricity tariffs to be applied as from that date. Subsequently, the ANRE resolutions introducing changes in the prevailing methodologies for calculating electricity distribution and supply tariffs were published on 5 May 2017.

In Colombia, Resolution CREG 66-2017 was published on 21 June 2017, containing a new proposal for changing the method for remunerating gas distribution within the tariff review process that commenced with the publication of Resolution CREG 202-2013, which approved the gas distribution remuneration methodology.

Note 3. Basis of presentation and accounting policies

3.1. Basis of presentation

The consolidated annual accounts of Gas Natural Fenosa for 2016 were approved by the General Meeting of Shareholders on 20 April 2017.

These condensed interim consolidated financial statements at 30 June 2017 of Gas Natural Fenosa were drawn up and signed by the Board of Directors on 25 July 2017, pursuant to IAS 34 "Interim financial reporting" and must be read together with the consolidated annual accounts for the year ended 31 December 2016, which were prepared in accordance with Regulation (EC) No. 1606/2002 of the European Parliament and of the Council ("IFRS-EU").

As a result, it has not been necessary to repeat or update certain notes or estimates included in the consolidated annual accounts. Instead, the accompanying selected notes to the accounts include an explanation of significant events or movements, if applicable, in order to explain any changes in the consolidated financial situation and results of operations, comprehensive income, changes in equity and cash flows of Gas Natural Fenosa between 31 December 2016, the date of the above-mentioned consolidated annual accounts, and 30 June 2017.

The figures set out these condensed interim consolidated financial statements are expressed in million euro, unless otherwise stated.

3.2 Main risks and uncertainties

The main risks and uncertainties coincide with those disclosed in the consolidated annual accounts and consolidated directors' report for 2016 and have not changed significantly since they were issued. During the six-month period ended 30 June 2017 there have been no significant changes in the business or economic environment, or in the regulatory environment, that could lead to the impairment of the carrying amounts of the recognised non-current assets by Gas Natural Fenosa at 30 June 2017.

3.3 Seasonality

Demand for natural gas is seasonal, with gas supplies and sales in Europe generally being higher in the colder months, from October to March, and lower during the warmer months, from April to September. This seasonal nature is partially offset by the increase in demand in Latin America and in demand for natural gas for industrial uses and electricity generation, which is generally more stable throughout the year. As a result, revenues and profits from operations in the "Gas" segment are higher in the first and fourth quarters and lower in the second and third quarters. In addition, electricity demand tends to increase in summer in Spain, particularly in July and August, and therefore revenues and profits from operations in the "Electricity" segment are higher in that period in Spain.

3.4 Accounting policies

The accounting policies applied in these condensed interim consolidated financial statements are the same as those applied in the consolidated annual accounts for the year ended 31 December 2016.

Entry into force of new accounting standards

No new standards, interpretations or amendments applicable to these condensed interim consolidated financial statements had come into effect at 1 January 2017.

However, the IASB issued the following amendments taking effect for the financial years commencing on or after 1 January 2017 which have yet to be adopted by the European Union and therefore have not been applied in these condensed interim financial statements:

− IAS 12 (Amendment), "Recognition of deferred tax assets for unrealised losses";
− IAS 7 (Amendment), "Disclosure initiative";
− Annual improvements to IFRS, Cycle 2014-2016.

No significant impact is expected from the application of these amendments.

In addition, the IASB issued the following standards and amendments that will come into force on 1 January 2018, 2019 and 2021 and are pending adoption by the European Union:

− IFRS 16, "Leases";
− IFRS 15 (Clarifications), "Revenue from contracts with customers";
− IFRS 2 (Amendment) , "Classification and measurement of share-based payments";
− IFRS 4 (Amendment), "Application of IFRS 9 Financial Instruments with IFRS 4 Insurance contracts";
− IAS 40 (Amendment), "Transfers of investment property";
− IFRIC 22, "Transactions and advance payments in foreign currency";
− IFRS 17, "Insurance contracts".
− IFRIC 23, "Uncertainty over Income Tax Treatments"

Additionally, in 2016 the European Union adopted the following standards which come into force for periods commencing on or after 1 January 2018:

− IFRS 15, "Revenue from contracts with customers";
− IFRS 9, "Financial instruments".

Gas Natural Fenosa continues analyzing the impact of all these standards, interpretations and amendments, and considers that the only ones that could have any an impact on the consolidated financial statements could be IFRS 9 and IFRS 15, which are expected to enter force on 1 January 2018, and IFRS 16, to enter force on 1 January 2019. Gas Natural Fenosa will not adopt earlier these standards.

To date, the main issues analysed are the following:

IFRS 9 - "Financial instruments"

Valuation of financial assets: Gas Natural Fenosa will measure its financial assets at amortised cost, except for investments in equity instruments and derivative financial instruments, which will be measured at fair value. To date, Gas Natural Fenosa has still not determined whether the changes in fair value of each investment in equity instruments will be recognised against income or net equity.

Impairment of financial assets: Gas Natural Fenosa will apply the general expected loss model for financial assets, except for trade receivables, to which Gas Natural Fenosa will apply the simplified expected loss model, irrespective of the financial component that these assets might contain. In view of the credit risk management policies applied by Gas Natural Fenosa and the high credit quality of its debtors, Gas Natural Fenosa considers that the impact of the application of the expected loss model will not be material.

Hedge accounting: IFRS 9 aligns accounting with financial risk management, without impact in actual hedges, but allowing the application, after the entry into force, of hedge accounting to financial hedges that are not allowed under the current standard, such as, for instance, the hedging of non-financial components of contracts (e.g. commodities). No substantial amendments are expected in Gas Natural Fenosa's hedging model.

Gas Natural Fenosa considers that the application of IFRS 9 will not have a material impact in the consolidated annual accounts.

IFRS 15 - "Revenue from contracts with customers"

In relation to the entry into force of IFRS 15, no significant differences between the internal policies regarding revenue recognition for the different customers agreements types and the model of revenue recognition established by the new standard have been identified. Relating to accounting record of incremental costs incurred in customer contracts assignment IFRS 15 establishes that an asset must be recognized that will be systematically amortised in line with the transfer to the customer of the contracted goods or services. Gas Natural Fenosa considers that an impact relating to customer loyalty costs capitalization could arise on the consolidated annual accounts which would not be material.

IFRS 16 - "Leases"

Gas Natural Fenosa has started analysing the impacts of IFRS 16 "Leases", which provides that right-ofuse assets and liabilities derived from operating leases must be recognised in the consolidated balance sheet (except for short-term leases and those relating to low-value assets). In addition, there will be a change in the policy for recognising the lease expense, which will be recorded as a depreciation expense for the relevant asset and a financial expense due to the revaluation of the lease liability.

The analysis is still under way at the date of these condensed interim consolidated financial statements. Gas Natural Fenosa is gathering the data needed concerning its operating lease contracts to be able to assess the relevant impacts. However, considering the negligible volume of commitments for lease contracts held by the Group (Note 35 to the consolidated annual accounts at 31 December 2016), Gas Natural Fenosa does not expect IFRS 16 to have a material impact on the consolidated financial statements.

3.5 Consolidation scope

2017

There have been no significant changes in the consolidation scope in the six-month period to 30 June 2017.

2016

In 2016 the main changes in the consolidation scope related to the sale by Unión Fenosa Gas of the shares in Gasifica, S.A. (April 2016) and Planta de Regasificación de Sagunto, S.A. (June 2016), the purchase of Vayu Limited (July 2016), the sale of Gasco S.A. together with the purchase of an additional 37.88% in Gas Natural Chile S.A. (August 2016), the sale of the holding in GNL Quintero, S.A. (November 2016) and the deconsolidation of the holding in Electricaribe following the loss of control (December 2016).

Appendix I includes the changes in the consolidation scope arising in the first half of 2017 and in 2016.

Note 4. Segment financial information

An operating segment is a component that carries on business activities from which it may obtain ordinary revenue and incur costs, whose operating results are reviewed regularly by the Gas Natural SDG, S.A. Board of Directors when taking the company's operating decisions in order to decide on the resources that must be allocated to the segment and to evaluate its performance, in respect of which separate financial information is available.

a) Segment information

The operating segments of Gas Natural Fenosa are:

Gas distribution. This segment encompasses the regulated gas distribution business in Spain, Italy and Latin America.
The gas distribution business in Spain includes the regulated gas distribution activity, the services for third-party access to the network, as well as the activities related to distribution. This also includes the liquefied petroleum gas (LPG) business.

Gas distribution in Italy consists of regulated gas distribution.

The gas distribution business in Latin America (Argentina, Brazil, Chile, Colombia, Mexico and Peru) includes the regulated gas distribution activity and sales to customers at regulated prices. In Chile the gas supply and commercialisation business is also included.

Electricity distribution. This segment encompasses the regulated electricity distribution business in Spain, Moldova and Latin America.

The electricity distribution business in Spain includes the regulated electricity distribution business, network services and other activities related to third party access to the distribution network.

The electricity distribution business in Moldova consists of the regulated distribution of electricity and commercialisation at the relevant tariff in that country.

The electricity distribution business in Latin America consists of the regulated electricity distribution activity in Argentina, Chile, Panama and Colombia (Until 31 December 2016 in the case of Colombia).

Gas. Includes the activity arising from the gas Infrastructure, the supply activity and Unión Fenosa Gas.

The infrastructure business includes operation of the Maghreb-Europe gas pipeline and the regassification process, and gas exploration, production and storage.

The commercialization business includes wholesale gas procurement and supply both in the Spanish liberalised market and in other countries, maritime transportation, retail supply of gas and other related products and services in the liberalised market in Spain and Italy, and supply of gas at the last-resort tariff (TUR) in Spain. In also includes the maritime transportation activity which was previously included in the infrastructures area, easing comparison with 2016.

Unión Fenosa Gas' business (50%-owned by Gas Natural Fenosa and 50% by another shareholder, consolidated using the equity method) includes the Damietta (Egypt) liquefaction activities, maritime transportation and gas supply activities.

Electricity. It includes the electricity generation and commercialisation in Spain and the International Electricity activities.

The Electricity business in Spain includes electricity production activity through combined cycle, coal, nuclear, hydro, co-generation and wind farm plants and other special regime technologies, the supply of electricity to wholesale markets and the wholesaling and retailing of electricity in the deregulated Spanish market and electricity supply at the Small Consumer Voluntary Price (PVPC).

The International Electricity business mainly includes the international generation activities in Latin America (Mexico, Costa Rica, Dominican Republic, Panama, Brazil, Chile and Puerto Rico, the latter consolidated using the equity method through EcoEléctrica, L.P.) and other countries (Kenya and Australia).

Rest. This includes the exploitation of the coal field owned by Kangra Coal (Proprietary), Ltd. in South Africa, the assets/liabilities and operating costs of the corporation and its sales to the different lines of business on the basis of utilisation, as well as other remaining activities.

Net financial income and income tax expense are not allocated to the operating segments, since both financing activities and the income tax effects are managed jointly.

Segment results and investments for the periods of reference are as follows:

		Gas dis	trib utio n			Ele ctri city dis	trib utio n			Gas				Ele ctri city
6-m h p erio d e nde d 3 0 J 20 17 ont une	Spa in	Italy	Lat in Am eric a	Tot al	Spa in	Mo ldo va	Lat in Am eric a	Tot al	Infr ast ture ruc s	Sup ply	UF GA S	Tot al	Spa in	Inte iona l rnat Elec trici ty	Tot al	Res t	Elim inat ion s	TOT AL
Sal olid ated es c ons	581	43	2,2 63	2,88 7	399	110	1,68 3	2,19 2	43	4,6 60	-	03 4,7	1,96 8	458	2,42 6	75	-	12,2 83
Sal es i nter ts seg men	57	-	-	57	21	-	31	52	121	689	-	810	518	8	526	118	-	1,56 3
Sal ents es s egm	638	43	2,2 63	2,94 4	420	110	1,71 4	2,24 4	164	5,34 9	-	5,5 13	2,48 6	466	2,95 2	193	(1,5 63)	12,2 83
Seg t pr ents men ocu rem	(50 )	-	(1,6 06)	(1,6 56)	-	(84 )	(1,2 99)	(1,3 83)	-	(4,9 03)	-	(4,9 03)	(1,9 15)	(25 9)	(2,1 74)	(92 )	1,48 2	(8,7 26)
Net nel ts pe rson cos	(39 )	(6)	(68 )	(11 3)	(50 )	(4)	(73 )	(12 7)	(3)	(41 )	-	(44 )	(68 )	(20 )	(88 )	(12 9)	-	(50 1)
Oth atin g in e/ex er o per com pen ses	(11 0)	(8)	(17 5)	(29 3)	(68 )	(6)	(11 4)	(18 8)	(8)	(13 3)	-	(14 1)	(31 3)	(39 )	(35 2)	13	81	(88 0)
EBI TDA	439	29	414	882	302	16	228	546	153	272	-	425	190	148	338	(15 )	-	2,17 6
Oth lts er r esu	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Dep reci atio tiza tion d im pair t n, a mor an men exp ens es	(14 8)	(12 )	(88 )	(24 8)	(11 3)	(3)	(63 )	(17 9)	(25 )	(38 )	-	(63 )	(22 4)	(64 )	(28 8)	(65 )	-	(84 3)
Tra nsfe rs to visi pro ons	(4)	-	(13 )	(17 )	-	-	(14 )	(14 )	-	(20 )	-	(20 )	(11 )	-	(11 )	(2)	-	(64 )
Ope ratin g in com e	287	17	313	617	189	13	151	353	128	214	-	342	(45 )	84	39	(82 )	-	1,26 9
Net fina ncia l inc ome	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	(34 7)
Equ ity-m etho d re sult s	-	-	7	7	-	-	10	10	-	-	(48 )	(48 )	8	29	37	1	-	7
Net inc be fore tax ome	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	929
Inco tax me exp ens e	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	(21 8)
Net inc fo r th riod fro inui ont ome e pe m c ng ratio ope ns	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	711
Net inc for the riod fro ome pe m disc inue d o atio ont per ns	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Net inc for the riod ome pe	-	-			-	-	-	-	-	-	-	-	-	-	-	-	-	711

Inve in PP& E a nd i gibl stm ents ntan sets e as (No te 5 ) (1)	82	15	155	252	106	3	177	286	5	25	-	30	53	90	143	26		737

		Gas dis	trib utio n			Ele ctri city	dis trib utio n			Gas				Ele ctri city
6-m h p erio d e nde d 3 0 J 20 16 ont une	Spa in	Italy	Lat in Am eric a	Tot al	Spa in	Mo ldo va	Lat in Am eric a	Tot al	Infr ast ture ruc s	Sup ply	UF GA S	Tot al	Spa in	Inte iona l rnat Elec trici ty	Tot al	Res t	Elim inat ion s	TOT AL
Sal olid ated es c ons	529	43	1,76 5	2,33 7	394	119	2,3 05	2,8 18	13	3,6 85	-	3,69 8	2,04 1	343	2,38 4	172	-	11,4 09
Sal es i nter ts seg men	52	-	-	52	22	-	-	22	146	683	-	829	532	10	542	103	-	1,54 8
Sal ents es s egm	581	43	1,76 5	2,38 9	416	119	2,3 05	2,84 0	159	4,3 68	-	4,5 27	2,5 73	353	2,92 6	275	(1,5 48)	11,4 09
Seg t pr ents men ocu rem	(9)	-	(1,1 85)	(1,1 94)	-	(86 )	(1,6 96)	(1,7 82)	(1)	(3,9 36)	-	(3,9 37)	(1,8 34)	(16 6)	(2,0 00)	(11 2)	1,46 9	(7,5 56)
Net nel ts pe rson cos	(39 )	(6)	(60 )	(10 5)	(45 )	(3)	(10 0)	(14 8)	(2)	(37 )	-	(39 )	(68 )	(22 )	(90 )	(12 4)	-	(50 6)
Oth atin g in e/ex er o per com pen ses	(10 9)	(8)	(14 3)	(26 0)	(68 )	(5)	(16 9)	(24 2)	(10 )	(11 8)	-	(12 8)	(29 5)	(41 )	(33 6)	(3)	79	(89 0)
EBI TDA	424	29	377	830	303	25	340	668	146	277	-	423	376	124	500	36	-	2,45 7
Oth lts er r esu	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Dep reci atio tiza tion d im pair t n, a mor an men exp ens es	(14 4)	(12 )	(79 )	(23 5)	(11 0)	(3)	(76 )	(18 9)	(24 )	(28 )	-	(52 )	(26 3)	(65 )	(32 8)	(64 )	-	(86 8)
Tra nsfe visi rs to pro ons	-	-	(13 )	(13 )	-	-	(85 )	(85 )	-	(23 )	-	(23 )	(20 )	-	(20 )	(1)	-	(14 2)
Ope ratin g in com e	280	17	285	582	193	22	179	394	122	226	-	348	93	59	152	(29 )	-	1,44 7
Net fina ncia l inc ome	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	(41 5)
Equ ity-m etho d re sult s	-	-	7	7	-	-	4	4	-	-	(43 )	(43 )	-	21	21	-	-	(11 )
Net inc be fore tax ome	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	1,02 1
Inco tax me exp ens e	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	(24 0)
Net inc fo r th riod fro inui ont ome e pe m c ng ratio ope ns	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	781
Net inc for the riod fro ome pe m disc ont inue d o atio per ns	-	-	30	30	-	-	-	-	-	-	-	-	-	-	-	-	-	30
Net inc for the riod ome pe	-	-			-	-	-	-	-	-	-	-	-	-	-	-	-	811

