REN – Redes Energéticas Nacionais, SGPS, S.A.

Consolidated Financial Statements 30 September 2017

(Translation of consolidated financial statements originally issued in Portuguese – Note 31)

Consolidated financial statements

30 September 2017

REN - Redes Energéticas Nacionais, SGPS, S.A.

Index

	1. ECONOMIC AND FINANCIAL PERFORMANCE	5
	1.1 3RD QUARTER RESULTS	5
	1.2 AVERAGE RAB AND CAPEX	9
	1.3 QUARTERLY STATEMENTS OF PROFIT OR LOSS AND COMPREHENSIVE INCOME FOR THE PERIODS FROM 1 JULY TO 30 SEPTEMBER OF 2017 AND 2016	10
	2. CONSOLIDATED FINANCIAL STATEMENTS	13
	3. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTH PERIOD ENDED 30 SEPTEMBER 2017	18
1	GENERAL INFORMATION	18
2	BASIS OF PRESENTATION	23
3	MAIN ACCOUNTING POLICIES	24
4	SEGMENT REPORTING	27
5	INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT	30
6	INVESTMENTS IN ASSOCIATES AND JOINT VENTURES	33
7	INCOME TAX	36
8	FINANCIAL ASSETS AND LIABILITIES	40
9	ASSETS AVAILABLE FOR SALE	42
	10 TRADE AND OTHER RECEIVABLES	45
	11 DERIVATIVE FINANCIAL INSTRUMENTS	46
	12 CASH AND CASH EQUIVALENTS	51
	13 EQUITY INSTRUMENTS	51
	14 BORROWINGS	53
	15 POST-EMPLOYMENT BENEFITS AND OTHER BENEFITS	55
	16 PROVISIONS	57
	17 TRADE AND OTHER PAYABLES	58
	18 SALES AND SERVICES RENDERED	59
	19 REVENUE AND COSTS FROM CONSTRUCTION ACTIVITIES	59
	20 OTHER OPERATING INCOME	60

21 EXTERNAL SUPPLIES AND SERVICES	60
22 PERSONNEL COSTS	61
23 OTHER OPERATING COSTS	61
24 FINANCIAL COSTS AND INCOME	62
25 ENERGY SECTOR EXTRAORDINARY CONTRIBUTION	62
26 EARNINGS PER SHARE	63
27 DIVIDENDS PER SHARE	63
28 GUARANTEES GIVEN	64
29 RELATED PARTIES	64
30 SUBSEQUENT EVENTS	68
31 EXPLANATION ADDED FOR TRANSLATION	68

1. ECONOMIC AND FINANCIAL PERFORMANCE

1.1 3RD QUARTER RESULTS

In the first 9 months of 2017, REN's net income was 88.9 million euros, 18.4 million euros (+26.1%) higher than the same period of the prior year, reflecting the strong performance of financial results (+18.9 million euros, +29.8%) and also the positive evolution of EBITDA (+7.2 million euros, +2.0%).

Similarly to the previous years, the results for 2017 reflect the continuation of the Extraordinary Levy on the Energy Sector (25.8 million euros in 2017, and 25.9 million euros in 2016¹ ).

In the current year, REN acquired for 169 million euros a 42.5% stake in Electrogas, a company that offers natural gas transportation services in Chile, which represents already 4.6² million euros in EBITDA.

Investment was 80.3 million euros, a 9.4% y.o.y increase (+6.9 million euros), while transfers to RAB grew 14.9 million euros (+70.7%) over the same period of the previous year to 36.1 million euros. Average RAB dropped by 39.5 million euros (-1.1%) to 3,462.5 million euros, reflecting the decrease in the natural gas sector (-40.4 million euros).

Despite the 2.2% increase in net debt (+55.7 million euros), influenced by Electrogas stake acquisition, the Group's financial income improved significantly due to better financing conditions, with the average cost of debt decreasing from 3.4%, in September of 2016, to 2.6%.

MAIN INDICATORS (MILLIONS OF EUROS)	September 2017	September 2016	VAR.%
EBITDA	364.4	357.2	2.0%
Financial income3	-44.5	-63.4	29.8%
Net income1	88.9	70.5	26.1%
Recurrent net income	116.9	96.4	21.3%
Total Capex	80.3	73.4	9.4%
Transfers to RAB4 (at historic costs)	36.1	21.1	70.7%
Average RAB (at reference costs)	3,462.5	3,502.0	-1.1%
Net debt	2,540.6	2,484.9	2.2%
Average cost of debt	2.6%	3.4%	-0.9p.p.

1 The full amount of the levy was recognized in the 1st quarter of 2017 and 2016, according to the Portuguese securities market commission (CMVM) recommendations.

² Electrogas Net income proportion (5.8 million euros), net of transaction costs (1.2 million euros).

³ The cost of 0.5 million euros in 3Q16 and 0.3 million euros in 3Q17 from electricity interconnection capacity auctions between Spain and Portugal – referred to as FTR (Financial Transaction Rights), were reclassified from financial income to Revenue.

⁴ Includes direct acquisitions (RAB related).

OPERATIONAL RESULTS – EBITDA

EBITDA reached 364.4 million euros in the first 9 months of 2017, a 2.0% increase over the same period of the previous year (+7.2 million euros).