Inve in PP& E a nd i gibl stm ents ntan sets e as (No ) (1) te 5	132	13	112	257	106	2	144	252	2	12	-	14	39	37	76	30		629

(1) Includes investment in property, plant and equipment and intangible assets (Note 5).

b) Reporting by geographic area

Gas Natural Fenosa's sales for the six-month periods ended in 2017 and 2016 by country of destination is analysed below:

	2017	2016
Spain	5,283	5,104
Rest of Europe	1,620	1,287
Latin American	4,736	4,665
Rest of the world	644	353
Total	12,283	11,409

Note 5. Intangible assets and property, plant and equipment

Movements in intangible assets and property, plant and equipment during the six-month period ended 30 June 2017 are as follows:

	Goodwill	Other intangible assets	Total intangible assets	Property, plant and equipment
Net carrying value at 31.12.16	5,036	5,884	10,920	23,627

Gross cost	5,036	9,038	14,074	35,727
Depreciation and impairment expenses	-	(3,154)	(3,154)	(12,100)
Net carrying value at 1.1.17	5,036	5,884	10,920	23,627

Investment	-	137	137	600
Divestitures	-	-	-	(13)
Depreciation and impairment charge	-	(166)	(166)	(677)
Translation differences	(83)	(270)	(353)	(421)
Reclassifications and other	-	-	-	9
Net carrying value at 30.06.2017	4,953	5,585	10,538	23,125

Gross cost	4,953	8,774	13,727	35,988
Depreciation and impairment expenses	-	(3,189)	(3,189)	(12,863)
Net carrying value at 30.06.2017	4,953	5,585	10,538	23,125

Note 4 provides a breakdown of investments by operating segment, the most significant being the recurring investments made in the planning and development of the gas and electricity distribution network and the investment in the International Electricity business.

At 30 June 2017, Gas Natural Fenosa records fixed asset investment commitments totalling Euros 613 million, basically for the construction of various renewable generation facilities in Brazil, Australia and Spain, the development of the distribution network and other gas infrastructures, development of the electricity grid and construction of four methane tankers under finance leases.

During the first quarter of 2017 Gas Natural Fenosa concluded the technical studies it was carrying out on the estimation of the useful life of combined cycle plants and, in line with the practice followed by the main operators in the industry, the useful life of the combined cycle plants has been changed on a prospective basis from 25 to 35 years, with effect from 1 January 2017. The effect of this change in estimated useful life on "Depreciation, amortisation and impairment losses" in the consolidated income statement for the six-month period to 30 June 2017 was a reduction of Euros 44 million in the depreciation charge. This change is expected to result in a reduction of approximate Euros 88 million in the annual depreciation charge in 2018.

Note 6. Financial instruments

a) Financial assets

Set out below is a breakdown of financial assets, excluding "Trade and other receivables" and "Cash and cash equivalents", at 30 June 2017 and 31 December 2016, by nature and category:

At 30 June 2017	Available for sale	Loans and other receivables	Investments held to maturity	Hedging derivatives	Total
Equity instruments	625	-	-	-	625
Derivatives	-	-	-	60	60
Other financial assets	-	1,101	1	-	1,102
Non-current financial assets	625	1,101	1	60	1,787
Derivatives	-	-	-	9	9
Other financial assets	-	296	1	-	297
Current financial assets	-	296	1	9	306
Total financial assets at 30.06.2017	625	1,397	2	69	2,093

At 31 December 2016	Available for sale	Loans and other receivables	Investments held to maturity	Hedging derivatives	Total
Equity instruments	619	-	-	-	619
Derivatives	-	-	-	111	111
Other financial assets	-	1,175	2	-	1,177
Non-current financial assets	619	1,175	2	111	1,907
Derivatives	-	-	-	1	1
Other financial assets	-	388	-	-	388
Current financial assets	-	388	-	1	389
Total financial assets at 31.12.2016	619	1,563	2	112	2,296

At 30 June 2017, "Available-for-sale financial assets" includes the 14.9% shareholding in Medgaz, S.A., the company that operates the submarine gas pipeline between Algeria and Spain, amounting to Euros 97 million (Euros 90 million at 31 December 2016) and the 85.4% shareholding in Electrificadora del Caribe, S.A. ESP ("Electricaribe") amounting to Euros 475 million (Euros 475 million at 31 December 2016).

During 2016 Electricaribe experienced major cash difficulties due to the acts and omissions of the Republic of Colombia in relation to the non-payment of a considerable number of customer invoices, mostly with obligatory supply arrangements, as well as a significant consumption fraud. As a result, within the framework of the Treaty for the reciprocal protection of investments between Spain and Colombia, on 12 July 2016 Gas Natural Fenosa commenced discussions to seek a negotiated solution to the extremely difficult situation in which Electricaribe found itself. In the event of an expropriation or similar event, the treaty demands that the corresponding indemnity be equivalent to the fair market value of the investment prior to the expropriation.

On 14 November 2016 the Superintendence for Residential Public Services of the Republic of Colombia ("the Superintendence") ordered, as a necessary measure to ensure the provision of electrical energy services, the intervention of Electricaribe, as well as the separation of the members of the governing body and the general manager, and their replacement by a special agent appointed by the Superintendence. In the fulfilment of his functions, this agent replaced the executive personnel appointed by Gas Natural Fenosa and centralised decision-making on the information to be supplied to Gas Natural Fenosa. Therefore, at 31 December 2016 Gas Natural Fenosa had lost control and any significant influence over Electricaribe as it does not take part in, and has no direct information about, material business activities or decisions. On 11 January 2017 the Superidentence agreed to extend this takeover until 14 March 2017, announced that Electricaribe would be liquidated on that date.

On 22 March 2017 Gas Natural Fenosa submitted the documentation required to commence arbitration proceedings before the Tribunal of the United Nations Commission on International Trade Law (UNCITRAL) in order to recover the company within a feasible regulatory framework or, failing that, to receive compensation in accordance with the fair value of the company, estimated at over Euros 1,000 million. The formal commencement of arbitration has been requested before the Tribunal of the UNCITRAL which, like the World Bank International Centre for the Settlement of Investment Disputes (ICSID), is regarded as the most suitable forum for resolving disagreements in the bilateral treaty for the reciprocal promotion and protection of investments between the Republic of Colombia and Spain.

In the light of the above events and in accordance with IFRS 10, on 31 December 2016 Electricaribe ceased to be consolidated on the consolidated balance sheet of Gas Natural Fenosa. Its assets, liabilities and non-controlling interests were derecognised for a net amount of Euros 475 million and the relevant negative exchange differences amounting to Euros 30 million were transferred to the income statement. In addition, under IAS 39, the investment in Electricaribe was recorded at fair value (Euros 475 million) under Available-for-sale financial assets. As the investment in Electricaribe involves unlisted equity instrument and therefore no quoted share price is available, it was valued on Level 3 and a prudent approach was applied in the valuation due to the uncertainty surrounding the current situation, resulting in an amount that does not differ from its carrying amount. The assumptions used in the valuation were similar to those described in Note 3.3.5. of the consolidated annual accounts at 31 December 2016. However, Gas Natural Fenosa believes that the final amount that may reasonably be expected to be recognised by the agencies and courts that may decide on the applicable price or indemnity based on fair market value will be higher than the figure mentioned above.

At 30 June 2017 there has been no change in the parameters to which the main assumptions for the measurement of the holding in Electricaribe refer or in the processes described above that could lead to a better evaluation of its fair value. As a result, the amount recorded under "Available-for-sale financial assets" has not changed.

A breakdown of the assets, liabilities and non-controlling interests of Electricaribe recorded in the consolidated balance sheet of Gas Natural Fenosa which were derecognised at 31 December 2016 is as follows:

	At 31.12.2016
Intangible assets	6
Property, plant and equipment	929
Non-current financial assets	63
Deferred tax assets	157
NON-CURRENT ASSETS	1,155
Trade and other receivables	633
Other current financial assets	20
Cash and cash equivalents	42
CURRENT ASSETS	695
TOTAL ASSETS	1,850
NON-CONTROLLING INTERESTS	70
Non-current provisions	265
Non-current financial liabilities	85
Deferred tax liability	4
NON-CURRENT LIABILITIES	354
Current financial liabilities	493
Trade and other payables	450
Other current liabilities	8
CURRENT LIABILITIES	951
TOTAL NON-CONTROLLING INTERESTS AND LIABILITIES	1,375

The income statement contributed by Electricaribe in the six-month period ended 30 June 2016 is as follows:

	For the period ended 30 June 2016
Sales	714
Procurements	(488)
Other operating income	2
Personnel costs	(22)
Other operating expenses	(157)
Depreciation, amortisation and impairment expenses	(18)
OPERATING INCOME	31
Financial income	2
Financial expense	(29)
Net exchange gain/(losses)	1
NET FINANCIAL INCOME	(26)
NET INCOME BEFORE TAXES	5
Income tax expense	(7)
CONSOLIDATED NET INCOME FOR THE PERIOD	(2)
Attributable to:
The equity holders of the parent company	(2)
Non-controlling interests	-

At 30 June 2017, the heading "Loans and receivables" includes temporary mismatches between gas system revenues and costs for periods commencing as from 2014, financed by Gas Natural Fenosa pursuant to Law 18/2014 (17 July), generating a recovery right, over the following 15 years, to the definitive 2014 deficit, and over the following five years, to the remain amount financed, plus interest at a market rate. Euros 340 million of that financing has been recognised under "Other non-current financial assets" and Euros 47 million under "Other current financial assets" (Euros 357 million and Euros 144 million, respectively, at 31 December 2016) based on the estimated period of recovery through system settlements.

At 30 June 2017, "Other current financial assets" includes temporary mismatches between electricity system revenues and costs financed by Gas Natural Fenosa pursuant to Law 24/2013 (26 December) in the amount of Euros 93 million (Euros 106 million at 31 December 2016), generating a recovery right over the following five years and interest at a market rate. The amount of this financing has been entirely recognised as a short-term item on the understanding that it is a temporary mismatch that will be recovered through system settlements within one year.

Financial assets recognised at fair value at 30 June 2017 and at 31 December 2016 are classified as follows:

	30 June 2017			31 December 2016
Financial assets	Level 1	Level 2	Level 3	Total	Level 1	Level 2	Level 3	Total
Available for sale	-	-	625	625	-	-	619	619
Hedging derivatives	-	69	-	69	-	112	-	112
Fair value through profit or loss	-	-	-	-	-	-	-	-
Total	-	69	625	694	-	112	619	731

b) Financial liabilities

Set out below is a breakdown of financial liabilities, excluding "Trade and other payables", at 30 June 2017 and 31 December 2016, by nature and category:

	Creditors and	Hedging
At 30 June 2017	payables	derivatives	Total
Loans from financial institutions	4,617	-	4,617
Issuing of debentures and other negotiable securities	9,823	-	9,823
Derivatives financial instruments	-	45	45
Other financial liabilities	-	-	-
Non-current financial liabilities	14,440	45	14,485
Loans from financial institutions	945	-	945
Issuing of debentures and other negotiable securities	1,789	-	1,789
Derivatives financial instruments	-	3	3
Other financial liabilities	120	-	120
Current financial liabilities	2,854	3	2,857
Total financial liabilities at 30.06.2017	17,294	48	17,342

At 31 December 2016	Creditors and payables	Hedging derivatives	Total
Loans from financial institutions	4,837	-	4,837
Issuing of debentures and other negotiable securities	10,098	-	10,098
Derivatives financial instruments	-	62	62
Other financial liabilities	6	-	6
Non-current financial liabilities	14,941	62	15,003
Loans from financial institutions	856	-	856
Issuing of debentures and other negotiable securities	1,563	-	1,563
Derivatives financial instruments	-	18	18
Other financial liabilities	162	-	162
Current financial liabilities	2,581	18	2,599
Total financial liabilities at 31.12.2016	17,522	80	17,602

Financial liabilities recognised at fair value at 30 June 2017 and at 31 December 2016 are classified as follows:

	30 June 2017			31 December 2016
Financial liabilities	Level 1	Level 2	Level 3	Total	Level 1	Level 2	Level 3	Total
Fair value through profit or loss	-	-	-	-	-	-	-	-
Hedging derivatives	-	48	-	48	-	80	-	80
Total	-	48	-	48	-	80	-	80

The carrying amounts and fair value of the non-current borrowings are as follows:

	Carrying amount		Fair value
	At 30.06.2017	At 31.12.2016	At 30.06.2017	At 31.12.2016
Issuing of debentures and other negotiable securities	9,823	10,098	10,953	11,389
Loans from financial institutions and others	4,617	4,843	4,655	4,874

The fair value of the listed bond issues is estimated on the basis of their quoted price (Level 1). The fair value of loans with fixed interest rates is estimated on the basis of the discounted cash flows over the remaining terms of such debt. The discount rates were determined based on market rates available at 30 June 2017 and 31 December 2016 on borrowings with similar credit and maturity characteristics. These valuations are based on the quotation price of similar financial instruments in an official market or on observable information in an official market (Level 2).

In the first half of 2017 and 2016, debt security issues evolved as follows:

	At 1.1.2017	Issuances	Buy-backs or redemptions	Business combinations	Interests, exch. rates & other	At 30.6.2017
Issued in a European Union Member State which required the filing of a prospectus	10,262	3,133	(2,833)	-	(300)	10,262
Issued in a European Union Member State which did not require the filing of a prospectus	-	-	-	-	-	-
Issued outside a European Union Member State	1,399	-	-	-	(49)	1,350
Total	11,661	3,133	(2,833)	-	(349)	12,612
	At 1.1.2016	Issuances	Buy-backs or redemptions	Business combinations	Interests, exch. rates & other	At 30.6.2016
Issued in a European Union Member State which required the filing of a prospectus	10,857	3,335	(2,535)	-	(113)	11,544
Issued in a European Union Member State which did not require the filing of a prospectus	-	-	-	-	-	-
Issued outside a European Union Member State	1,466	-	(119)	-	22	1,369
Total	12,323	3,335	(2,654)	-	(91)	12,913

In the first half of 2017, the following bond issues were completed under the Euro Medium Term Notes (EMTN) programme:

Issue	Nominal	Maturity	Coupon %
January 2017	1,000	2027	1.375
April 2017	1,000	2024	1.125

The total amount utilised in the programme stands at Euros 10,105 million (Euros 10,205 million at 31 December 2016). The programme limit at 30 June 2017 is Euros 14,000 million (Euros 14,000 million at 31 December 2016).

In April 2017 Gas Natural Fenosa issued bonds under its EMTN programme amounting to Euros 1,000 million maturing in seven years and with a coupon of 1.125%. This amount was used to implement the repurchase of debentures for Euros 1,000 million maturing in 2018, 2020 and 2021.

In the first half of 2017, issues under the Euro Commercial Paper (ECP) programme totalling Euros 2,133 million (Euros 2,435 million in the same period 2016) were carried out. The outstanding balance of issues under the ECP programme stands at Euros 500 million (Euros 100 million at 31 December 2016).

In addition, bilateral bank operations amounting to Euros 3,624 million have been renegotiated during the period, refering Euros 684 milion to loans and the rest to credits.