EBITDA (MILLIONS OF EUROS)	September 2017	September 2016	VAR.%
1) Revenues from assets	338.4	337.0	0.4%
RAB remuneration	156.9	161.1	-2.6%
Smoothing differences (gas)	0.6	-1.1	n.m.
Hydro land remuneration	0.2	0.2	-4.7%
Lease revenues from hydro protection zone	0.5	0.5	-1.2%
Remuneration of fully amortized assets	16.2	14.9	8.8%
Recovery of amortizations (net of investment subsidies)	150.5	147.8	1.8%
Amortization of investment subsidies	13.5	13.6	-0.6%
2) Revenues from OPEX	75.2	70.8	6.2%
3) Other revenues	18.3	11.9	54.2%
4) Own works (capitalised in investment)	12.4	11.4	8.3%
5) Earnings on Construction (excl. own works capitalised in investment) – Concession assets	67.8	61.9	9.5%
6) OPEX	79.6	73.7	8.0%
Personnel costs5	37.3	37.8	-1.2%
External costs	42.3	35.9	17.7%
7) Construction costs – Concession assets	67.8	61.9	9.5%
8) Provisions	-0.0	0.3	n.m.
9) Impairments	0.3	-0.1	n.m.
10) EBITDA (1+2+3+4+5-6-7-8-9)	364.4	357.2	2.0%

The growth in operational results was achieved through the following positive impacts:

Revenues with the 42.5% stake in Electrogas, acquired in the first quarter of 2017 (5.8 million euros; 4.6 million euros after transaction costs);
Higher revenues from opex (+4.4 million euros) reflecting the 2.9 million euros increase in pass-through costs (of which +1.6 million euros in cross border costs and +0.9 million euros in costs with consumer information campaign approved by Dispatch 5729/2013 of April 17th), and the increase in LNG Terminal activity which led to higher electricity costs;
Positive evolution of amortizations recovery (+2.7 million euros), in line with the increase in gross assets.

5 Includes costs for training and seminars and provisions for staff costs

These effects were partially offset by:

The decrease in RAB remuneration (-2.5 million euros) resulting from: (i) 6.6 milllion euros decrease in natural gas (including smoothing differences) affected by the decrease in the rate of return (from 6.9% to 6.3%) with the new regulatory period initiated in July 2016, partilally offset by (ii) the 4.1 million euros increase in electricity RAB remuneration due to an increase in the base rate of return (from 6.1% to 6.3%) following the positive evolution of 10Y Treasury bills;
The 5.9 million euros increase in the Group opex (+8.0%),which reflected the increase of (i) 2.9 million euros in non-core external costs (pass-through), and (ii) 3.4 million euros in core external costs, due to additionnal costs of 2.0 million euros incurred with Electrogas and EDPG acquisition, partially offset by a 0.5 million euros reduction in personnel costs (-1.2%).

NET INCOME

Overall, the Group's net income for the first 9 months of 2017 grew 18.4 million euros (+26.1%) y.o.y., reaching 88.9 million euros, reflecting:

The increase in EBITDA (+7.2 million euros), which was positively impacted by Electrogas stake results of 5.8 million euros (4.6 million euros, after transaction costs);
Better financial results (+18.9 million euros, +29.8%), driven by a lower cost of debt, which dropped to 2.6% (from 3.4% in September 2016), despite the increase in net debt of 2.2% (+55.7 million euros) to 2,540.6 million euros, reflecting the acquisition of Electrogas (169 million euros).

Excluding non-recurring items, Net Income grew 20.5 million euros (+21.3%). Non-recurring items considered in the first 9 months of 2017 and 2016 are as follows:

i) In 2017: i) Extraordinary Levy on the Energy Sector laid down in the State Budget for 2017 (25.8 million euros); ii) financial and operating one-off costs with Electrogas and EDP Gás acquisition (3.1 million euros, 2.2 million euros after taxes)
ii) In 2016: i) Extraordinary Levy on the Energy Sector laid down in the State Budget for 2016 (25.9 million euros)

NET INCOME (MILLION EUROS)	September 2017	September 2016	VAR.%
EBITDA	364.4	357.2	2.0%
Depreciations and amortizations	162.8	160.5	1.4%
Financial income	-44.5	-63.4	29.8%
Income tax expenses	42.4	36.9	15.0%
Extraordinary levy on the energy sector6	25.8	25.9	-0.5%
Net income	88.9	70.5	26.1%
Non-recurring items	28.0	25.9	8.0%
Recurrent net income	116.9	96.4	21.3%

⁶ The full amount of the levy was recognized in the 1st quarter of 2017 and 2016, according to the Portuguese securities market commission (CMVM) recommendations

1.2 AVERAGE RAB AND CAPEX

In the first 9 months of 2017, investment was 80.3 million, 9% (+6.9 million euros) higher than the same period of the prior year, while transfers to RAB reached 36.1 million euros, a 14.9 million euros increase over the first 9 months of 2016.

In electricity, investment grew 9.0% to 74.8 million euros, and transfers to RAB increased 14.2 million euros to 34.4 million euros. Main projects include: (i) reinforcement of the 400 kV axis Lavos-Rio Maior (11.0 million euros in 2017; project concluded with a total investment of 11.3 million euros), (ii) new injector 400/60 kV in Alcochete (5.9 million euros in 2017; project concluded with a total investment of 15.5 million euros), to feed the consumption in the regions of Montijo and Alcochete, (iii) refurbishment of control and protection systems at Riba d'Ave substation (4.2 millions euros) and (iv) power line Foz Tua – Armamar 400 kV (3.4 million euros), to connect Foz Tua hydroelectric power plant.

In natural gas, investment was 5.4 million euros, a 0.7 million euros (+14.1%) increase, and transfers to RAB were 1.7 million euros, a 0.7 million euros (72.4%) increase.

Average RAB was 3,462.5 million euros, a 39.5 million euros reduction (-1.1%) over September of 2016. In electricity, average RAB (excl. lands) was 2,129.4 million euros, of which 1,117.5 million euros in assets remunerated at a premium rate of return, while lands reached 257.2 million euros (-12.8 million euros, -4.7%). In natural gas, average RAB was 1,076.0 million euros (-40.4 million euros, -3.6%).

1.3 QUARTERLY STATEMENTS OF PROFIT OR LOSS AND COMPREHENSIVE INCOME FOR THE PERIODS FROM 1 JULY TO 30 SEPTEMBER OF 2017 AND 2016

Consolidated statements of profit or loss (unaudited information)

QUARTERLY STATEMENTS OF PROFIT OR LOSS AND COMPREHENSIVE INCOME FOR THE PERIODS FROM 1 JULY TO 30 SEPTEMBER OF 2017 AND
Consolidated statements of profit or loss (unaudited information)
(Amounts expressed in thousands of Euros – tEuros)
	01.07.2017 to 30.09.2017	01.07.2016 to 30.09.2016
Sales	8	47
Services rendered	135,081	133,226
Revenue from construction of concession assets	39,304	35,680
Gains from associates and joint ventures	1,716	257
Other operating income	6,010	5,057
Operating income	182,119	174,267
Cost of goods sold	(21)	(43)
Cost with construction of concession assets	(33,133)	(31,650)
External supplies and services	(12,001)	(10,236)
Employee compensation and benefit expense	(12,231)	(12,488)
Depreciation and amortizations	(54,174)	(53,492)
Impairments	(94)	-
Other expenses	(3,066)	(2,968)
Operating costs	(114,720)	(110,877)
Operating results	67,399	63,390
Financial costs	(17,638)	(23,238)
Financial income	677	1,542
Investment income - dividends	-	-
Financial results	(16,961)	(21,696)
Profit before income taxes	50,438	41,694
Income tax expense	(14,537)	(11,771)
Extraordinary contribution on energy sector	-	-
Net profit for the period	35,902	29,923

Attributable to:
Equity holders of the Company	35,902	29,923
Consolidated profit for the period	35,902	29,923
Earnings per share (expressed in euro per share)	0.07	0.06

(Amounts expressed in thousands of Euros – tEuros)

Consolidated statements of comprehensive income (unaudited information)

Consolidated statements of comprehensive income (unaudited information)
(Amounts expressed in thousands of Euros – tEuros)
	01.07.2017 to 30.09.2017	01.07.2016 to 30.09.2016
Net Profit for the year	35,902	29,923
Other income and cost recorded in equity:
Items that will not be reclassified subsequently to profit or loss: Actuarial gains / (losses) Tax effect on actuarial gains / (losses)	311 (90)	- -
Items that will be reclassified subsequently to profit or loss:
Currency exchange differences (Associates)	(4,995)	-
Increase/(decrease) in hedging reserves - cash flow derivatives Tax effect on hedging reserves	(15) 4	(1,749) 367
Gain/(loss) in fair value reserve - available-for-sale assets Tax effect on fair value reserves	(1,556) 278	(4,535) 952
Comprehensive income for the year	29,837	24,959
Attributable to:
Shareholders of the company	29,837	24,959
	29,837	24,959

CONSOLIDATED FINANCIAL STATEMENTS

30 September 2017

2. CONSOLIDATED FINANCIAL STATEMENTS

Consolidated statements of financial position as of 30 September 2017 and 31 December 2016

Consolidated statements of financial position		as of 30 September 2017 and
	31 December 2016
(Amounts expressed in thousands of Euros – tEuros)

ASSETS	Notes	Sep 2017	Dec 2016
Non-current assets
Property, plant and equipment	5	498	578
Goodwill Intangible assets	5	3,114 3,742,511	3,397 3,825,712
Investments in associates and joint ventures Available-for-sale financial assets	6 9	165,211 150,574	14,657 150,118
Derivative financial instruments	11	9,431	20,425
Other financial assets	8	24	14
Trade and other receivables Deferred tax assets	10 7	49,545 71,666	10,145 62,825
		4,192,573	4,087,871
Current assets
Inventories Trade and other receivables	10	1,204 354,648	1,028 448,826
Other financial assets	8	-	1,317
Cash and cash equivalents	12	6,372 362,225	10,783 461,954
Total assets	4	4,554,798	4,549,825

EQUITY Shareholders' equity
Share capital	13	534,000	534,000
Treasury shares Other reserves	13 13	(10,728) 307,317	(10,728) 319,204
Retained earnings		226,369	216,527
Other changes in equity Net profit for the period		30 88,867	30 100,183
Total equity		1,145,856	1,159,217
LIABILITIES
Non- current liabilities Borrowings	14	2,055,911	2,298,543
Liability for retirement benefits and others	15	121,653	125,673
Derivative financial instruments Provisions	11 16	7,615 6,347	12,212 6,154
Trade and other payables	17	352,484	318,126
Deferred tax liabilities	7	53,567 2,597,577	73,027 2,833,735
Current liabilities Borrowings	14	505,460	216,594
Provisions	16	-	801
Trade and other payables Income tax payable	17 7	270,517 35,388	311,539 26,875
Derivative financial instruments	11	- 811,364	1,063 556,873
Total liabilities	4	3,408,941	3,390,608
			4,549,825
Total equity and liabilities		4,554,798

The accompanying notes form an integral part of the consolidated statement of financial position as of 30 September 2017.

Consolidated statements of profit or loss for the nine month periods ended 30 September 2017 and 2016

Consolidated statements of profit or loss for the nine month periods ended 30 September 2017 and 2016
(Amounts expressed in thousands of Euros – tEuros)
	Notes	Sep 2017	Sep 2016 (a)

Sales	4 and 18	23	201
Services rendered	4 and 18	408,058	403,632
Revenue from construction of concession assets	4, 5 and 19	80,161	73,320
Gains / (losses) from associates and joint ventures	6	4,469	983
Other operating income	20	19,621	15,320
Operating income		512,332	493,455
Cost of goods sold		(146)	(250)
Cost with construction of concession assets	19	(67,800)	(61,910)
External supplies and services	21	(32,253)	(26,283)
Employee compensation and benefit expense	22	(37,031)	(37,563)
Depreciation and amortizations	5	(162,809)	(160,529)
Provisions	16	27	(322)
Impairments		(293)	120
Other expenses	23	(10,197)	(9,633)
Operating costs		(310,502)	(296,372)

Operating results		201,831	197,083
Financial costs	24	(54,353)	(74,001)
Financial income	24	4,566	5,911
Investment income - dividends	9	5,013	4,260
Financial results		(44,774)	(63,830)
Profit before income tax		157,057	133,253

Income tax expense	7	(42,392)	(36,862)
Energy sector extraordinary contribution	25	(25,798)	(25,938)
Net profit for the period		88,867	70,453
Attributable to:
Equity holders of the Company		88,867	70,453
Non-controlled interest		-	-
Consolidated profit for the period		88,867	70,453
Earnings per share (Basic and diluted)	26	0.17	0.13

(a) - Financial information that has not been subject to audit or limited review.