Note 7. Non-current assets and disposal groups of assets held for sale and discontinued operations

On 18 December 2015 Gas Natural Fenosa, which owned a controlling interest through CGE of 56.62% in the Chilean company Gasco, S.A., entered into an agreement with a group of shareholders with an interest of 22.4% in Gasco S.A., named "Familia Perez Cruz", to split Gasco, S.A. into two companies, one devoted to the natural gas business which would remain under the control of Gas Natural Fenosa and the other to the liquefied petroleum gas business (LPG) which would be controlled by the Perez Cruz Family. Following completion of the split, on 6 July 2016 each party launched a public share offering in order to obtain a 100% interest in its company in order to carry out its own independent project. On 8 August 2016 Gas Natural Fenosa reported the sale of the shares in Gasco S.A. totalling 160,197 million Chilean pesos (Euros 220 million), generating a net capital gain of Euros 4 million, in addition to the success of the takeover bid for Gas Natural Chile, S.A. acquiring an additional 37.88% for a total of 223,404 million Chilean pesos (Euros 306 million). As a result, Gas Natural Fenosa's controlling interest in Gas Natural Chile, S.A. increased to 94.50%.

A breakdown by nature of the heading "Profit/(loss) for the year from discontinued operations after taxes" in the consolidated income statement relating to the LPG business in Chile at 30 June 2016 is as follows:

	30.06.2016
Sales	287
Procurements	(186)
Other operating income	2
Personnel costs	(22)
Other operating expenses	(31)
Depreciation, amortisation and impairment expenses	-
OPERATING INCOME	50
Financial income	1
Financial expense	(13)
NET FINANCIAL INCOME	(12)
NET INCOME BEFORE TAXES	38
Income tax expense	(8)
NET INCOME FOR THE PERIOD FROM DISCONTINUED OPERATIONS	30
Attributable to:
The equity holders of the parent company	14
Non-controlling interests	16

Set out below is a breakdown of the total comprehensive income from this business during the six-month period ended 30 June 2016:

	30.06.2016
Consolidated profit/(loss) for the year	30
Income and expenses recognised directly in net equity:	18
Currency translation differences	18
Cash flow hedges	-
Total comprehensive income for the year	48

Note 8. Equity

Share capital and share premium

There were no movements in the number of shares or in the accounts "Share capital" and "Share premium" during the first half of 2017 or during 2016.

Treasury shares

Movements during the first half of 2017 and 2016 involving the treasury shares of Gas Natural SDG, S.A. are as follows:

	Number of shares	In million euro	% Capital
At 01 January 2017	750,545	13	0.1%
Acquisitions	3,030,164	60	0.3%
Share Acquisition Plan	(336,625)	(7)	-
Disposals	(3,062,734)	(58)	(0.3%)
At 30 June 2017	381,350	8	-

	Number of shares	In million euro	% Capital
At 01 January 2016	-	-	-
Acquisitions	912,162	16	0.1%
Disposals	(912,162)	(16)	(0.1%)
At 30 June 2016	-	-	-

In the first half of 2017 the profit made on transactions involving treasury shares of Gas Natural Fenosa amounted to Euros 0.5 million, recognised under "Other reserves" (Euros 0.3 million profit in the first half of 2016).

In accordance with the resolutions adopted by the shareholders of Gas Natural SDG, S.A. at the General Meeting held on 20 April 2017, the Share Acquisition Plan 2017-2018-2019 for 2017, aimed at Gas Natural Fenosa employees in Spain who decide voluntarily to take part in the Plan, was set in motion. The Plan enables participants to receive part of their remuneration for 2017 in the form of shares in Gas Natural SDG, S.A., subject to an annual limit of Euros 12,000. During the first half of 2017, 336,625 of the Company's own shares were acquired for Euros 7 million to be handed over to the employees taking part in the Plan.

Movements during the first half of 2017 in treasury shares of Compañía General de Electricidad, S.A. break down as follows (no movements in the first half of 2016):

	Number of shares	In million euro	% Capital
At 01 January 2017	8,695,395	8	0.4%
Acquisitions	5,105,914	5	0.3%
Disposals	-	-	-
At 30 June 2017	13,801,309	13	0.7%

The shares recorded in 2016 were acquired following the merger in which Compañía General de Electricidad, S.A. was absorbed into Gas Natural Fenosa Chile, S.A., as a result of which the shareholders of both companies obtained a right of withdrawal under which they were able to sell their shares to the company. This right was exercised by 44 shareholders holding 8,695,395 shares in Compañía General de Electricidad, S.A., equivalent to 0.4% of capital.

On 14 December 2016 an extraordinary shareholders' meeting was held which approved the merger by absorption of Transnet, S.A. into Compañía General de Electricidad, S.A. On 8 February 2017 the withdrawal period for dissenting shareholders of Compañía General de Electricidad, S.A. and Transnet, S.A. with respect to said merger expired. Twelve shareholders owning 5,098,044 shares in Compañía General de Electricidad, S.A and six shareholders owning 7,870 shares in Transnet, S.A. exercised their withdrawal right.

Treasury shares resulting from the right of withdrawal must be disposed of in the securities market within a maximum of one year, at the end of which they must be redeemed if they have not been sold.

Earnings per share

Earnings per share are calculated by dividing "Net income attributable to the equity holders of the parent company" by the average weighted number of ordinary shares in issue during the year.

	At 30.06.2017	At 30.06.2016
Net income attributable to equity holders of the parent company	550	645
Weighted average number of ordinary shares in issue	1,000,518,692	1,000,689,341
Earnings per share from continuing operations (in euro):
- Basic	0.55	0.63
- Diluted	0.55	0.63
Earnings per share from discontinued operations (in euro):
- Basic	-	0.01
- Diluted	-	0.01

The average weighted number of ordinary shares used in the calculation of earnings per share in the first half of 2017 is as follows:

	2017
Weighted average number of ordinary shares	1,000,689,341
Weighted average number of treasury shares	(170,649)
Weighted average number of shares in issue	1,000,518,692

The Parent Company has no financial instruments that could dilute the earnings per share.

Dividends

Set out below is a breakdown of the payments of dividends made in the six months to 30 June 2017 and 2016:

	30.06.2017			30.06.2016
	% of Nominal	Euros per share	Amount	% of Nominal	Euros per share	Amount
Ordinary shares	67%	0.67	671	100%	1.00	1,001
Other shares (without voting rights, redeemable, etc.)	-	-	-	-	-	-
Total dividends paid	67%	0.67	671	100%	1.00	1,001
a) Dividends charged to income statement	67%	0.67	671	100%	1.00	1,001
b) Dividends charged to reserves or	-	-	-	-	-	-
share premium account c) Dividends in kind	-	-	-	-	-	-

30 June 2017

The General Shareholders Meeting held on 20 April 2017 approved a complementary dividend of Euros 0.670 per share for a total of Euros 671 million, paid on 27 June 2017.

The Board of Directors has approved the payment of an interim dividend of Euros 0.330 per share out of 2017 results, payable as from 27 September 2017

30 June 2016

This included the payment of an interim dividend of Euros 0.408 per share out of 2015 profits, for a total amount of Euros 408 million, agreed on 30 October 2015 and paid on 8 January 2016.

The General Shareholders Meeting held on 4 May 2016 approved a complementary dividend of Euros 0.592 per share for a total of Euros 593 million, paid on 30 June 2016.

The Board of Directors agreed an interim dividend for 2016 of Euros 0.330 per share, for a total of Euros 330 million, which was fully paid on 27 September 2016.

Adjustments for changes in value

Adjustments for changes in value movements are presented in the Consolidated statement of comprehensive income for each concept showing a breakdown of the tax effect.

The item "Currency translation differences" includes the exchange differences described in the 2016 Consolidated Annual Accounts Note 3.3.2 as a result of the euro's fluctuation against the main currencies of Gas Natural Fenosa's foreign companies, mainly the Chilean Peso and the Brazilian Real.

Non-controlling interests

Movements in non-controlling interests during the six-month period ended 30 June 2017 are as follows:

Balance at 31.12.2016	3,780
Total comprehensive income for the year	20
Distribution of dividends	(147)
Payments for remuneration on subordinated perpetual debentures	(17)
Other changes	1
Balance at 30.06.17	3,637

Note 9. Provisions

The breakdown of provisions at 30 June 2017 and 31 December 2016 is as follows:

	At 30.06.2017	At 31.12.2016
Provisions for employee obligations	483	489
Other provisions	753	759
Total non-current provisions	1,236	1,248
Total current provisions	132	158
Total	1,368	1,406

The heading "Other provisions" mainly includes provisions set up to cover obligations derived from decommissioning and tax claims, as well as lawsuits and arbitration, insurance and other liabilities. Note 18 includes further information on contingent liabilities.

Note 10. Sales

Set out below is a breakdown of this heading for the six-month periods ended 30 June 2017 and 2016:

		For the period ended 30 June
	2017	2016
Sales of gas and access to distribution networks	7,119	5,718
Sales of electricity and access to distribution networks	4,398	4,954
Rental of facilities, maintenance and other services	726	709
Other sales	40	28
Total	12,283	11,409

Note 11. Procurements

Set out below is a breakdown of this heading for the six-month periods ended 30 June 2017 and 2016:

	For the period ended 30 June
	2017	2016
Energy purchases	7,357	6,165
Access to transmission networks	1,059	1,075
Other purchases and changes in inventories	310	316
Total	8,726	7,556

Note 12. Personnel costs

Set out below is a breakdown of this heading for the six-month periods ended 30 June 2017 and 2016:

	2017	For the period ended 30 June 2016
Wages and salaries	432	421
Social security costs	70	68
Defined contribution plans	23	20
Own work capitalised	(58)	(46)
Other	34	43
Total	501	506

The average number of employees of Gas Natural Fenosa for the six-month periods ended 30 June 2017 and 2016 is the following:

		For the period ended 30 June
	2017	2016
Men	12,256	14,398
Women	4,847	5,376
Total	17,103	19,774

In addition, the average number of employees for equity-method companies stands at 837 persons at 30 June 2017 (936 persons at 30 June 2016).

The calculation of the average number of employees at 30 June 2017 in Gas Natural Fenosa does not take into account the average number of employees of Electricaribe (1,481 persons) which were included at 30 June 2016 (1,512 persons).

Note 13. Other operating expenses

Set out below is a breakdown of this heading for the six-month periods ended 30 June 2017 and 2016:

	For the period ended 30 June
	2017	2016
Taxes	234	236
Operation and maintenance	182	185
Advertising and other commercial services	163	152
Transfers to provisions	64	142
Professional services and insurance	87	84
Supplies	49	57
Construction or refurbishment services	71	55
Services to customers	42	36
Leases	33	35
Other	155	181
Total	1,080	1,163

Note 14. Net financial income

Set out below is a breakdown of this heading for the six-month periods ended 30 June 2017 and 2016:

	For the period ended 30 June
	2017	2016
Dividends	10	8
Interest income	15	14
Other financial income	42	38
Total financial income	67	60
Cost of borrowings	(335)	(388)
Interest expenses pension plans	(4)	(14)
Other financial expense	(73)	(73)
Total financial expense	(412)	(475)
Fair-value measurement of financial derivatives:	-	-
Derivative financial instruments	-	-
Net exchange differences	(2)	-
Gains/(losses) on disposals of financial instruments	-	-
Net financial income	(347)	(415)

Note 15. Tax situation

The corporate income tax expense is as follows:

		For the period ended 30 June
	2017	2016
Current-year tax	187	201
Deferred tax	31	39
Total	218	240

Corporate income tax expense is recognised based on the best estimate of the effective tax rate forecast for the whole year. The effective rate estimated for the first half of 2017 is 23.5% the same that the one of the same period in 2016.

Note 16. Information on transactions with related parties

Related parties are as follows:

Significant shareholders of Gas Natural Fenosa, i.e. those directly or indirectly owning an interest of 5% or more, and those who, though not significant, have exercised the power to propose the appointment of a member of the Board of Directors.

Based on this definition, the significant shareholders of Gas Natural Fenosa are Fundación Bancaria Caixa d'Estalvis i Pensions de Barcelona ("la Caixa"), Repsol, S.A. (Repsol) and Global Infrastructure Partners III (GIP) and subsidiaries.

Directors and executives of the company, and their immediate families. The term "director" means a member of the Board of Directors; "executive" means a member of the Management Committee of Gas Natural Fenosa and the Internal Audit Director. Operations with directors and executives are disclosed in Note 17.
Transactions between Group companies form part of ordinary business activities and are effected at arm's length. Group company balances include the amount that reflects Gas Natural Fenosa's share of the balances and transactions with companies consolidated under the equity method.

The aggregates for operations with significant shareholders are as follows, in thousand euro:

			June 2017	For the six-month period ended 30	For the six-month period ended 30 June 2016
	Significant shareholders			Group		Significant shareholders
Expense and Income (thousand euros)	"la Caixa"	Repsol	GIP (*)	companies	"la Caixa"	Repsol	companies
Financial expenses	816	-	-	25	992	-	7
Leases	-	-	-	2	-	-	3
Receipt of services	7,669	7,930	-	5,671	7,226	3,274	15,429
Purchases of goods	-	196,731	-	172,710	-	122,159	188,630
Other expenses (1)	10,753	-	-	-	10,126	-	-
Total expenses	19,238	204,661	-	178,408	18,344	125,433	204,069
Financial income	330	-	-	108	180	-	255
Leases	-	-	-	-	-	-	-
Provision of services	224	127	-	11,163	215	1,282	14,072
Sales of goods (finished or in progress)	484	382,516	-	34,995	-	304,015	16,667
Other income	-	-	-	1,187	-	-	1,006
Total income	1,038	382,643	-	47,453	395	305,297	32,000

		For the six-month period ended 30	June 2017		For the six-month period ended 30 June 2016
	Significant shareholders			Group		Significant shareholders	Group
Other transactions (in thousand Euros)	"la Caixa"	Repsol	GIP (*)	companies	"la Caixa"	Repsol	companies
Acquisition of property, plant and equipment, intangible assets or other					-	-	-
assets (2)	-	10,147	-	-
Financing agreements, loans and capital
contributions(lender) (3)	362,737	-	-	3,995	613,530	-	11,026
Sale of property, plant and equipment, intangibles or other assets (4) Financing agreements: loans and capital	157,220	-	-	-	113,065	-	-
contributions (borrower) (5)	121,325	-	-	-	147,814	-	-
Warranties and guarantees received	137,500	-	-	-	201,667	-	-
Dividends and other profits distributed	163,854	134,575	134,092	-	311,716	273,873	-
Other operations (6)	472,100	-	-	-	429,770	-	-

(*) Since 21 September 2016.

(1) Includes contributions to pension plans, group insurance policies, life insurance and other expenditure.
(2) Basically includes the purchase of LPG supply points under the agreement with Repsol Butano dated 30 September 2015, that are located in the area of influence of its existing distribution zones and which is completed as the relevant administrative authorisations are obtained.
(3) Includes cash and cash equivalents.
(4) Basically includes the assignment of accounts (factoring without recourse) with "La Caixa" Group each year.
(5) At 30 June 2017, credit facilities arranged with "la Caixa" Group amounted to Euros 569,000 thousand (Euros 569,000 thousand at 30 June 2016), no amounts having been utilised at 30 June 2017 or 2016. At 30 June 2017, other loans amounted to Euros 121,325 thousand (Euros 147,814 thousand at 30 June 2016).
(6) At 30 June 2017, the heading "Other transactions" with "la Caixa" Group includes Euros 345,037 thousand in respect of foreign exchange hedges (Euros 496,465 thousand at 30 June 2016) and Euros 127,063 thousand in respect of interest rate hedges (Euros 33,305 thousand at 30 June 2016).

Note 17. Information on members of the Board of Directors and senior management personnel

Remuneration of the Board of Directors

Remuneration accrued to the members of the Board of Directors of Gas Natural SDG, S.A. by reason of their membership of the Board and Board committees totalled Euros 2,546 thousand at 30 June 2017 (Euros 2,293 thousand at 30 June 2016). As the remuneration for belonging to the Board of Directors and the various Board Committees has remained unchanged, the increase is due solely to the higher number of Committee members as a result of changes in the company's corporate governance following the alteration in September 2016 of the company's shareholder structure. In this respect, the Executive Committee has increased by two members, the Audit Committee has increased by four members and the Appointments and Remuneration committee has increased by two members.

In the first half of 2017, the Chief Executive Officer did not receive remuneration due to his position as a Board member of the other investee company (Euros 48 thousand at 30 June 2016). These amounts are deducted from the CEO's annual variable remuneration.

The amounts accrued to the Chief Executive Officer for executive functions in respect of fixed remuneration, annual variable remuneration, multi-year variable remuneration and other items totalled Euros 642 thousand, Euros 526 thousand, Euros 428 thousand and Euros 4 thousand, respectively, at 30 June 2017 (Euros 606 thousand, Euros 553 thousand, Euros 430 thousand and Euros 4 thousand at 30 June 2016).

Contributions to pension plans and group insurance policies, together with life insurance premiums paid, totalled Euros 167 thousand at 30 June 2017 (Euros 159 thousand at 30 June 2016).