The accompanying notes form an integral part of the consolidated statement of profit or loss for the nine month period ended 30 September 2017.

Consolidated statements of comprehensive income for the nine month periods ended 30 September 2017 and 2016

Consolidated statements of comprehensive income for the nine month periods ended 30 September 2017 and 2016 (Amounts expressed in thousands of Euros – tEuros)

	Notes	30 September 2017	2016 (a)
Net Profit for the period		88,867	70,453
Other income and cost recorded in equity:
Items that will not be reclassified subsequently to profit or loss: Actuarial gains / (losses) Tax effect on actuarial gains / (losses)	7	436 (126)	(87) 25
Items that will be reclassified subsequently to profit or loss:
Currency exchange differences (Associates)	6	(15,855)	-
Increase/(decrease) in hedging reserves - cash flow derivatives Tax effect on hedging reserves	11 7 and 11	4,533 (432)	(15,724) 3,302
Gain/(loss) in fair value reserve - available-for-sale assets Tax effect on fair value reserves	9 7 and 9	456 (590)	289 (1,889)
		77,289	56,369
Comprehensive income for the period
Attributable to: Shareholders of the company Non-controlling interests		77,289 -	56,369 -

(a) - Financial information that has not been subject to audit or limited review.

The accompanying notes form an integral part of the consolidated statement of comprehensive income for the nine month period ended 30 September 2017.

Consolidated statements of changes in equity for the nine month periods ended 30 September 2017 and 2016

Consolidated statements of changes in equity for the nine month periods					ended 30 September 2017 and 2016 (Amounts expressed in thousands of Euros – tEuros)
						Attributable to shareholders
		Share capital	Own shares	Legal Reserve	Fair Value reserve	Hedging reserves	Other reserves	Other changes	Retained earnings	Profit for the
Changes in the period	Notes				(Note 9)	(Note 11)		in equity		period	Total
At 1 January 2016		534,000	(10,728)	102,608	54,489	(8,960)	177,482	30	196,253	116,115	1,161,289
Net profit of the period and other comprehensive income Distribution of dividends Transfer to other reserves At 30 September 2016 (a)	27	- - - 534,000	- - - (10,728)	- - 4,192 106,800	(1,599) - - 52,890	(12,422) - - (21,382)	- - - 177,482	- - - 30	(62) (90,650) 111,922 217,463	70,453 - (116,115) 70,453	56,369 (90,650) - 1,127,008
At 1 January 2017		534,000	(10,728)	106,800	48,781	(13,858)	177,482	30	216,527	100,183	1,159,217
Net profit of the period and other comprehensive income		-	-	-	(134)	4,101	(15,855)	-	310	88,867	77,289
Distribution of dividends Transfer to other reserves	27	- -	- -	- -	- -	- -	- -	- -	(90,650) 100,183	- (100,183)	(90,650) -
At 30 September 2017		534,000	(10,728)	106,800	48,647	(9,757)	161,627	30	226,369	88,867	1,145,856

(a) - Financial information that has not been subject to audit or limited review.

The accompanying notes form an integral part of the consolidated statement of changes in equity for the nine month period ended 30 September 2017.

Consolidated statements of cash flow for the nine month periods ended 30 September 2017 and 2016

	Consolidated statements of cash flow for the nine month periods ended
	30 September 2017 and 2016
	(Amounts expressed in thousands of Euros – tEuros)
		Notes	Sep 2017	Sep 2016 (b)
Cash flow from operating activities:
Cash receipts from customers			1,801,293 (a)	1,385,544 (a)
Cash paid to suppliers			(1,315,949) (a)	(1,036,350) (a)
Cash paid to employees Income tax received/(paid)			(50,171) (63,381)	(47,828) (21,858)
	Other receipts/(payments) relating to operating activities		(8,532)	(32,844)
Net cash flows from operating activities (1)			363,261	246,663
Cash flow from investing activities:
Receipts related to: Other financial assets			1,309	-
Grants related to assets			5,647	100
Interests and other similar income Dividends		6 and 9	12 9,250	5 5,466
Payments related to:
Investments in associates and joint ventures		6	(169,285)	-
Available-for-sale			-	(202)
Property, plant and equipment Intangible assets - Concession assets			(239) (130,460)	(19) (110,462)
Net cash flows used in investing activities (2)			(283,766)	(105,111)
Cash flow from financing activities:
Receipts related to:
Borrowings			3,618,800	4,313,500
Payments related to:
Borrowings Interests and other similar expense			(3,581,052) (46,293)	(4,267,284) (101,697)
Dividends		27	(90,650)	(90,650)
	Net cash flows from/(used in) financing activities (3)		(99,196)	(146,132)
Effect of exchange rates	Net (decrease)/increase in cash and cash equivalents (1)+(2)+(3)		(19,701) 1,582	(4,580) -
	Cash and cash equivalents at the beginning of the year	12	10,680	63,539
	Cash and cash equivalents at the end of the period	12	(7,440)	58,960
Detail of cash and cash equivalents Cash
		12 12	21 (13,812)	21 (12,764)
Bank overdrafts			6,351	71,703
Bank deposits		12	(7,440)	58,960

(a) These amounts include payments and receipts relating to activities in which the Group acts as agent, income and costs being reversed in the consolidated statement of profit and loss.