Senior management remuneration

For the sole purposes of the information contained in this section, "senior management personnel" refers to the members of the Management Committee, excluding the CEO, whose remuneration has been included in the previous section, and the Internal Audit Director.

During the first half of 2017 a total of 11 persons have formed part of the Management Committee. One person joined the committee in April 2017.

Remuneration accrued to senior management personnel totalled Euros 4,859 thousand at 30 June 2017 (Euros 4,917 thousand at 30 June 2016).

Contributions to pension plans and group insurance policies, together with life insurance premiums paid, totalled Euros 1,327 thousand at 30 June 2017 (Euros 1,248 thousand at 30 June 2016).

Transactions with members of the Board of Directors and senior management personnel

The Board members and senior management personnel have not carried out any transactions outside the ordinary course of business or on non-arm's length terms with Gas Natural SDG, S.A. or with Group companies.

Note 18. Contingent liabilities

In relation to the information on lawsuits and arbitration included in Note 34 "Commitments and contingent liabilities" in the consolidated annual accounts for the year ended 31 December 2016, there have been no material changes in their status during the first six months of 2017.

Note 19. Events after the reporting date

On 5 July 2017 Gas Natural Fenosa concluded a Euros 450 million loan agreement with the European Investment Bank (EIB) which will be used to finance part of the electricity distribution business and the development of renewable energy projects in Spain.

On 17 July 2017 Gas Natural Fenosa arranged a loan with the Official Credit Institute (ICO) for Euros 200 million with a term of 12 years that will be used to finance part of the investment plan included in the strategic vision 2016-2020, specifically focusing on growth in distribution networks and renewable energy generation.

************

APPENDIX I: CHANGES IN CONSOLIDATION SCOPE

The main consolidation scope changes during the first half of 2017 are as follows:

Company name	Operation category	Effective date of operation	Voting rights acquired /eliminated (%)	Voting rights after the operation (%)	Consolidation method after the operation
Línea Trasmisión Cabo Leones, S.A.	Disposal	1 January	50.0	-	-
Proyectos Balmes México, S.A. DE C.V.	Incorporation	1 January	100.0	100.0	Full
Gas Natural Fenosa LNG Singapore PTE. LTD.	Incorporation	1 January	100.0	100.0	Full
Vayu Energy, BV	Liquidation	28 February	100.0	-	-
Arte Contemporáneo y Energía, A.I.E.	Liquidation	26 April	100.0	-	-
Lanzagorta y Palmes 2, S.L.	Acquisition	7 June	100.0	100.0	Full

The main consolidation scope changes during 2016 were as follows:

Company name	Operation category	Effective date of operation	Voting rights acquired /eliminated (%)	Voting rights after the operation (%)	Consolidation method after the operation
Renovables Aragón, S.L.U	Acquisition	1 March	100.0	100.0	Full
Alas Capital Gas Natural, S.A.	Disposal	11 March	40.0	-	-
Gas Natural Chile, S.A.	Incorporation	30 March	56.6	56.6	Full

Sociedad Inversiones Atlántico, S.A.	Incorporation	31 March	55.1	55.1	Full
Energías Especiales de Extremadura, S.L.	Liquidation	25 April	99.0	-	-
Regasificadora del Noroeste, S.A.	Disposal	28 April	11.6	-	-
Leo-Ras, S.L.	Acquisition	15 May	100.0	100.0	Full
Aprovisionadora Global de Energía, S.A.	Incorporation	1 June	36.9	36.9	Full
Unión Fenosa Financial Services USA, Llc	Liquidation	29 June	100.0	-	-
Union Fenosa Wind Australia Pty, Ltd.	Acquisition	20 July	0.2	96.7	Full
Gas Natural Redes GLP, S.A.	Incorporation	21 July	100.0	100.0	Full
Enervent, S.A.	Disposal	28 July	26.0	-	-
Infraestructuras de Gas, S.A.	Disposal	29 July	85.0	-
Planta de Regasificación de Sagunto, S.A.	Disposal	31 July	50.0	-	-
Vayu Ltd	Acquisition	2 August	100.0	100.0	Full
Vayu Energy, Ltd	Acquisition	2 August	100.0	100.0	Full
Vayu Energy, Ltd (UK)	Acquisition	2 August	100.0	100.0	Full
Vayu Energy B.V.	Acquisition	2 August	100.0	100.0	Full
LNG GOM Limited	Acquisition	2 August	100.0	100.0	Full
LNG International Resources Ltd	Acquisition	2 August	100.0	100.0	Full
LNG Marketing Ltd	Acquisition	2 August	100.0	100.0	Full
Gas Natural Wind 6, S.L.	Liquidation	2 August	60.0	-	-
Gas Natural Chile, S.A.	Acquisition	8 August	37.9	94.5	Full
Gasco S.A.	Disposal	8 August	55.1	-	-
Gasco GLP S.A.	Disposal	8 August	55.1	-	-
Gasmar S.A.	Disposal	8 August	35.2	-	-
Hualpén Gas S.A.	Disposal	8 August	17.6	-	-
Autogasco S.A.	Disposal	8 August	55.1	-	-
Transportes e Inversiones Magallanes S.A.	Disposal	8 August	46.9	-	-
Automotive Gas Systems S.A.	Disposal	8 August	55.1	-	-
Inversiones Invergas S.A.	Disposal	8 August	55.1	-	-
Inversiones Atlántico S.A.	Disposal	8 August	55.1	-	-
Campanario Generación S.A.	Disposal	8 August	11.0	-	-
Inversiones GLP S.A.S. E.S.P.	Disposal	8 August	38.6	-	-
JGB Inversiones S.A.S. E.S.P.	Disposal	8 August	38.6	-	-
Unigas Colombia S.A. E.S.P.	Disposal	8 August	27.0	-	-
Montagas S.A. E.S.P.	Disposal	8 August	12.9	-	-
Energas S.A. E.S.P.	Disposal	8 August	10.9	-	-
Tecnet, S.A.	Disposal	9 August	100.0	-	-
Infraestructuras Eléctricas La Mudarra, S.L.	Incorporation	31 August	39.6	39.6	Equity
CGE Gas Natural, S.A.	Incorporation	14 October	100.0	100.0	Full
GNL Quintero, S.A.	Disposal	8 November	20.0	-	-
Union Fenosa Wind Australia Pty, Ltd.	Acquisition	15 December	0.2	97.0	Full
Hormigones del Norte, S.A.	Disposal	16 December	100.0	-	-
Sobral i Solar Energía SPE, Ltda	Acquisition	19 December	85.0	85.0	Full
Sertao i Solar Energía SPE, Ltda	Acquisition	19 December	85.0	85.0	Full
Inca de Varas I	Acquisition	20 December	100.0	100.0	Full
Inca de Varas II	Acquisition	20 December	100.0	100.0	Full
Gasifica, S.A.	Liquidation	27 December	100.0	-	-

Gas Galicia SDG, S.A. Electrificadora del Caribe S.A, E.S.P.	Acquisition Loss of control	29 December 31 December	6.9 85.4	68.5 -	Full -
Energía Empresarial de la Costa, S.A.,
E.S.P.	Loss of control	31 December	85.4	-	-
Energía Social de la Costa S.A. E.S.P.	Loss of control	31 December	85.4	-	-

***********

Consolidated Directors' Report as of 30 June 2017

1. Company situation

Gas Natural Fenosa's business model is characterised by responsible and sustainable management of all resources. Our commitment to sustainability and value creation over time is reflected specifically in our corporate responsibility policy, approved by the Board of Directors and implemented across all the Company's business processes; it comprises seven corporate responsibility commitments to stakeholders, which guide our activities: commitment to results, customer orientation, environmental protection, concern for people, health and safety, commitment to society and integrity.

Gas Natural Fenosa is an integrated energy company that supplies gas and electricity to 22 million customers. Its main purpose is to supply energy to society so as to maximise development and welfare, using innovation, energy efficiency and sustainability as the fundamental pillars of the business model. It is a leading energy company and a pioneer in the integration of gas and electricity. The business focuses on the full gas life cycle and on electricity generation, distribution and supply. There are other business lines, such as energy services, that favour diversification of activities and revenues, anticipating new market trends, meeting specific customer needs and providing an integrated service not focused only on selling energy.

Operations throughout the gas value chain provide Gas Natural Fenosa with a competitive advantage and a leading position in the sector. Our electricity management capacity and experience, combined with a unique integrated position in the gas and electricity markets, make the company a benchmark in this sector. International presence guarantees a privileged position to achieve growth in new regions that are in the process of economic development, making the Company one of the world's leading operators.

2. Business evolution and results

2.1. Milestones in the six-month period ended 30 June 2017

Net profit amounted to Euros 550 million in the first half of 2017, 14.7% less than in the same period of 2016.

Ebitda amounted to Euros 2,176 million, an 11.4% decrease on the first half of 2016 (6.6% in like-for-like terms, excluding Electricaribe). That reduction was concentrated in the Electricity business in Spain, whose performance was shaped by weather, as Gas Natural Fenosa's hydroelectric output declined by 77.3%.

On 11 January 2017, Euros 1,000 million of 10-year notes with an annual coupon of 1.375% were issued in the euromarket under the EMTN programme.

On 11 April 2017, Euros 1,000 million of 7-year notes with an annual coupon of 1.125% were issued in the euromarket under the EMTN programme; they were paid for in April 2017. In parallel, Gas Natural Fenosa tendered for its notes maturing between 2018 and 2021, with the result that the new bonds were swapped for the redeemed bonds.

On 17 May 2017, Gas Natural Fenosa, through subsidiary Gas Natural Fenosa Renovables, was awarded a total of 667 MW of wind capacity through an auction in Spain. The investment required to develop those projects and the awarded capacity a maximum of Euros 700 million.

On 5 July 2017 Gas Natural Fenosa arranged a Euros 450 million loan agreement with the European Investment Bank (EIB) with a term of 20 years and a vesting period of 4 years which will be used to finance part of the electricity distribution business and the development of renewable energy projects in Spain.

On 17 July 2017 Gas Natural Fenosa arranged a loan with the Official Credit Institute (ICO) for Euros 200 million with a term of 12 years and a vesting period of 2 years.

As of 30 June 2017, the indebtedness ratio was 46.4%, i.e. slightly higher than the ratio in 2016 (45.7%), while the net financial debt/Ebitda ratio was 3.4, in line with 2016 (excluding Electricaribe).

On 20 April 2017, the Shareholders' Meeting approved the distribution of income, consisting of allocating Euros 1,001 million out of 2016 income to dividends, the same amount as in the preceding year, representing a 74.3% payout. That is a dividend of Euros 1 per share, of which Euros 0.330 per share was paid as an interim dividend in cash on 27 September 2016 and the remaining Euros 0.670 per share was paid, also in cash, on 27 June 2017.

The Board of Directors has declared an interim dividend for 2017 of Euros 0.330 per share, to be paid entirely in cash on 27 September 2017.

2.2. Main aggregates

Financial main aggregates

	2017	2016	%

Net sales	12,283	11,409	7.7
Ebitda	2,176	2,457	(11.4)
Operating income	1,269	1,447	(12.3)
Net income attributable to equity holders of the parent
company	550	645	(14.7)
Cash flow from operations (CFO)	1,406	1,600	(12.1)

Net investments	740	622	19.0
Net equity (at 30/06)	18,246	18,793	(2.9)
Net equity attributed to the equity holders of the parent
company (at 30/06)	14,609	14,575	0.2
Net borrowings (at 30/06)	15,818	15,832	(0.1)

Main financial ratios

	2017	2016
Leverage	46.4%	45.7%
Ebitda / Cost of net financial debt	6.8x	6.6x
Net borrowings / Annualized Ebitda	3.4x	3.1x
Return on assets (ROA)	2.8%	2.9%

Main stock market ratios and shareholder remuneration

	2017	2016

Average number of shares (thousand)	1,000,519	1,000,689
Number of shares at end period (thousand)	1,000,689	1,000,689
Share price at 30/06 (euro)	20.49	17.67
Stock market capitalisation at 30/06 (million euro)	20,504	17,677
Earnings per share (euro)	0.55	0.64
Net equity attributed to the equity holders of the parent
company per share (euro)	14.60	14.56
Price-earnings ratio (P/E)	16.4x	12.7x
EV / Annualized Ebitda	7.7x	6.6x

Main physical aggregates

	2017	2016	%
Gas distribution:
Sales - TPA1 : Europe Latin America	239,030 101,310 137,720	227,534 96,585 130,949	5.1 4.9 5.2
Gas distribution connections points (thousand) (at 30/06): Europe Latin America	13,717 5,796 7,921	13,361 5,760 7,601	2.7 0.6 4.2
Electricity distribution:
Sales - TPA1 : Europe Latin America (*)	28,284 17,333 10,951	34,685 17,250 17,435	(18.5) 0.5 (37.2)
Electricity distribution connections (thousand) (at 30/06): Europe Latin America (*)	8,271 4,595 3,676	10,746 4,565 6,181	(23.0) 0.7 (40.5)
ICEIT2 (minutes)	67	26	157.7
Gas:
Gas supply (MW): Spain Rest of Europe International LNG Gas transportation – EMPL (GWh)3	178,821 90,594 39,361 48,866 49,433	160,959 89,686 37,209 34,064 52,299	11.1 1.0 5.8 43.5 (5.5)

(*) 1H16 includes Electricaribe's contribution to the consolidated figures.

1 Third-Party Access (electricity distributed). Includes TPA services in secondary transmission.

2 Installed capacity equivalent interruption time in Spain.
3 Europe-Maghreb gas pipeline.

	2017	2016	%
Electricity:
Electricity generated (GWh):	22,226	21,424	3.7
Spain: Hydroelectric Nuclear Coal CCGTs Renewables and Cogeneration	13,161 737 2,185 2,832 6,141 1,266	12,767 3,244 2,104 936 4,986 1,497	3.1 (77.3) 3.8 202.6 23.2 (15.4)
International: Hydroelectric CCGTs Oil – gas Wind	9,065 234 7,925 600 306	8,657 203 7,509 558 387	4.7 15.3 5.5 7.5 (20.9)
Installed capacity (MW):	15,418	15,416	-
Spain: Hydroelectric Nuclear Coal CCGTs Renewables and Cogeneration	12,716 1,954 604 2,010 7,001 1,147	12,714 1,954 604 2,010 7,001 1,145	- - - - - 0.2
International: Hydroelectric CCGTs Oil – gas Wind	2,702 123 2,035 310 234	2,702 123 2,035 310 234	- - - - -
Electricity supply (GWh)	17,284	18,107	(4.5)

2.3. Analysis of consolidated results

Sales

		% of		% of
	2017	total	2016		total % 2017/2016
Gas distribution	2,944	24.0	2,389	21.0	23.2
Spain	638	5.2	581	5.1	9.8
Italy	43	0.4	43	0.4	-
Latin America	2,263	18.4	1,765	15.5	28.2
Electricity distribution	2,244	18.3	2,840	24.8	(21.0)
Spain	420	3.4	416	3.6	1.0
Moldova	110	0.9	119	1.0	(7.6)
Latin America	1,714	14.0	2,305	20.2	(25.6)
Gas	5,513	44.8	4,527	39.7	21.8
Infrastructures	164	1.3	159	1.4	3.1
Supply	5,349	43.5	4,368	38.3	22.5
Electricity	2,952	24.0	2,926	25.7	0.9
Spain	2,486	20.2	2,573	22.6	(3.4)
International	466	3.8	353	3.1	32.0
Other activities	193	1.6	275	2.4	(29.8)
Consolidation adjustments	(1,563)	(12.7)	(1,548)	(13.6)	1.0
Total	12,283	100.0	11,409	100.0	7.7

Net sales totalled Euros 12,283 million in the first half of 2017, a 7.7% increase with respect to the same period of 2016, due basically to higher volumes and prices in the gas business compared with the same period of the previous year, and to the currency effect.

EBITDA

		% of		% of
	2017	total	2016		total % 2017/2016
Gas distribution	882	40.5	830	33.8	6.3
Spain	439	20.2	424	17.3	3.5
Italy	29	1.3	29	1.2	-
Latin America	414	19.0	377	15.3	9.8
Electricity distribution	546	25.1	668	27.1	(18.3)
Spain	302	13.9	303	12.3	(0.3)
Moldova	16	0.7	25	1.0	(36.0)
Latin America	228	10.5	340	13.8	(32.9)
Gas	425	19.5	423	17.2	0.5
Infrastructures	153	7.0	146	5.9	4.8
Supply	272	12.5	277	11.3	(1.8)
Electricity	338	15.5	500	20.4	(32.4)
Spain	190	8.7	376	15.4	(49.5)
International	148	6.8	124	5.0	19.4
Other activities	(15)	(0.6)	36	1.5	(141.7)
Total	2,176	100.0	2,457	100.0	(11.4)

Consolidated Ebitda in the first half 2017 amounted to Euros 2,176 million, i.e. Euros 281 million (11.4%) less than in the same period of 2016. Nevertheless, the first half of 2017 does not include the figures for Electricaribe; consequently, in like-for-like terms, the reduction would be just 6.6%.

Foreign currency fluctuations in consolidation had a positive impact on Ebitda in the first half of 2017 amounting to Euros 45 million with respect to the same period of 2016, mainly due to appreciation of the Brazilian real and the Chilean peso.

Ebitda from Gas Natural Fenosa's international activities increased by 1.3% to account for 51.4% of the consolidated total, compared with 45.0% in the same period of last year. Ebitda from operations in Spain fell by 21.8% and declined as a share of the consolidated total to 48.6%.

Operating income

		% of		% of
	2017	total	2016		total % 2017/2016
Gas distribution	617	48.6	582	40.3	6.0
Spain	287	22.6	280	19.4	2.5
Italy	17	1.3	17	1.2	-
Latin America	313	24.7	285	19.7	9.8
Electricity distribution	353	27.8	394	27.2	(10.4)
Spain	189	14.9	193	13.3	(2.1)
Moldova	13	1.0	22	1.5	(40.9)
Latin America	151	11.9	179	12.4	(15.6)
Gas	342	27.0	348	24.0	(1.7)
Infrastructures	128	10.1	122	8.4	4.9
Supply	214	16.9	226	15.6	(5.3)
Electricity	39	3.1	152	10.5	(74.3)
Spain	(45)	(3.5)	93	6.4	(148.4)
International	84	6.6	59	4.1	42.4
Other activities	(82)	(6.5)	(29)	(2.0)	182.8
Total	1,269	100.0	1,447	100.0	(12.3)

Depreciation and amortisation charges and impairment losses in 1H17 amounted to Euros 843 million, a 2.9% decrease year-on-year, mainly due to extending the useful lives of the combined cycle plants from 25 to 35 years.

Provisions for bad debts amounted to Euros 64 million, compared with Euros 142 million in 2016; this reduction is due basically to deconsolidating Electricaribe.

Operating income in the first half of 2017 declined by Euros 178 million (12.3%) with respect to the same period of 2016, to Euros 1,269 million; in like-for-like terms (i.e. excluding Electricaribe), the reduction was -10.4%.

Net financial income

Net financial expenses amounted to Euros 347 million in the first half of 2017, 16.4% less than in the same period of 2016 (Euros 415 million).

The breakdown of net financial income is as follows:

	2017	2016	%
Cost of net financial debt Other financial expenses/revenues Financial revenues Costa Rica1	(320) (34) 7	(374) (49) 8	(14.4) (30.6) (12.5)
Net financial income	(347)	(415)	(16.4)

1 The Costa Rica generation concessions are accounted for as finance leases in accordance with IFRIC 12.

The cost of net interest-bearing debt in the first half of 2017 was Euros 320 million, i.e. lower than in the same period of 2016 due to deconsolidating Electricaribe and to the lower coupons on new debt issued to refinance maturing debt.

The average cost of gross financial debt is 3.7%, and 80% of the net debt is at fixed rates.

Profit/(loss) of entities recorded by equity method

Equity-accounted affiliates contributed Euros 7 million in earnings in the first half of 2017 (Euros -11 million in the same period of 2016) due to the positive contribution by Ecoeléctrica in Puerto Rico and by other holdings (Chile and renewables), which was partly offset by the negative result contributed by the Union Fenosa Gas subgroup.

Corporate income tax

The effective tax rate as of 30 June 2017, based on the best estimate of the effective tax rate for the full year, was 23.5%, the same as one year earlier.

Non-controlling interests

The main items in this account are the non-controlling interests in EMPL, International Electricity, gas distribution companies in Chile, Brazil, Colombia and Mexico, and electricity distribution companies in Chile and Panama, as well as accrued interest on perpetual subordinated notes.

Income attributed to non-controlling interests amounted to Euros -161 million in 1H17, in line with the 2016 figure of Euros -166 million.

Net income

Net income amounted to Euros 550 million, a reduction of 14.7% with respect to the same period of 2016.

2.4. Analysis of the consolidated balance sheet

Investments

The breakdown of investments by nature is as follows:

	2017	2016	%
Investments in property, plant and equipment and intangible assets (Note 5)	737	629	17.2
Financial investments	27	26	3.8
Total gross investments	764	655	16.6
Disposals and others	(24)	(33)	(27.3)
Total net investments	740	622	19.0

Investments in property, plant and equipment and intangible assets amounted to Euros 737 million in 1H17, a 17.2% increase with respect to 1H16, due basically to greater investment in gas and electricity distribution in Latin America and in the electricity business.

Financial investments in 1H17 correspond to cash flows into investing activities in group companies, associates and business units (Euros 14 million), Compañía General de Electricidad, S.A. treasury shares acquisition (Euros 5 million) and others (Euros 8 million).

Disposals and others in 1H17 correspond to Other proceeds from investing activities (Euros 24 million).

	2017		2016 % 2017/2016
Gas distribution	252	257	(1.9)
Spain	82	132	(37.9)
Italy	15	13	15.4
Latin America	155	112	38.4
Electricity distribution	286	252	13.5
Spain	106	106	-
Moldova	3	2	50.0
Latin America	177	144	22.9
Gas	30	14	114.3
Infrastructures	5	2	150.0
Supply	25	12	108.3
Electricity	143	76	88.2
Spain	53	39	35.9
International	90	37	143.2
Other activities	26	30	(13.3)
Total	737	629	17.2

The breakdown of investment in property, plant and equipment and intangible assets, by line of business, is as follows:

The electricity distribution business accounts for 38.8% of the consolidated total, is the main target of capital expenditure, and expanded by 13.5% with respect to the same period of 2016. The electricity distribution business in Latin America accounts for 24.0% of the consolidated total and expanded by 22.9%, basically as a result of the increase in Chile.

Gas distribution accounts for 34.2% of the consolidated total and declined by 1.9% with respect to the same period of the previous year. Gas distribution in Latin America accounts for 21.0% of the consolidated total and increased by 38.4% with respect to the same period of 2016, as both maintenance and network growth investment increased in all countries.

The electricity business accounts for 19.4% of the consolidated total. Capital expenditure in Spain increased by 35.9% with respect to the same period of 2016, basically due to investment in new wind projects in the Canary Islands. Investment in Electricity International increased by 143.2%, mainly due to the development of photovoltaic projects in Brazil.

Capital expenditure outside Spain increased by 41.7% to account for 60.4% of the total (vs. 49.9% in the same period of 2016).

Investment in Spain declined by 7.3%, and its share declined to 39.6%, compared with 50.1% in 2016.

Equity and shareholder remuneration

The distribution of 2016 income approved by the Shareholders' Meeting on 20 April 2017 entailed allocating Euros 1,001 million to dividends, the same amount as in 2016. That represents a dividend of Euros 1 per share and a pay-out of 74.3%, i.e. a dividend yield of 5.6% based on the share price at 31 December 2016 (Euros 17.91).

An interim dividend amounting to Euros 0.330 per share out of 2016 earnings was paid entirely in cash on 27 September 2016, and the remaining Euros 0.670 per share was paid, also in cash, on 27 June 2017.

The Board of Directors has declared an interim dividend for 2017 of Euros 0.330 per share, to be paid entirely in cash on 27 September 2017.

At 30 June 2017, Gas Natural Fenosa's shareholders' equity totalled Euros 18,246 million. Of that total, Euros 14,609 million is attributable to Gas Natural Fenosa.

Debt and finances

Evolution of net borrowings (million euros)

	30.06.17	30.06.16	%
Net borrowings	15,818	15,832	-0.08

At 30 June 2017, net interest-bearing debt amounted to Euros 15,818 million and leverage was 46.4% (Euros 15,832 million and 45.7% at 30 June 2016).

The net debt/EBITDA ratio was 3.4 and the EBITDA/net financial expenses ratio was 6.8 at 30 June 2017, evidencing that the company maintained its credit fundamentals stable with respect to the preceding year.

The detail of net borrowings is as follows:

	30.06.17	30.06.16
Non-current borrowings	14,485	14,798
Current borrowings	2,857	3,884
Cash and cash equivalents	(1,455)	(2,763)
Derivatives	(69)	(87)
Net borrowings	15,818	15,832

Net debt maturities (Euros million)

	2017	2018	2019	2020	2021 and thereafter
Net debt maturities	195	1,801	2,463	2,310	9,049

The above table shows Gas Natural Fenosa's net debt maturities at 30 June 2017.

A total of 87.4% of the net interest-bearing debt matures in or after 2019. The average term of the debt is 5.6 years.

Of the net financial debt, 8.5% is short term and the other 91.5% is long term.

The breakdown of the net borrowings by currency at 30 June 2017, in absolute and relative terms, is as follows:

(Euros million)	30.06.2017	%

EUR	12,693	80.2
CLP	1,506	9.5
USD	921	5.8
MXN	316	2.0
BRL	277	1.8
COP	97	0.6
Others	8	0.1
Total net borrowings	15,818	100.0

Main financial transactions

As part of the ongoing process of optimising interest-bearing debt, on 11 January 2017 Gas Natural Fenosa, through its Euro Medium Term Notes (EMTN) programme, issued notes amounting to Euros 1,000 million, maturing in January 2027, with an annual coupon of 1.375%.

To that same end, Euros 3,624 million in bilateral bank transactions were renegotiated during the period, of which Euros 684 were loans and the remainder were credit lines.

In April 2017 Gas Natural Fenosa issued bonds under its EMTN programme amounting to Euro 1,000 million maturing in seven years and with a coupon of 1.125%. This amount was used to implement the repurchase of debentures for Euros 1,000 million maturing in 2018, 2020 and 2021.

After the closing date some other transactions have been signed, including two long-term transactions with institutional banks: one maturing in 20 years with 4 years of vesting period and amounting to Euro 450 million with European Investment Banks (EIB) and the other maturing in 12 years with 2 years of vesting period amounting to Euro 200 million with the Official Credit Institute (ICO).

Transactions amounting to Euros 657 million were performed in Latin America, including notably a Euros 196 million (MXN 4,000 million) 3- and 5-year debt issue in Mexico, and a Euros 105 million (USD 120 million) 5-year issue in Panama.

For the purposes of managing interest rates, to complement the debt originated at fixed rates, long-term interest rate hedges have been arranged in order to have 80% of the debt at fixed rates.

Credit rating

The credit ratings of Gas Natural Fenosa's short-term and long-term debt are as follows:

Agency	Short term	Long term
Fitch	F2	BBB+
Moody's	P-2	Baa2
Standard & Poor's	A-2	BBB

Liquidity and capital funds

At 30 June 2017, cash and cash equivalents together with available bank finance totalled Euros 9,607 million, providing the company with sufficient liquidity to cover its debt maturities for more than 24 months, with the following breakdown:

Liquidity source	Limit	Drawn	Available
Committed credit lines	7,656	469	7,187
Uncommitted credit lines	506	43	463
Undrawn loans	502	-	502
Cash and cash equivalents	-	-	1,455
Total	8,664	512	9,607

Additionally, at 30 June 2017, the company had Euros 6,207 million available in the form of shelf registrations for financial instruments, including Euros 3,895 million in the Euro Medium Term Notes (EMTN) programme; Euros 500 million in the Euro Commercial Paper (ECP) programme; and a combined Euros 1,812 million in the stock market certificates programmes on the Mexico Stock Exchange, the commercial paper programme on the Panama Exchange, the straight bonds programme in Colombia and the bond lines in Chile.

2.5. Analysis of results by activity

Gas distribution

2.5.1 Gas distribution Spain

This area includes gas distribution, third-party access (TPA) and secondary transportation, as well as the distribution activities in Spain that are charged for outside the regulated remuneration (meter rentals, customer connections, etc.) and the piped liquefied petroleum gas (LPG) business.

Results

	2017	2016	%

Net sales	638	581	9.8
Procurement	(50)	(9)	-
Net personnel expenses	(39)	(39)	-
Other expenses/revenues	(110)	(109)	0.9
EBITDA	439	424	3.5
Depreciation, amortisation and impairment expenses	(148)	(144)	2.8
Change in operating provisions	(4)	-	-
Operating income	287	280	2.5

Net sales in the gas distribution business totalled Euros 638 million, Euros 57 million more than in the same period last year, due basically to the LPG business, which completed the acquisition of distribution points in the fourth quarter of 2016.

The increase in the LPG business required a larger number of shiploads to meet the higher demand.

These factors, coupled with the positive impact of efficiency measures on operating expenses, resulted in a 3.5% increase in EBITDA.

Main aggregates

The main aggregates in gas distribution in Spain were as follows:

	2017	2016	%
Sales – TPA (GWh)	98,913	94,396	4.8
LPG sales (ton)	85,223	14,064	-
Distribution network (km)	53,042	51,694	2.6
Increase in connection points (thousand)	23	36	(36.1)
Connection points (thousand) (at 30/06)	5,336	5,302	0.6

Regulated gas sales increased by 4.8% (+4,517 GWh).

Residential demand was 1,499 GWh (6%) lower than in the same period of 2016.

Demand growth was concentrated in the industrial market. Demand under 60 bars increased by 8% (+3,715 GWh). Demand for transportation and industrial consumption over 60 bar increased by 10% (+2,301 GWh).

The growth in LPG sales was due to the acquisition of supply connections from Repsol in the fourth quarter of 2016.

In the first half of 2017, the distribution network expanded by 1,086 km.

2.5.2 Gas distribution Italy

The business in Italy includes regulated distribution of gas.

Results

	2017	2016	%
Net sales	43	43	-
Procurement	-	-	-
Net personnel expenses	(6)	(6)	-
Other expenses/revenues	(8)	(8)	-
EBITDA	29	29	-
Depreciation, amortisation and impairment expenses Change in operating provisions	(12) -	(12) -	- -
Operating income	17	17	-

EBITDA amounted to Euros 29 million, in line with the same period of 2016, since remuneration was stable in 2017 following the update in WACC recognised by the Italian regulator in 2016 as a result of the decline in the risk-free rate.

Main aggregates

	2017	2016	%
Sales – TPA (GWh)	2,397	2,189	9.5
Distribution network (km)	7,291	7,210	1.1
Connection points (thousand) (at 30/06)	460	458	0.4

A total of 2,397 GWh of gas were distributed, i.e. 9.5% more than in 2016, due to favourable weather conditions.

The distribution grid expanded by 26 km in the last six months, to 7,291 km at 30 June 2017.

Gas Natural Fenosa has 460,340 gas distribution connection points in Italy, a slight increase with respect to the previous year.

2.5.3 Gas distribution Latin America

This division involves regulated gas distribution in Argentina, Brazil, Chile, Colombia, Mexico and Peru. In Chile, it also includes the gas procurement and supply business.

Results

	2017	2016	%

Net sales	2,263	1,765	28.2
Procurement	(1,606)	(1,185)	35.5
Net personnel expenses	(68)	(60)	13.3
Other expenses/revenues	(175)	(143)	22.4
EBITDA	414	377	9.8
Depreciation, amortisation and impairment expenses	(88)	(79)	11.4
Change in operating provisions	(13)	(13)	-
Operating income	314	285	9.8

Revenues increased by 28.2% to Euros 2,263 million, affected by appreciation of the main Latin American currencies.

EBITDA amounted to Euros 414 million, an increase of 9.8% with respect to the same period of the previous year, impacted by currency performance in Argentina (-6.7%), Mexico (-4.4%), Colombia (9.2%), Brazil (16.6%) and Chile (7.1%). Excluding the effect of currency fluctuations, EBITDA would have increased by 3.4%.

Brazil contributed 31.4% of total EBITDA. Adjusting for the currency effect, EBITDA increased by 7.8%. Dispatching and TPA for thermal power plants was 2.3% higher than in the second quarter of 2016, while gas sales in the residential-commercial market were down 3.1% year-onyear. In contrast, the change in trend in the industrial sector with respect to 2016 persisted in the second quarter, with 6.8% growth; additionally, sales of automotive natural gas increased by 11.1% year-on-year as it proved more competitive than liquid fuels.

Mexico accounted for 22.2% of total EBITDA in this business. Excluding the exchange rate effect, Mexico's EBITDA increased by 15.4%, and the sales margin increased by 16.7%, with growth in all markets.