(b) Financial information that has not been subject to audit or limited review.

The accompanying notes form an integral part of the consolidated statement of cash flow for the nine month period ended 30 September 2017.

3. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTH PERIOD ENDED 30 SEPTEMBER 2017

(Translation of notes originally issued in Portuguese – Note 31)

1 GENERAL INFORMATION

REN – Redes Energéticas Nacionais, SGPS, S.A. (referred to in this document as "REN", "REN SGPS, S.A.", "REN SGPS" or "the Company" together with its subsidiaries, referred to as "the Group" or "the REN Group"), with head office in Avenida Estados Unidos da América, 55 – Lisbon, resulted from the spin-off of the EDP Group, in accordance with Decree-Laws 7/91 of 8 January and 131/94 of 19 May, approved by the Shareholders' General Meeting held on 18 August 1994, with the objective of ensuring the overall management of the Public Electric Supply System (PES).

Up to 26 September 2006 the REN Group's operations were concentrated on the electricity business through REN – Rede Eléctrica Nacional, S.A. On 26 September 2006, as a result of the unbundling transaction of the natural gas business, the Group went through a significant change with the purchase of assets and financial participations relating to the transport, storage and re-gasification of natural gas activities, comprising a new business.

In the beginning of 2007 the Company was transformed into a holding company and, after the transfer of the electricity business to a new company incorporated on 26 September 2006, renamed REN – Serviços de Rede, S.A., changed its name to REN – Rede Eléctrica Nacional, S.A..

The Group presently has two main business segments, Electricity and Gas, and a secondary business of Telecommunications.

The Electricity business includes the following companies:

a) REN – Rede Eléctrica Nacional, S.A., founded on 26 September 2006, the activities of which are carried out under a concession contract for a period of 50 years as from 2007 and establishes the global management of the Public Electricity Supply System (PES);

b) REN Trading, S.A., founded on 13 June 2007, the main function of which is the management of power purchase agreements ("PPA") from Turbogás, S.A. and Tejo Energia, S.A., which did not terminate on 30 June 2007, date of the entry into force of the new Maintenance of Contractual

Equilibrium Contracts (Contratos para a Manutenção do Equilíbrio Contratual – CMEC). The operations of this company include the trading of electricity produced and of the installed production capacity, with national and international distributors;

c) Enondas, Energia das Ondas, S.A. was founded on 14 October 2010, its capital being fully held by REN - Redes Energéticas Nacionais, SGPS, S.A., its main activity being management of the concession to operate a pilot area for the production of electricity from sea waves.

The Gas business includes the following companies:

a) REN Gás, S.A. was incorporated on 29 March 2011, with the corporate purpose of promoting, developing and carrying out projects and developments in the natural gas sector, as well as defining the overall strategy and coordination of the companies in which it has direct interests;

b) REN Gasodutos, S.A., was incorporated on 26 September 2006, the capital of which was paid up through carve-in of the gas transport infrastructures (network, connections and compression);

c) REN Armazenagem, S.A., was incorporated on 26 September 2006, the capital of which was paid up through integration into the company of the gas underground storage assets;

d) REN Atlântico, Terminal de GNL, S.A., acquired under the acquisition of the gas business, previously designated "SGNL – Sociedade Portuguesa de Gás Natural Liquefeito". The operations of this company comprise the supply, reception, storage and re-gasification of natural liquefied gas through the GNL marine terminal, being responsible for the construction, utilization and maintenance of the necessary infrastructures.

The operations of REN Gasodutos, S.A., REN Armazenagem S.A. and REN Atlântico S.A. are made in accordance with the three concession contracts separately granted for periods of 40 years starting 2006.

The telecommunications business is managed by RENTELECOM – Comunicações, S.A. whose activity is the establishment, management and operation of telecommunications infrastructures and systems, the rendering of telecommunications services and optimizing the optical fibre excess capacity of the installations owned by REN Group.

REN SGPS fully owns REN Serviços, S.A., a company whose purpose is the rendering of services in the energetic area and the general services of business development support to group companies and third parties, receiving a fee for the services rendered, as well as the management of financial participations in other companies.

On 10 May 2013 REN Finance, B.V., a company based in Netherlands and fully owned by REN SGPS, whose purpose is to participate, finance, collaborate and lead the management of group companies, was incorporated.

Additionally on 24 May 2013, together with China Electric Power Research Institute, a State Grid Group company, Centro de Investigação em Energia REN – State Grid, S.A. ("Centro de Investigação") was incorporated under a Joint Venture Agreement on which REN holds 1,500,000 shares representing 50 of the total share capital.

The purpose of this company is to implement a Research and Development centre in Portugal, dedicated to the research, development, innovation and demonstration in the areas of electricity transmission and systems management, the rendering of advisory services and education and training services as part of these activities, as well as performing all related activities and complementary services to its object.

On 14 December 2016, Aério Chile SPA was incorporated, a company fully owned by REN Serviços, S.A., headquartered in Santiago, Chile, whose purpose is to realize investments in assets, shares and rights of companies and associations.

As of 30 September 2017 REN has also:

a) 42.5% interest in the share capital of the Chilean company Electrogas, S.A., whose corporate purpose is to provide transportation services for natural gas and other fuels. This participation was acquired on February 7, 2017;
b) 40% interest in the share capital of OMIP Operador do Mercado Ibérico (Portugal), SGPS, S.A. ("OMIP SGPS"), being its purpose the management of participations in other companies as an indirect way of exercising economic activities.
c) 10% interest in the share capital of OMEL Operador do Mercado Ibérico de Energia, S.A., the Spanish pole of the Sole Operator;
d) 1% interest in the share capital of Red Eléctrica Corporación, S.A. ("REE"), entity in charge of the electricity network management in Spain;
e) 8.3% interest in the share capital of Coreso, S.A. ("Coreso"), entity that assists the European transmission system operators ("TSO"), in coordination and safety activities to ensure the reliability of Europe's electricity supply;
f) Participations in the share capital of: (i) Hidroeléctrica de Cahora Bassa, S.A. ("HCB") 7.5%; and (ii) MIBGÁS, S.A. - 6.67%.