EBITDA in Colombia amounted to Euros 72 million, a 22.9% decline year-on-year (excluding the exchange rate effect) as a result of the lower commercialisation margin in the secondary market. This market registered atypically good performance in the first half of 2016 due to the El Niño phenomenon, which produced a sharp decline in hydroelectric output.

Chile contributed Euros 103 million in EBITDA (+12.1% at constant exchange rates), basically due to an increase in the volume of sales in the residential-commercial segment, i.e. 24.9% of total EBITDA from Latin America.

EBITDA in Argentina amounted to Euros 19 million, in line with the same period of 2016, following the entry into force on 1 April 2017 of a new tariff table for all markets, even though the new tariff will be implemented in three stages. Excluding the currency effect, EBITDA would have increased by 10.1%. Overall sales volumes increased by 7.0% in the first half, concentrated particularly in the TPA market, which registered 6.5% growth.

Main aggregates

The main physical aggregates in gas distribution in Latin America were as follows:

	2017	2016	%
Gas activity sales (GWh):	137,720	130,949	5.2
Gas sales at the tariff	77,629	74,903	3.6
TPA	60,091	56,046	7.2
Distribution network (km)	83,689	81,866	2.2
Increase in connection points (thousand)	148	153	(3.3)
Connection points (thousand) (at 30/06)	7,921	7,601	4.2

The main physical aggregates by country as of 30 June 2017 are as follows:

	Argentina	Brazil	Chile	Colombia	Mexico	Total

Gas activity sales (GWh):	34,880	37,197	23,611	13,245	28,787	137,720
Increase v. 1H16 (%)	7.0	4.4	0.8	(5.5)	13.8	5.2

Distribution network (km)	25,749	7,382	7,092	22,081	21,385	83,689
Increase vs. 30/06/2016 (km)	175	73	195	431	949	1,823

Connection points (thousand) (at 30/06)	1,642	1,058	593	2,912	1,716	7,921
Increase vs. 30/06/2016 (thousand)	22	48	24	110	116	320

There were a total of 7.921 million gas distribution connections at 30 June 2017. Customer numbers increased by 320 thousand year-on-year, notably in Colombia and Mexico.

Sales in the gas activity in Latin America, which includes both gas sales and TPA (third-party access) services, totalled 137,720 GWh, i.e. higher than the same period of 2016, particularly due to higher sales in Mexico.

The distribution grid expanded by 1,823 km (+2.2%) in the last 12 months, to 83,689 km at the end of June 2017. This sizeable expansion is attributable most notably to Mexico, which added 949 km, and Colombia, which added 431 km.

Highlights of this area in 2016:

In Argentina, after a year of intense negotiations, the new tariffs arising from the Integral Tariff Review (RTI) were applied on 1 April 2017. The tariff tables were approved on 31 March 2017 by Resolution 4.354 of ENARGAS, which announced the RTI outcome for Gas Natural BAN.

The outcome of the Integral Tariff Review process includes a major investment plan that entails a significant change in the scale of this business; the plan is already being implemented.

The new tariff will be phased in over three stages, and will be adjusted for inflation every six months. The first stage commenced on 1 April 2017; the second will begin on 1 December 2017 and will include the first inflation adjustment; the third stage, which will also include an inflation adjustment, will commence in April 2018.

Completion of the RTI process and application of the new tariffs will normalise the company in economic and financial terms.

In Brazil, new residential-commercial customer additions declined by 2.1% year-on-year in the first half due to large number of additions of new buildings in 2016 on the occasion of the Olympic Games. Sales increased by 4.4% due to the higher sales of automotive natural gas, which expanded by 11.1% as this fuel was more competitive than liquid fuels and also because of the increase in vehicle conversions in the period; sales to the industrial market grew by 6.8% against the backdrop of a macroeconomic recovery, while the power generation and TPA market expanded by 2.3% due to the greater utilisation of thermal power plants. In contrast, sales in the residential and commercial market declined by 3.1%, mainly as a result of lower consumption by large retailers.
In Colombia, gas and TPA sales declined by 5.5% year-on-year, due mainly to an 8.4% decline in the industrial market as a result of the atypical sales volume in the secondary market in the first six months of 2016. Residential-commercial customer numbers increased by 50,057 net in the first half of 2017, which represented a 13.0% decrease year-on-year, basically in the new building segment, as a result of the deceleration in building completion caused by the market contraction.

In relation to unregulated businesses in Colombia they experienced a 5.8% decrease in margins with respect to the first half of 2016. The energy solutions business shrank by 34.9% due to negative performance by mobility products, partly offset by a 36.7% improvement in the margin in the residential and SME market, basically due to the product Servigas.

Mexico continued to implement the growth acceleration plan, having increased customer numbers by 8% and made progress in all segments in the first half of the year. Gas sales increased by 13.8%, mainly in the TPA market, while the industrial market expanded by 7.9% due to growth in customer numbers and sales; in contrast, consumption in the residential-commercial market shrank by 2.7%.

As part of the ongoing energy reform, in December 2016 the company was granted a concession to distribute gas in the Mexico Valley area (Cuautitlán-Texcoco-Hidalgo). This area adjoins Mexico City and will enable gas to be distributed in a market close to the existing grid. Commercialisation commenced this year and customer numbers are expected to reach 125,000 within five years.

The number of supply connections in Chile increased by 24 thousand, including growth in the residential-commercial (4.1%) and industrial (0.6%) segments with respect to the first half of 2016. As for gas sales and TPA, the strongest growth was observed in the residential-commercial (6.9%) and industrial (3.4%) segments, while TPA sales declined by 0.6% year-on-year.

The new Gas Law, promulgated in February 2017, filled a legal vacuum by reducing the uncertainties surrounding investment, thereby allowing the distribution business to expand and providing for an increase in natural gas use in Chile, which was one of the main objectives of Chile's Energy Agenda and Energy Policy, both drawn up following work directed by the Ministry of Energy.

In this context of legal certainty, the aggressive expansion plan has been stepped up since February 2017, with a substantial increase in investment in established territories, where the goal is to increase saturation, and the introduction of gas to new regions throughout the country.

Work in 2017 will be focused on central and southern areas in order to double new customer additions to approximately 20,000 more new supply connections than in a standard year.

In Peru, the company continues development work after rescheduling the beginning of commercial operations (originally planned for the third quarter of the year), which depends on completion of construction of the gas terminal.

As a result of the concession awarded in July 2013, Gas Natural Fenosa will supply energy to an area in south-west Peru that is not yet connected to the gas grid and expects to supply natural gas to over 80,000 households.

Electricity distribution

2.5.4 Electricity distribution Spain

The electricity distribution business in Spain includes regulated distribution of electricity and network services for customers, basically connections and hook-ups, metering and other actions associated with third-party access to Gas Natural Fenosa's distribution network.

Results

	2017	2016	%
Net sales	420	416	1.0
Procurement	-	-	-
Net personnel expenses	(50)	(45)	11.1
Other expenses/revenues	(68)	(68)	-
EBITDA	302	303	(0.3)
Depreciation, amortisation and impairment expenses Change in operating provisions	(113) -	(110) -	2.7 -
Operating income	189	193	(2.1)

The Ministerial Order on electricity tolls for 2017 (ETU/1976/2016) establishes that, until the approval of the remuneration for transmission and distribution for 2017 under the provisions of Royal Decree 1047/2013, of 27 December, and Royal Decree 1048/2013, of 27 December, the remuneration established in Order IET/981/2016 and Order IET/980/2016, which established the remuneration for electricity transmission and distribution companies for 2016, will be paid pro rata.

Net revenues amounted to Euros 420 million, i.e. 1.0% more than in the same period of 2016, due to application of the aforementioned Ministerial Orders and to the accrual of investments that were brought into operation.

EBITDA amounted to Euros 302 million in the first half of 2017, a 0.3% decline with respect to the same period of 2016, due to the 11.1% increase in net personnel expenses caused by the implementation of business efficiency measures that will have a positive impact in subsequent periods.

Main aggregates

	2017	2016	%
Electricity sales (GWh): TPA	15,977	15,934	0.3
Connection points (thousand) (at 30/06)	3,712	3,692	0.5
ICEIT (minutes)	67	26	-

Electricity supplied in the first half of 2017 was in line with the same period of 2016, due to the warm weather. Domestic demand amounted to 123,313 GWh in the first half, a 1.2% increase, according to figures from Red Eléctrica de España (REE).

The number of supply points increased by 10,492 net in the first half of 2017.

The ICEIT outage indicator increased sharply with respect to 2016 due to storms in Galicia in February 2017, where wind speeds reached 178 km/hour, with close to 400,000 customers being affected at times. This effect was mitigated by good ICEIT performance in the second quarter. Galicia accounted for 89% of Gas Natural Fenosa's total outage time.

As of 30 June 2017, smart meters accounted for 92% of the total, and 87% of meter readings are performed on a remote basis. The plan is to achieve 100% smart meters and remote readings in the residential market in 2018.

2.5.5 Electricity distribution in Moldova

The business in Moldova consists of regulated distribution of electricity and the supply of electricity at the bundled tariff in the capital city and the central and southern regions. Gas Natural Fenosa is responsible for 70% of electricity distribution in Moldova.

Results

	2017	2016	%

Net sales	110	119	(7.6)
Procurement	(84)	(86)	(2.3)
Net personnel expenses	(4)	(3)	33.3
Other expenses/revenues	(6)	(5)	20.0
EBITDA	16	25	(36.0)
Depreciation, amortisation and impairment expenses	(3)	(3)	-
Change in operating provisions	-	-	-
Operating income	13	22	(40.9)

Net revenues reflect the pass-through effect of procurement costs together with the capital expenditure and operation and maintenance work performed in accordance with the country's current regulations.

The decline in EBITDA in the first half of 2017 is due to the regulator's adjustment to investments made in 2015 in the tariff approved in March 2017 and to the reform of the distribution tariff methodology applied from May 2017 onwards.

Main aggregates

	2017	2016	%
Electricity sales (GWh) – tariff sales	1,356	1,316	3.0
Connection points (thousand) (at 30/06)	883	873	1.1

In 2017, the company continued to implement its plan to improve operations in Moldova, focusing on processes linked to energy control in the distribution networks, operating processes associated with the entire customer management cycle, and optimisation of facility O&M.

Electricity supplied increased by 3.0% in 2017 as consumption increased because of the colder winter this year.
The number of supply connections totalled 883,415, i.e. an increase of 1.1% with respect to the same period of 2016, primarily as a result of growth in the real estate sector.

2.5.6 Electricity distribution Latin America

This division involves regulated electricity distribution in Argentina, Chile and Panama, and electricity transmission in Chile.

In 2016, this area also included electricity distribution in Colombia.

Results

	2017	2016	%

Net sales	1,714	2,305	(25.6)
Procurement	(1,299)	(1,696)	(23.4)
Net personnel expenses	(73)	(100)	(27.0)
Other expenses/revenues	(114)	(169)	(32.5)
EBITDA	228	340	(32.9)

Depreciation, amortisation and impairment expenses	(63)	(76)	(17.1)
Change in operating provisions	(14)	(85)	(83.5)
Operating income	151	179	(15.6)

EBITDA from electricity distribution in Latin America totalled Euros 228 million. Excluding Colombia's contribution to EBITDA in the first half of 2016, EBITDA in this business would have increased by 6.5%, mainly as a result of the appreciation by the Chilean peso.

At constant exchange rates and in like-for-like terms, excluding Electricaribe, EBITDA would have increased by 0.9%.

EBITDA in Panama amounted to Euros 55 million in 2017, a 16.7% decline at constant exchange rates. This variation was mainly due to refunds to customers of revenues corresponding to the tariff for the period 2002-2006, to a greater impact of power losses, and to other effects on the price, notably the higher revenues received in the first half of 2016 as a result of recognition, by the regulator, of extraordinary generation costs corresponding to the year 2015.

EBITDA in Chile and Argentina (CGE) amounted to Euros 173 million, a Euros 13 million increase at constant exchange rates.

Main aggregates

	2017	2016	%
Electricity sales (GWh):	10,951	17,435	(37.2)
Tariff electricity sales	10,130	16,325	(37.9)
TPA	821	1,110	(26.0)
Connection points (thousand) (at 30/06)	3,676	6,181	(40.5)

Electricity sales amounted to 10,951 GWh, a 37.2% decline, basically due to deconsolidating Electricaribe (Colombia). But for that effect, sales would have risen by 1.2%.

Sales in Panama increased slightly (+0.4%) in year-on-year terms. Temperatures in the first half of the year were above the historical average, which attenuated growth in consumption.

The main physical aggregates by country as of 30 June 2017 are as follows:

	Argentina	Chile	Panama	Total

Electricity sales (GWh):	977	7,446	2,528	10,951
Increase vs. 1H16 (%)	(2.0)	2.0	0.4	(37.2)
				-
Connection points (thousand)	224	2,824	628	3,676
Increase vs. 30/06/2016 (thousand)	6	78	25	(2,505)

The increase in sales and in connection points (excluding the impact of deconsolidating Electricaribe) reflects sustained growth in the electricity distribution business in Latin America.

Electricity transmission in Chile

	2017	2016	%
Electricity transmitted (GWh)	7,396	7,531	(1.8)
Transmission network (km)	3,528	3,528	-

Power transmission in Chile decreased by 1.8% year-on-year, mainly due to lower activity in the first half. The transmission grid is 3,528 km long, the same as at 30 June 2016.

Gas

2.5.7 Infrastructure

This area includes operating the Maghreb-Europe gas pipeline as well as gas exploration, production, storage and regasification.

Results

	2017	2016	%

Net sales	164	159	3.1
Procurement	-	(1)	-
Net personnel expenses	(3)	(2)	50.0
Other expenses/revenues	(8)	(10)	(20.0)
EBITDA	153	146	4.8
Depreciation, amortisation and impairment expenses	(25)	(24)	4.2
Change in operating provisions	-	-	-
Operating income	128	122	4.9

Net sales in the infrastructure business totalled Euros 164 million in the first half of 2017, a 3.1% increase with respect to the same period of the previous year.

EBITDA increased by 4.8% year-on-year to Euros 153 million, mainly as a result of the increase in the international shipping tariff on the Maghreb-Europe pipeline and the positive USD exchange rate effect.

Main aggregates

The main aggregates in international gas transportation are as follows:

	2017	2016	%

Gas transport-EMPL (GWh):	49,433	52,299	(5.5)
Portugal-Morocco	20,441	19,988	2.3
Spain (Gas Natural Fenosa)	28,992	32,311	(10.3)

The gas transportation activity conducted in Morocco through companies EMPL and Metragaz represented a total volume of 49,433 GWh, 5.5% less than in the same period last year. Of that figure, 28,992 GWh were shipped for Gas Natural Fenosa through Sagane and 20,441 GWh for Portugal and Morocco.

Gas Natural Fenosa owns 14.9% of Medgaz, the company that owns and operates the Algeria-Europe subsea gas pipeline connecting Beni Saf with the Almería coast (capacity: 8 bcm/year). The corresponding capacity is associated with a new supply contract amounting to 0.8 bcm/year. A total of 3,790 GWh were shipped via the Medgaz pipeline for Gas Natural Fenosa in 1H17.

The company currently has 916 GWh of company-owned gas storage capacity. A number of works (pipeline replacement and initial well drilling) have been completed on one of the projects to increase storage capacity, as part of the exploration, production and storage projects that Gas Natural Fenosa plans for the Guadalquivir Valley in the coming years. The other four projects are at various stages of the permit process.

2.5.8 Supply

This business includes wholesale gas procurement and supply both in the Spanish liberalised market and in other countries, maritime shipping, retail supply of gas and other related products and services in the liberalised market in Spain and Italy, and supply of gas at the last-resort tariff (TUR) in Spain.

Results

	2017	2016	%

Net sales	5,349	4,368	22.5
Procurement	(4,903)	(3,936)	24.6
Net personnel expenses	(41)	(37)	10.8
Other expenses/revenues	(133)	(118)	12.7
EBITDA	272	277	(1.8)
Depreciation, amortisation and impairment expenses	(38)	(28)	35.7
Change in operating provisions	(20)	(23)	(13.0)
Operating income	214	226	(5.3)

Net sales amounted to Euros 5,349 million, a 22.5% increase with respect to the same period of last year. EBITDA amounted to Euros 272 million, in line with the same period of the previous year.

Market context

Spanish gas market demand reached 168,233 GWh in the first half of 2017 (157,936 GWh in the same period of 2016), of which 30,004 GWh relate to the residential market (31,317 GWh in 2016), 111,124 GWh to the industrial market and supplies to third-party (103,989 GWh in 2016) and 27,105 GWh to the electricity market (22,630 GWh in 2016).

Evolution of the main gas market price indices is set out below:

	2017	2016	%

Brent (USD/bbl)	51.8	39.7	30.5
Henry Hub (USD/MBtu)	3.2	2.0	60.0
NBP (USD/MBtu)	5.4	4.5	20.0
TTF (EUR/MWh)	17.4	13.2	31.8

Main aggregates

The main aggregates in the wholesale gas procurement and supply activity are as follows:

	2017	2016	%

Gas supply (MW):	178,821	160,959	11.1
Spain:	90,594	89,686	1.0
Gas Natural Fenosa supply	71,496	71,164	0.5
Residential	15,793	16,850	(6.3)
Industrial	47,457	47,980	(1.1)
Electricity	8,246	6,334	30.2
Supplies to third parties	19,098	18,522	3.1
International:	88,227	71,273	23.8
Europe wholesale	37,275	35,324	5.5
Europe retail	2,086	1,885	10.7
Other foreign	48,866	34,064	43.5

Energy services contracts (thousand) (at 30/06)	2,884	2,816	2.4

Share of supply market in Spain	42.5%	45.0%	(5.8)

Gas supply

Wholesale supply by Gas Natural Fenosa totalled 160,943 GWh, a 13.2% increase, basically due to the international business (+24.1%).

Gas Natural Fenosa supplied 74,802 GWh of gas to end customers in Spain, i.e. 2.7% more than in the same period of the previous year.

International gas supply amounted to 86,141 GWh in the first half of 2017, a 24.1% increase year-on-year, driven particularly by international LNG supply.

In the organised market in gas through MIBGAS, DA (day-ahead) and WD (within day) contracts became more firmly established and there was an increase in liquidity driven by actions proposed by the system operator (GTS) to achieve equilibrium in the gas balance; Gas Natural Comercializadora is one of the few active participants in this market Additionally, the figure of "voluntary market maker" was created in January 2017, giving the market greater liquidity and depth.

In the first quarter of 2017, Gas Natural Fenosa participated in the auction for underground storage capacity for the period from April 2017 to March 2018. Gas Natural Fenosa was awarded 10.3 TWh of capacity, i.e. 46.2% of the total capacity contracted via direct assignment.

Gas Natural Europe has a strong position in natural gas supply in Europe, with a presence in France, Belgium, Ireland, Italy, Luxembourg, Portugal, the Netherlands and Germany. It is also an active trader in these countries' liquid markets, enabling Gas Natural Fenosa to optimise its position and seize opportunities in European markets.

Sales in France in 2017 amounted to 19.5 TWh, to customers in numerous segments such as industry, local government and the public sector. Sales in Belgium, Luxembourg, the Netherlands and Germany amounted to 9.0 TWh in the same period.

Gas Natural Fenosa is also active in the wholesale market in Italy and Ireland, where it sold 4.8 TWh and 0.8 TWh, respectively, in the first half of 2017.

Gas Natural Fenosa is still Portugal's second-largest operator (and its largest foreign operator), with a 15% market share, and it sold 3.1 TWh in the first half of 2017. Its activities are focused in the industrial market, where it has a share of over 17%.

The company continues to diversify into international markets, having sold gas in the Americas and Asia. This strengthens the Group's presence in the main international LNG markets, providing it with a medium-term position in countries with growth potential and in new markets.

In the retail market, Gas Natural Fenosa focuses on meeting its customers' energy needs. With a range of quality products and services, it has 12.3 million active gas, electricity and maintenance contracts, of which 579 thousand are in Italy.

In the Italian retail market, Gas Natural Fenosa has a portfolio of 434,753 gas supply contracts and 52,272 electricity supply contracts, with an overlap of 27 thousand between the two. Additionally, 91,856 customers have a maintenance contract.

Gas Natural Fenosa provides a comprehensive service by integrating the supply of both energies (gas and electricity) with maintenance services to achieve efficiencies and enhance customer satisfaction; it supplies both energies to over 1.5 million homes, a large percentage of which have a maintenance contract in place.

With a strong focus on continued growth in the retail business, the company sells products and services throughout Spain, having signed 849 thousand new contracts in 2017.

In the domestic gas segment, GNF updates its product portfolio with a view to offering electricity and natural gas tariffs that are tailored to each customer's profile. New products meet needs as a function of customers' energy usage, preferred form of payment, usage patterns over time and their interest in consuming renewable energy .

In the highly competitive SME market, Gas Natural Fenosa is adapting to customers' needs by expanding customised price offers in this segment, which attained 1.5 TWh/year in the second quarter. It also expands, updates and pursues flexibility in its product portfolio in order to match customer profiles as closely as possible through products indexed to pool prices, fixed-price products for business, and eco-type products.

In the SME segment, Gas Natural Fenosa distinguishes itself from competitors by offering its Energy Saving Service, which enables customers to optimise their contracted power and save. Over 114,000 SME customers have received consulting services in 2017. Additionally, the portfolio of gas and electricity maintenance services for SMEs continues to expand, having attained 28,000 contracts.

The broad, diversified offering of services for residential and SME customers has enabled the company to increase the number of active contracts to 2.8 million, managed through the group's own operating platform with 112 associated firms connected via an online system, through which it provides an excellent service and satisfies even the most demanding customers. As a result of this performance, the portfolio of energy and services contracts in the retail segment increased in value.

Gas Natural Fenosa remains committed to innovation to meet and even anticipate its customers' expectations by adding new functionalities in all digital channels, such as the ability to buy services and receive customer care online; its online platform receives 6 million queries per year.

Gas Natural Fenosa continues to develop its own network of natural gas service stations that are open to the public; at the end of June 2017, it had 49 service stations (both compressed and liquefied natural gas). A total of 28 stations are open to the public and 21 are private.

The integrated energy services solutions business continues to expand. A survey conducted by DBK identified Gas Natural Servicios as market leader in energy services to business.

Unión Fenosa Gas

Gas supplied in Spain by Unión Fenosa Gas (equity method, figures expressing 100%) amounted to 21,885 GWh in 1H17, compared with 17,083 GWh in the first half of the previous year. Additionally, a total of 12,537 GWh of energy was traded in international markets in the first half of 2017, compared with 10,792 GWh in 2016.

Electricity

2.5.9 Electricity in Spain

The electricity business in Spain includes electricity generation in Spain, electricity wholesale and retail in Spain's deregulated market, and electricity supply at the "voluntary price for small consumers" (PVPC).

Results

	2017	2016	%
Net sales	2,486	2,573	(3.4)
Procurement	(1,915)	(1,834)	4.4
Net personnel expenses	(68)	(68)	-
Other expenses/revenues	(313)	(295)	6.1
EBITDA	190	376	(49.5)
Depreciation, amortisation and impairment expenses Change in operating provisions	(224) (11)	(263) (20)	(14.8) (45.0)
Operating income	(45)	93	(148.4)

Net sales in the electricity business in Spain amounted to Euros 2,486 million, 3.4% less than in the same period of the previous year, while EBITDA amounted to Euros 190 million, 49.5% less than in the same period last year.

EBITDA performance was shaped by weather, as Gas Natural Fenosa's hydroelectric output shrank by 77.3%, since 2017 is proving to a very dry year, in contrast with 2016, which was classified as very wet. It was also affected by higher taxes caused by high market prices.

Depreciation, amortisation and impairment expenses amounted to Euros 224 million, a decline of Euros 39 million (-14.8%) with respect to the same period of the previous year, basically because of extending the useful lives of the combined cycle plants from 25 to 35 years on 1 January 2017 following technical surveys completed in the first quarter, in line with the practices adopted by the leading players in the industry.

Market context

Overall, demand in the first half of 2017 was 1.1% higher than in the same period of the previous year (1.6% after adjusting for the leap year effect).

The balance of physical interchanges amounted to 5,073 GWh in the first half of 2017, compared with 3,723 GWh in the same period of the previous year.

Year-to-date consumption for pumped storage amounted to 2,069 GWh, i.e. 40.4% less than in 1H16 due to high market prices in comparison with the first half of last year.

Net domestic electricity output declined by 1.2% with respect to the first half of 2016.

Renewable output declined by 25.8% in the first half of 2017 and covered 36.4% of demand, compared with 49.6% in 2016.

Wind output in the first half amounted to 25,184 GWh (-12.0% with respect to the same period of 2016) and covered 20.1% of demand, three points less than in the same period of 2016.

Non-renewable generation output increased by 22.8% in the first half.

The thermal gap increased by 67.7% in the first half, i.e. 10.2 points higher in the same period of 2016 (25.7% vs. 15.5%).

Nuclear output increased by 3.3% in the first half.

Coal-fired output increased by 98.8%. Year-to-date, utilisation of the former capacity guarantee units was 39%, compared with 55% for other coal-fired units.

CCGT output increased by 33.3% in the first half of 2017. CCGT output covered 9.7% of demand in the first half, i.e. 2.5 points more than in the first half of 2016.

Non-renewable thermal, cogeneration and waste-to-power experienced an increase of 11.3% in 1H17 with respect to the same period of last year.

The weighted average price in the electricity pool was Euros 52.9 €/MWh in the first half of 2017, i.e. 71.8% more than in the same period of 2016.

Movements in the main electricity and related market price indices (in addition to the indices mentioned in point 2.5.8.) are set out below:

	2017	2016	%
Arithmetic average daily market price (EUR/MWh)	51.3	30.1	70.4
Coal API 2 CIF (USD/t)	78.9	47.0	67.9
CO2 EUA (EUR/ton)	5.0	5.7	(12.3)

Main aggregates

The main aggregates in Gas Natural Fenosa's electricity business in Spain were as follows:

	2017	2016	%

Installed capacity (MW):	12,716	12,714	-
Generation: Hydroelectric	11,569 1,954	11,569 1,954	- -
Nuclear	604	604	-
Coal	2,010	2,010	-
CCGTs	7,001	7,001	-
Renewable and cogeneration output:	1,147	1,145	0.2
Wind	979	977	0.2
Small hydroelectric	110	110	-
Cogeneration and other	58	58	-

Electricity generated (GWh):	13,161	12,767	3.1
Generation:	11,895	11,270	5.5
Hydroelectric	737	3,244	(77.3)
Nuclear	2,185	2,104	3.8
Coal	2,832	936	202.6
CCGTs	6,141	4,986	23.2
Renewable and cogeneration output:	1,266	1,497	(15.4)
Wind	987	1,135	(13.0)
Small hydroelectric	240	334	(28.1)
Cogeneration and other	39	28	39.3

Power generation availability factor (%)	92.1	84.3	7.8 p.p.

Electricity sales (GWh):	17,284	18,107	(4.5)
Liberalised market	14,674	15,454	(5.0)
PVPC/Regulated	2,610	2,653	(1.6)

Market share of generation	16.5	15.7	0.8 p.p.

Gas Natural Fenosa generated 13,161 GWh of electricity in mainland Spain, i.e. 3.1% more than in the same period of 2016 (5.5% more, considering only conventional sources).

Conventional hydroelectric output totalled 737 GWh in the first half, 77.3% less than in the same period of 2016.

The year could be classified as extremely dry, with an exceedance probability of 99%; i.e. 99 out of 100 years would be wetter than 2017.

Reservoirs in the Gas Natural Fenosa watersheds were at 34% of capacity, 21 points lower than at the same point in 2016.

Nuclear output increased by 3.8%.

Coal-fired output tripled, having increased by 202.6%, with 33% total capacity utilisation.

CCGT output increased by 23.2% in the first half of the year. Gas Natural Fenosa's CCGT utilisation in the first half was 20%, almost double that of the industry as a whole.

Emissions⁴ of CO2 in the second quarter of 2017 from Gas Natural Fenosa's coal-fired power plants and CCGTs that are affected by the regulation governing greenhouse gas emission trading totalled 5 million tons. This significant increase was due mainly to greater utilisation of coal-fired plants.

Gas Natural Fenosa applies a comprehensive approach to its portfolio of CO2 emission rights for the post-Kyoto (2013-2020) period, acquiring the necessary emission rights and credits through active participation in the secondary market.

Gas Natural Fenosa's share of conventional output was 16.5% in the first half of 2017, 0.8 points more than in the same period of 2016.

In the area of renewables and cogeneration, in 2017 Gas Natural Fenosa Renovables (GNF Renovables) commenced construction of 7 of the 13 wind farms registered under the maximum quota of 450 MW authorised by the Ministry of Industry, Energy and Tourism for the Canary Islands. These 7 farms under construction will have a combined installed capacity of 27 MW. This capacity will enjoy a special remuneration system, conditional upon it being commissioned by 31 December 2018. At the same time, work continues to obtain the necessary permits to begin building the other 6 wind farms in the second half of 2017.

Additionally, Gas Natural Fenosa was awarded a total of 667 MW of wind capacity in an auction held by the Spanish government on 17 May, in which the leading domestic energy companies and numerous developers participated. Gas Natural Fenosa obtained 22% of the auctioned capacity, which enhances the group's pipeline, on which it has been working in recent years, enabling it to configure a very competitive, optimised portfolio of projects. The development and construction of these projects will cost a maximum of Euros 700 million and they must be commissioned by December 2019.

At 30 June 2017, GNF Renovables had a consolidable total operational capacity of 1,147 MW, of which 979 MW are wind, 110 MW are small hydroelectric and 58 MW are cogeneration and photovoltaic. Those figures include the 43 MW of slurry-based cogeneration plants that are in liquidation.

The Ministerial Order establishing the criteria for remunerating cogeneration plants based on slurry was published in June 2017. The first impact of this publication is that part of the remuneration that was repaid to the CNMC in 2014-2016 amounting to Euros 8 million.

The Order also makes it possible to make decisions as to bringing this cogeneration technology, which is currently mothballed, back into production either fully or partially.

2.5.10 International Electricity

Encompasses all of the international power generation assets and holdings in Mexico, Puerto Rico, the Dominican Republic, Panama, Costa Rica and Kenya and its power generation projects in Australia, Chile and Brazil, as well as assets operated for third parties via group company O&M Energy.

Results

	2017	2016	%
Net sales	466	353	32.0
Procurement Net personnel expenses Other expenses/revenues	(259) (20) (39)	(166) (22) (41)	56.0 (9.1) (4.9)
EBITDA	148	124	19.4
Depreciation, amortisation and impairment expenses Change in operating provisions	(64) -	(65) -	(1.5) -
Operating income	84	59	42.4

EBITDA in 1H17 amounted to Euros 148 million, up 19.4% compared with the previous year, due mainly to higher EBITDA contribution of Mexico.

Depreciation, amortisation and impairment expenses amounted to Euros 64 million, a decline of 1.5% with respect to the same period of the previous year, basically because of extending the useful lives of the combined cycle plants from 25 to 35 years on 1 January 2017 following technical surveys completed in the first quarter, in line with the practices adopted by the leading players in the industry, partly offset by foreign currency conversion effect.

EBITDA in Mexico increased by 27.7% because the contribution margin increased, basically due to higher spare capacity, better availability, better performance, and favourable trends in the contracts' benchmark indices. Additionally, results at Bii Hioxo improved due to more efficient management of the sales mix.

EBITDA in the Dominican Republic declined by 26.8% due to the effect on margins of lower output and lower spot market prices after expiration of the PPA⁵ with the distribution companies.

EBITDA in Panama increased by 15.9% due to higher precipitation in the areas where the plants are located.

Kenya experienced a 20.4% year-on-year increase in EBITDA as output increased due to greater dispatching.

⁵ PPA: Power Purchase Agreement.

Main aggregates

The main aggregates are as follows:

2017	2016	%
		-

		-
		-
		-
		-
		-
		-
		4.7
		5.5
		(20.9)
		15.3
		15.2
		(3.9)
134	73	83.6

		6.4 p.p.
		2.7 p.p.
		-2.6 p.p.
		2.6 p.p.
		2.7 p.p.
	2,702 2,035 234 101 22 198 112 9,065 7,925 306 196 38 466 95.6 96.8 90.1 92.1 97.8	2,702 2,035 234 101 22 198 112 8,657 7,509 387 170 33 485 89.2 94.1 92.7 89.5 95.1

Output in Mexico increased year-on-year as a result of the different schedule of maintenance shutdowns and greater sales of surplus energy, mainly from Norte Durango and Tuxpan, which began selling surplus power in February 2017. These effects were offset by lower output at Bii Hioxo because of lower winds. Differences in maintenance calendars between years resulted in higher availability than last year.

Hydroelectric output in Costa Rica was favoured by higher precipitation. As discussed in section 2.2.3, the concessions in Costa Rica are recognised as finance leases in accordance with IFRIC 12.