1.1 Companies included in the consolidation

The following companies were included in the consolidation perimeter as of 30 September 2017 and 31 December 2016:

			Set 2017 % Owned		Dec 2016 % Owned
Designation / adress	Activity	Group	Individual	Group	Individual
Parent company:
REN - Redes Energéticas Nacionais, SGPS, S.A.	Holding company	-	-	-	-
Subsidiaries:
Electricity segment:
REN - Rede Eléctrica Nacional, S.A. Av. Estados Unidos da América, 55 - Lisboa	National electricity transmission network operator (high and very high tension)	100%	100%	100%	100%
REN Trading, S.A. Praça de Alvalade, nº 7 - 12º Dto, Lisboa	Purchase and sale, import and export of electricity and natural gas	100%	100%	100%	100%
Enondas - Energia das Ondas, S.A. Mata do Urso - Guarda Norte - Carriço - Pombal	Management of the concession to operate a pilot area for the production of electric energy from ocean waves	100%	100%	100%	100%
Telecommunications segment: RENTELECOM - Comunicações S.A.	Telecommunications network
Av. Estados Unidos da América, 55 - Lisboa	operation	100%	100%	100%	100%
Other segments: REN - Serviços, S.A.	Back office and management of
Av. Estados Unidos da América, 55 - Lisboa	participations	100%	100%	100%	100%
REN Finance, B.V. De Cuserstraat, 93, 1081 CN Amsterdam, The Netherlands	Participate, finance, collaborate, conduct management of companies related to REN Group.	100%	100%	100%	100%
Natural Gas segment:
REN Atlântico, Terminal de GNL, S.A. Terminal de GNL - Sines	Liquified Natural Gas Terminal maintenance and regasification operation	100%	100%	100%	100%
Owned by REN Serviços, S.A.:
REN Gás, S.A. Av. Estados Unidos da América, 55, 12º - Lisboa	Management of projects and ventures in the natural gas sector	100%	-	100%	-
Aério Chile SPA	Investments in assets, shares,	100%	-	100%	-
Santiago do Chile Owned by REN Gas, S.A.:	companies and associations
REN - Armazenagem, S.A. Mata do Urso - Guarda Norte - Carriço- Pombal	Underground storage developement, maintenance and operation	100%	-	100%	-
REN - Gasodutos, S.A.	National Natural Gas Transport
	operator and natural gas overall manager	100%	-	100%	-

There were no changes in the consolidation perimeter in 2017 with respect to what was reported on 31 December 2016.

1.2. Approval of the consolidated financial statements

These consolidated financial statements were approved by the Board of Directors at a meeting held on 3 November 2017. The Board of Directors believes that the consolidated financial statements fairly present the financial position of the companies included in the consolidation, the consolidated results of their operations, their consolidated comprehensive income, the consolidated changes in their equity and their consolidated cash flows in accordance with the International Financial Reporting Standards for interim financial statements as endorsed by the European Union (IAS 34).

2 BASIS OF PRESENTATION

The consolidated financial statements for the nine month period ended 30 September 2017 were prepared in accordance with International Financial Reporting Standards (IFRS) for interim financial reporting as endorsed by the European Union (IAS 34), therefore do not include all information required for annual financial statements so should be read in conjunction with the annual financial statements issued for the year ended 31 December 2016.

The Board of Directors evaluated the Group's going concern capability, based on all the relevant information, facts and circumstances, of financial, commercial and other natures, including subsequent events occurred after the financial statement report date. Particularly, as of 30 September 2017, current liabilities in the amount of 811,364 thousand Euros are higher than current assets, which total 362,225 thousands Euros.

However, in addition to the consolidated results and cash flows estimated for 2017, the Group has, as of 30 September 2017, credit lines in the form of commercial paper available for use in the amount of 699,850 thousands Euros, with a substantial part with guaranteed placement (Note 14).

In result of this assessment, the Board concludes that the Group has the adequate resources to proceed its activity, not intending to cease its operations in short term, and therefore considers adequate the use of a going concern basis in the preparation of the Company's financial statements.

The consolidated financial statements are presented in thousands of Euros – tEuros, rounded to the nearest thousand.

3 MAIN ACCOUNTING POLICIES

The consolidated financial statements were prepared for interim financial reporting purposes (IAS 34), on a going concern basis from the books and accounting records of the companies included in the consolidation, maintained in accordance with the accounting standards in force in the respective countries, adjusted in the consolidation process so that the financial statements are presented in accordance with International Financial Reporting Standards as endorsed by the European Union in force for the years beginning as from 1 January 2017.

Such standards include International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board ("IASB"), International Accounting Standards (IAS), issued by the International Accounting Standards Committee ("IASC") and respective SIC and IFRIC interpretations, issued by the International Financial Reporting Interpretation Committee ("IFRIC") and Standard Interpretation Committee ("SIC"), that have been endorsed by the European Union. The standards and interpretations are hereinafter referred generically to as IFRS.

The accounting policies used to prepare these consolidated financial statements are consistent in all material respects, with the policies used to prepare the consolidated financial statements for the year ended 31 December 2016, as explained in the notes to the consolidated financial statements for 2016. These policies were applied consistently in the presented periods.

Adoption of new standards, interpretations, amendments and revisions

The following standards, interpretations, amendments and revisions have been endorsed by the European Union with mandatory application in future economic exercises:

IFRS 9 Financial Instruments (replacement of IAS 39) (to be applied for periods beginning on or after 1 January 2018) - This standard establishes the requirements for the classification and measurement of financial instruments and for the application of hedge accounting rules. The Company is analyzing and estimating the impacts on REN's consolidated financial statements associated with the adoption of this standard.

IFRS 15 Revenue from Contracts with Customers (amendment to be applied for periods beginning on or after 1 January 2018) - These amendments clarify how the principles set out in the standard should be applied. The future adoption of this standard is not expected to have significant impacts on REN's consolidated financial statements.

The Company did not apply any of these standards in advance in the financial statements for the nine-month period ended September 30, 2017.

Standards and interpretations, amended or revised not endorsed by the European Union

Standards and interpretations, amended or revised not endorsed by the European Union
		The following standards, interpretations, amendments and revisions, with mandatory application in future years, were not, until the date of preparation of these consolidated financial statements,
been endorsed by the European Union:
Standard	Applicable for financial years beginning on or after	Resume
IFRS 16 - Leases	01-jan-19	This standard is intended to replace the actual standards of leases (IAS 17, IFRIC 4, SIC-15 and SIC-27) and clarifies the recognition, measurement, presentation and disclosure principles of leases.
IFRS 17 - Insurance contracts	01-jan-21	This standard is intended to replace IFRS 4 and requires all insurance contracts to be accounting for consistently.
IFRIC 23 Uncertainty over Income Tax Treatments	01-jan-19	Clarifies how the recognition and measurement requirements of IAS 12 - Income taxes are applied where there is uncertainty over income tax treatments.
Amendments to IAS 12 - Recognition of Deferred Tax Assets for Unrealised Losses	01-jan-17	The purpose of this amendment is to clarify the accounting of a deferred tax asset on an unrealized loss, in a debt instrument measured at fair value.
Amendments to IAS 7 - Statement of Cash Flows	01-jan-17	The purpose of this amendment, which is part of an ample reform project of the principles and requirements of presentation and disclosure of financial reporting (disclosure initiative) is to enable users of financial statements to evaluate changes resulting from financing activities. To this purpose, this amendment establishes additional disclosure requirements regarding financing activities.
IFRS 15 - Revenue from Contracts with Customers	01-jan-18	These amendments clarify how the principles set out in IFRS 15 should be applied.
Amendments to IFRS 2 - Share-based payment	01-jan-18	This amendment clarifies certain definitions, namely the definition of acquisition conditions and market conditions, in order to ensure consistency in the classification of share-based payments.
Amendments to IFRS 4 - Insurance contracts: Application of IFRS 9 with IFRS 4	01-jan-18	This amendment clarifies the accounting impacts of the different effective dates of application of IFRS 4 and IFRS 9.
Annual improvements to IFRS (2014-2016 cycle)	01-jan-17 and 01-jan-18	Cyclical improvements are introduced to clarify and simplify the application of international normative. The changes introduced in the 2014-2016 cycle focused on the revision of: (i) IFRS 1 (elimination of short-term exemptions that are no longer applicable); (ii) IFRS 12 (clarifies that disclosure requirements of IFRS 12 apply to all investments - referred to in paragraph 5 - even if classified as held for sale, for distribution to owners or discontinued operations in accordance with IFRS 5); and (iii) IAS 28 (clarifies that the option to measure an investment in an associate or joint venture held by an entity that is a venture capital organization or other qualified entity is available on an individual basis).
Amendments to IFRIC 22 - Foreign Currency Transactions and Advance Consideration	01-jan-18	This interpretation clarifies that relevant date for the recognition of an asset, expense or income relating to a foreign currency transaction for which an entity receives or pays in advance an amount in a foreign currency, is the date of the transaction.
Amendments to IAS 40 - Investment Property	01-jan-18	This amendment clarifies that a transfer of assets from or to the investment property caption should only be carried out when there is evidence of a change of use. Additionally, it is clarified that the change of intention to use is not evidence of a change of use.

4 SEGMENT REPORTING

The REN Group is organised in two main business segments, Electricity and Gas, and one secondary segment. The electricity segment includes the transmission of electricity in very high voltage, overall management of the public electricity system and management of the power purchase agreements (PPA) not terminated at 30 June 2007 and the pilot zone for electricity production from sea waves. The Gas segment includes high pressure gas transmission and overall management of the national natural gas supply system, as well as the operation of regasification at the LNG Terminal and the underground storage of natural gas.

Although the activities of the LNG Terminal and underground storage can be seen as separate from the transport of gas and overall management of the national natural gas supply system, since these operations provide complementary services to same users, it was considered that it is subject to the same risks and benefits.

The telecommunications segment is presented separately although it does not qualify for disclosure.

Management of external loans are centrally managed by REN SGPS, S.A. for which the Company choose to present the assets and liabilities separate from its eliminations that are undertaken in the consolidation process, as used by the main responsible operating decision maker.

The results by segment for the nine month period ended 30 September 2017 were as follows:

The results by segment for the nine month period ended 30 September 2017 were as follows:







Electricity Gas Telecommunications Others Eliminations Consolidated
Sales and services provided 282,954 121,163 3,797 25,052 (24,886) 408,081
Inter-segments 439 290 46 24,111 (24,886) - Revenues from exernal customers 282,515 120,873 3,751 941 - 408,081
Revenue from construction of concession assets 74,753 5,409 - - - 80,161
Cost with construction of concession assets (64,041) (3,759) - - - (67,800) Gains from associates and joint ventures - - - 4,469 - 4,469
External supplies and services (31,485) (17,651) (1,190) (11,051) 29,124 (32,253)
Employee compensation and benefit expense (15,202) (5,409) (194) (16,225) - (37,031) Other expenses and operating income 12,004 1,526 (22) 9 (4,238) 9,279
258,982 101,278 2,392 2,254 - 364,906
Investment income - dividends - - - 5,013 - 5,013
Non reimbursursable expenses
Depreciation and amortizations (117,531) (45,115) (15) (149) - (162,809) Provisions (76) 36 - 67 - 27
Impairments - (10) - (283) - (293)
Financial results -
Financial income 569 6,404 21 112,918 (115,346) 4,566 Financial costs (44,856) (15,811) - (109,032) 115,346 (54,353)
Profit before income tax 97,089 46,782 2,397 10,788 - 157,057
Income tax expense (26,600) (12,681) (566) (2,545) - (42,392)