Higher output in Panama was the result of greater precipitation as the first quarter of 2016 was especially dry in the areas where the plants are located. The lower availability with respect to last year is attributable to that fact that the Los Algarrobos hydroelectric plant underwent its annual overhaul in the second quarter of 2017.

Output in the Dominican Republic declined year-on-year due to higher hydroelectric generation and to the withdrawal of the more efficient plants from the system in 2016.

Oil-fired output in Kenya was higher than in the same period of 2016 as a result of increased dispatching this year due to withdrawal of the more efficient plants from the system.

Ecoeléctrica, the CCGT plant in Puerto Rico (equity accounted), increased its contribution to the consolidated figures to Euros 29 million (from Euros 21 million) as a result of higher capacity revenues. Output in the first half of 2017 amounted to 1,636 GWh (100%), in line with the same period of 2016 (1,646 GWh).

3. Main risks and uncertainties

3.1. Operating risks

3.1.1. Regulatory risk

Gas Natural Fenosa and its subsidiaries are required to comply with legislation governing the natural gas and electricity sectors. In particular, gas and electricity distribution are regulated activities in most of the countries in which Gas Natural Fenosa performs them.

Legislation applicable to the natural gas and electricity sectors in the countries in which Gas Natural Fenosa operates is generally revised on a regular basis by the competent authorities. Any amendments may affect the current remuneration system for regulated activities, adversely impacting Gas Natural Fenosa's business, profits, grants and financial position.

In the event that competent public or private bodies interpret or apply such regulations based on criteria that differ from those of Gas Natural Fenosa, its compliance might be questioned or appealed and, in the event that an infringement were proven, there might be a material adverse impact on Gas Natural Fenosa's business, prospects, profits, grants and financial position.

Regulatory risk management is founded on smooth communication between Gas Natural Fenosa and regulators. Additionally, in the course of its regulated activities, Gas Natural Fenosa ensures that its costs and investments are aligned with the rates of return recognised for each business.

3.1.2. Gas and electricity volume risk

Most purchases of natural gas and liquefied natural gas (LNG) are made under long-term contracts containing clauses whereby Gas Natural Fenosa is obligated to purchase certain annual volumes of gas ("take-or-pay" clauses). Under such contracts, even if Gas Natural Fenosa does not need to acquire the committed volume of gas at a given time, it is contractually obligated to pay for the minimum volume committed in the take-or-pay clauses.

The contracts stipulate gas volumes in line with Gas Natural Fenosa's estimated needs. However, actual needs may be below the volumes estimated when the contracts were arranged. In the event of significant departures from the estimates, Gas Natural Fenosa will be obligated to purchase a large volume of gas than is actually needed or, failing this, to pay for the minimum volume of gas committed, irrespective of whether or not it acquires the volume that exceeds its needs; this could have a significant adverse effect on Gas Natural Fenosa's operating costs.

In the electricity business, Gas Natural Fenosa's results are exposed to a reduction in the amount of electricity generated, which is shaped by trends in demand for electricity. Additionally, in view of the major role played by CCGT technology in Gas Natural Fenosa's generating fleet, the amount of power generated might be reduced because of the growing importance of power generation from renewable sources.

A decrease in volumes generated would increase uncertainty as regards the achievement of generation/supply objectives.

Gas Natural Fenosa manages contracts and assets on a globally integrated basis to optimise energy balances, enabling it to correct any deviation in the most profitable manner possible.

3.1.3. Operational risk

a) Insurable risks

Gas Natural Fenosa's activities are exposed to a variety of operational risks such as faults in the distribution network, in electricity generation facilities and in gas carriers, explosions, polluting emissions, toxic spillage, fire, adverse weather conditions, contractual breaches, sabotage or accidents affecting the gas distribution network or electricity generation assets, and other damage and force majeure circumstances that might cause bodily harm and/or material damage, affecting or destroying Gas Natural Fenosa's facilities or property. Events such as these, or similar events, are unforeseeable and may interrupt the supply of gas and generation of electricity. In such situations, although coverage is provided by risk insurance policies, such as policies covering loss of profit and material damage, Gas Natural Fenosa's financial situation and results could be affected to the extent that any losses are not insured, coverage is insufficient, or economic losses are generated due to coverage limits or an increase in the excess, as well as potential increases in premiums paid to insurers.

Gas Natural Fenosa might also have to respond to third-party claims for bodily harm and/or other damage caused in the ordinary course of business. Such claims could result in the payment of indemnities under legislation applicable in the countries in which Gas Natural Fenosa operates, which could have a material adverse impact on the business, prospects, financial position and results if the its third-party liability insurance policies not cover the amount of the indemnities.

Gas Natural Fenosa prepares continuous improvement plans to reduce the frequency and severity of potential incidents. Specific asset supervision units have been created to intensify preventive and predictive maintenance, among other measures. Additionally, the approach to insurance coverage is based on optimising the total cost of risk.

b) Image and reputation

Gas Natural Fenosa is exposed to opinions and perceptions of a variety of stakeholders. Such perceptions may be adversely impacted by events caused by the Company or by third parties over which the Company has little or no control, impacting its own reputation or that of the industry. Such impacts might cause medium-term financial damage by increasing regulatory demands or funding costs or by requiring additional expenditure to win customers.

Gas Natural Fenosa is engaged actively in identifying and monitoring potential reputational events and the stakeholders affected. Transparency also forms part of our communication policy.

c) Environment

Gas Natural Fenosa's activities are subject to extensive legislation on environmental protection.

Gas Natural Fenosa and its subsidiaries must comply strictly with extensive environmental protection regulations requiring, among other aspects, the preparation of environmental impact analyses, obtainment of authorisations, licences and permits, and fulfilment of certain requirements. Considerations include:

− Environmental authorisations and licences might not be granted or might be revoked due to failure to comply with the attached conditions;
− The regulatory framework or its interpretation by the authorities might be amended, resulting in higher costs or deadlines for compliance with the new requirements.

In order to mitigate this risk, Gas Natural Fenosa has adopted an integrated environmental management system and has emergency plans for facilities where there is a risk of accidents with an environmental impact. Specific insurance policies have also been arranged to cover this type of risks.

d) Climate change

Demand for electricity and natural gas is related to the weather. A significant part of gas consumption during the winter months is driven by electricity generation and space heating, while summer consumption depends basically on electricity generation for air conditioning. Gas Natural Fenosa's revenue and results from natural gas distribution and supply activities might be adversely affected in the event that the autumn months become warmer or winters become milder. Demand for electricity might also fall if summers become milder, due to a decline in demand for air conditioning. Additionally, hydroelectric generation plant utilisation depends on rainfall in the plant locations and might be affected by drought.

European policies and measures to combat climate change could affect Gas Natural Fenosa's results in the event that the competitiveness of the Company's generation mix is altered.

Gas Natural Fenosa forms part of a number of work groups at European level, enabling strategy to be adapted to new regulations in advance. Gas Natural Fenosa also forms part of clean development projects designed to reduce CO2 emissions.

e) Geopolitical exposure

Gas Natural Fenosa has interests in countries with different political, economic and social environments; in this regard, two main areas are particularly relevant:

• Latin America

A large part of Gas Natural Fenosa's operating profits are generated by its Latin American subsidiaries. Latin American operations are exposed to a number of risks inherent in investment in this region. Risk factors linked to investment and business in Latin America include:

Considerable influence of local governments on the economy;
Significant fluctuation in the economic growth rate;
High inflation;
Devaluation, depreciation or overvaluation of local currencies;
Controls or restrictions on the repatriation of earnings;
Fluctuating interest rates;
Changes in financial, economic and fiscal policies;
Unexpected changes to regulatory frameworks;
Social tensions and
Political and macroeconomic instability.
Middle East and Maghreb

Gas Natural Fenosa has both its own assets and major contracts for the supply of gas from various Maghreb countries and the Middle East, particularly Egypt. Political instability in the zone may result in physical damage to the assets of Gas Natural Fenosa's investee companies or the obstruction of the operations of those or other companies, interrupting the Group's gas supply.

Gas Natural Fenosa has a diversified portfolio both in the countries in which it carries on energy distribution activities (Latin America, Europe) and the countries that supply gas (Latin America, Africa, Middle East, Europe). Diversification minimises the risk of expropriation and of supply interruption due to the knock-on effect of political instability in neighbouring countries. Specific insurance policies have also been arranged for these risks.

3.2. Financial risks

Financial risks (interest rate, exchange rate, commodity price, credit and liquidity risk) are detailed in Note 17 to the 2016 Consolidated Annual Accounts.

3.3. Main opportunities

− Generation mix: Gas Natural Fenosa's generating fleet, consisting mainly of CCGT facilities, has the necessary flexibility to adapt to different market circumstances; it is thus a valuable asset to leverage opportunities related to price and demand volume volatility in the gas and electricity markets.
− International generation: Increase renewable capacity internationally, given that renewable energies are cost-competitive and Gas Natural Fenosa's presence in growth markets.
− CO2 market evolution: The mechanisms proposed by the European Commission to increase the cost of emission rights are intended to discourage the use of the more polluting technologies so as to counteract climate change. In this context, Gas Natural Fenosa's

plants would be more competitive than coal plants and opportunities could also arise in the emissions market.

− NG/LNG procurement portfolio: Management of gas pipelines, investment in plants and the fleet of gas carriers enable the Group to meet its business needs in a flexible, diversified manner, optimising its approach to different energy scenarios. Specifically, the fleet of gas carriers makes Gas Natural Fenosa one of the world's leading LNG operators and a principal in the Atlantic and Mediterranean.
− A balanced structural position in terms of businesses and geographies, many with stable flows, irrespective of commodities prices, making it possible to take the maximum advantage of growth in energy demand and of new business opportunities in new markets.

4. Events after the reporting date

Events after closing data, i.e. 30 June 2017, are described in Note 19 to the condensed interim consolidated financial statements.

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Glossary of terms

Gas Natural Fenosa's financial disclosures contain magnitudes and metrics drafted in accordance with International Financial Reporting Standards (IFRS) and others that are based on the Group's disclosure model, referred to as Alternative Performance Metrics (APM), which are viewed as adjusted figures with respect to those presented in accordance with IFRS.

Selected APMs are usefull to financial information users because they allow analysis of Gas Natural Fenosa financial performance, cash flows and the financial situation, as well as its comparative to other companies.

Below is a glossary of terms with the definition of the APMs used. APMs terms are, generally, directly traceable with the corresponding lines and subtotals of the interim consolidated balance sheet, the interim consolidated income statement, the interim consolidated cash flow statement or the notes to the condensed interim consolidated financial statements of Gas Natural Fenosa. For those whose terms are not directly traceable there is, below the Glossary, a breakdown of the calculations.

Ebitda	"Operating income"(2) + "Depreciation, amortisation and impairment expenses"(2) + "Transfers to provisions"(4) (Note 13) – "Other results"(2)
Cash flow from operations (CFO)	"Operating cash flows"(3) before "Changes in working capital"(3)
Investments, net	Investment in intangible assets(4) (Note 5) + Investment in property, plant and equipment(4) (Note 5) + Investment in financial assets - Receipts for divestment of property, plant and equipment and intangible assets - Other investing receipts/payments(6)
Gross financial debt	"Non-current financial liabilities"(1) + "Current financial liabilities"(1)
Net borrowings	Gross financial debt(5) – "Cash and cash equivalents"(1) – "Derivative financial assets"(4) (Note 6)
Leverage (%)	Net borrowings(5) / (Net borrowings(5) + "Net equity"(1) )
Cost of net borrowings	"Cost of borrowings"(4) (Note 14) – "Interest revenues"(4) (Note 14)
Ebitda / Cost of net borrowings	Ebitda(5) / Cost of net borrowings(5)
Net borrowings / Annualized Ebitda Net borrowings(5)	/ Ebitda annualized(6)
Return on assets (ROA) (%)	Annualized attributable net income(6) / "Total Assets" (1)
Market capitalisation	(6) No. of shares at end of period * Market price at end of period(6)
Earnings per share	"Net income attributable for the period"(2) / Average number of shares of period(6)
Net equity attributable to the equity holders of the parent company per share	"Net equity attributable to the equity holders of the parent company" (1) / No. of shares at end of period(6)
Price-earnings ratio (P/E)	Closing share price(6) / Earnings per share in the last four quarters(6)

Alternative performance metrics Definition and terms

Enterprise value (EV)	Market capitalisation(5) + Net borrowings(5)
EV / Annualized Ebitda	Enterprise value(5) / Ebitda annualized(6)
Personnel expenses, net	Personnel expenses - Capitalised personnel expenses (Note 12) (4)
Other expenses/revenues	"Other operating revenues"(2), "Other operating expenses" (2) and "Release of fixed assets grants to income and others" (2)
(1) Interim consolidated balance sheet heading

(2) Interim consolidated income statement heading

(3) Interim consolidated cash flow statement heading

(4) Figures detailed in the Notes to the condensed interim consolidated financial statement

(5) Figures detailed in the APM

(6) Figures set out below this glossary

Additionally, set out below is a breakdown of the calculations of those APMs terms not directly traceable:

	EBITDA

3rd quarter 2016	1,183
4th quarter 2016	1,330
1st quarter 2017	1,104
2nd quarter 2017	1,072
Annualized Ebitda	4,689

	Attributable net income

3rd quarter 2016	285
4th quarter 2016	417
1st quarter 2017	298
2nd quarter 2017	252
Annualized attributable net income	1,252

	Net income	Average number of shares (thousand)	Earnings per share

3rd quarter 2016	285	1,000,689	0.28
4th quarter 2016	417	1,000,468	0.42
1st quarter 2017	298	1,000,689	0.30
2nd quarter 2017	252	1,000,519	0.25
Earnings per share in the last four quarters (euro)			1.25
Closing share price (euro)			20.49
Price-earnings ratio (P/E)			16.4

The number of issued shares at the end of the period is included in page number 3 of the Consolidated Directors' Report

Financial investments, proceeds from divestitures of property, plant and equipment and intangible assets and other proceeds/(payments) in investing activities are included in page number 8 of the Consolidated Directors' Report

AI Terminal

Naturgy Energy Group S.A.

1863_ir_2017-06-30_abc54ce2-c042-40b6-bf68-e5c6e2bf5edd.pdf

GAS NATURAL SDG, S.A. AND ITS SUBSIDIARIES

REPORT ON LIMITED REVIEW OF CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Report on the Condensed Interim Consolidated Financial Statements

Introduction

Scope of Review

Conclusion

Emphasis of Matter

Report on Other Legal and Regulatory Requirements

Other Matter

Condensed interim consolidated financial statements at 30 June 2017

Interim Consolidated Balance Sheet (Million Euros)

Interim Consolidated Income Statement (Million Euros)

Interim Consolidated Statement of Comprehensive Income (Million Euros)

Interim Statement of Changes in Consolidated Net Equity (Million Euros)

Interim Consolidated Cash Flow Statement (Million Euros)

Notes to the condensed interim consolidated financial statements

Note 1. General information

Note 2. Regulatory framework

Note 3. Basis of presentation and accounting policies

3.1. Basis of presentation

3.2 Main risks and uncertainties

3.3 Seasonality

3.4 Accounting policies

Entry into force of new accounting standards

IFRS 9 - "Financial instruments"

IFRS 15 - "Revenue from contracts with customers"

IFRS 16 - "Leases"

3.5 Consolidation scope

2016

Note 4. Segment financial information

a) Segment information

b) Reporting by geographic area

Note 5. Intangible assets and property, plant and equipment

Note 6. Financial instruments

a) Financial assets

b) Financial liabilities

Note 7. Non-current assets and disposal groups of assets held for sale and discontinued operations

Note 8. Equity

Share capital and share premium

Treasury shares

Earnings per share

Dividends

30 June 2017

30 June 2016

Adjustments for changes in value

Non-controlling interests

Note 9. Provisions

Note 10. Sales

Note 11. Procurements

Note 12. Personnel costs

Note 13. Other operating expenses

Note 14. Net financial income

Note 15. Tax situation

Note 16. Information on transactions with related parties

Note 17. Information on members of the Board of Directors and senior management personnel

Remuneration of the Board of Directors

Senior management remuneration

Transactions with members of the Board of Directors and senior management personnel

Note 18. Contingent liabilities

Note 19. Events after the reporting date

APPENDIX I: CHANGES IN CONSOLIDATION SCOPE

1. Company situation

2. Business evolution and results

2.1. Milestones in the six-month period ended 30 June 2017

2.2. Main aggregates

Financial main aggregates

Main financial ratios

Main stock market ratios and shareholder remuneration

Main physical aggregates

2.3. Analysis of consolidated results

Sales

EBITDA

Operating income

Net financial income

Profit/(loss) of entities recorded by equity method

Corporate income tax

Non-controlling interests