Energy sector extraordinary contribution (18,362) (7,435) - - - (25,798)

Results by segment for the nine month period ended 30 September 2016 were as follows:

Results by segment for the nine month period ended 30 September 2016 were as follows:




Revenue from construction of concession assets	68,580	4,740	-	-	-	73,320
Cost with construction of concession assets	(58,731)	(3,180)	-	-	-	(61,910)
Gains from associates and joint ventures	-	-	-	983	-	983
External supplies and services	(29,432)	(15,486)	(1,197)	(10,950)	30,782	(26,283)
Employee compensation and benefit expense	(15,787)	(5,982)	(185)	(15,610)	-	(37,563)
Other expenses and operating income	8,389	1,603	(9)	1,417	(5,964)	5,436
	246,932	107,425	2,659	1,204	(404)	357,816
Investment income - dividends	-	-	-	4,260	-	4,260
Non reimbursursable expenses
Depreciation and amortizations	(115,626)	(44,733)	-	(171)	-	(160,529)
Provisions	(319)	(3)	-	-	-	(322)
Impairment of trade receivables	28	-	-	92	-	120
Financial results
Financial income	6	10,896	24	122,520	(127,536)	5,911
Financial costs	(54,327)	(25,710)	(1)	(121,903)	127,940	(74,001)
Profit before income tax	76,694	47,875	2,683	6,002	-	133,253
Income tax expense	(22,342)	(12,578)	(572)	(1,370)	-	(36,862)
Energy sector extraordinary contribution	(18,302)	(7,635)	-	-	-	(25,938)
	36,050	27,661	2,110	4,632	-	70,453

Revenue included in the segment "Others" is essentially related to the services provided by the
management and back office to Group entities as well as third parties.

Assets and liabilities by segment as well as capital expenditures for the nine month period ended 30
September 2017 were as follows:
	Electricity	Gas	Telecommunications	Others	Eliminations	Consolidated
Segment assets Group investments held	-	527,175	-	1,651,672	(2,178,847)	-
Property, plant and equipment and intangible assets Other assets	2,607,050 524,684	1,135,493 393,226	63 5,739	402 5,014,098	- (5,125,957)	3,743,008 811,789
Total assets	3,131,734	2,055,894	5,802	6,666,171	(7,304,804)	4,554,798
Total liabilities	2,488,432	879,232	2,361	5,170,979	(5,132,062)	3,408,941
Capital expenditure - total	74,753	5,408	-	125	-	80,286
Capital expenditure - property, plant and equipment (Note 5) Capital expenditure - intangible assets (Note 5)	- 74,753	- 5,408	-	125 -	- -	125 80,161
Investments in associates (Note 6) Investments in joint ventures (Note 6)	- -	- -	- -	162,339 2,872	- -	162,339 2,872
Assets and liabilities by segment as well as capital expenditures for the year ended 31 December
2016 were as follows:
	Electricity	Gas	Telecommunications	Others	Eliminations	Consolidated
Segment assets

Segment assets













Segment assets Group investments held	-	533,685	-	1,453,960	(1,987,645)	-
Property, plant and equipment and intangible assets	2,650,536	1,175,219	-	535	-	3,826,290
Other assets	575,485	441,059	6,998	4,891,800	(5,191,807)
Total assets	3,226,022	2,149,964	6,998	6,346,295	(7,179,452)	723,535 4,549,825
Assets and liabilities by segment as well as capital expenditures for the year ended 31 December 2016 were as follows: Total liabilities	2,635,831	933,642	2,973	5,009,973	(5,191,808)	3,390,608
Capital expenditure - total	157,494	13,753	-	214	-	171,461
Capital expenditure - property, plant and equipment (Note 5)	-	-	-	214	-
Capital expenditure - intangible assets (Note 5)	157,494	13,753	-	-	-	214 171,247
Investments in associates (Note 6)	-	-	-	11,666	-	11,666

The liabilities included in the segment "Others" are essentially related to external borrowings obtained directly by REN SGPS, S.A. and REN FINANCE, B.V. for financing the several activities of the Group.

The captions of the statement of financial position and profit and loss for each segment result of the amounts considered directly in the individual financial statements of each company that belongs to the Group included in the perimeter of each segment, corrected with the reversal of the intrasegment transactions.

5 INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT

5
INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT


During the nine month period ended 30 September 2017, the changes in intangible assets and property, plant and equipment in the

period were as follows:
		1 January 2017				Changes				30 September 2017
								Depreciation -
								disposals, write-
	Cost	Accumulated	Net book	Additions	Disposals and	Transfers	Depreciation	offs and other	Cost	Accumulated	Net book
		depreciation	value		write-offs		charge	reclassifications		depreciation	value
					-	-	-	-
Property, plant and equipment
Transmission and electronic equipment	103	(103)	-	-					103	(103)	-
Transport equipment	931	(453)	479	45	(259)	-	(140)	227	717	(366)	352
Office equipment	299	(217)	81	80	(5)	-	(29)	5	374	(241)	132
Buildings, halls and construction	27	(9)	18	-	-	-	(5)	-	27	(14)	13
	1,360	(782)	578	125	(264)	-	(174)	232	1,221	(724)	498
		1 January 2017				Changes				30 September 2017
								Amortization -
		Accumulated	Net book		Disposals and		Amortization	disposals, write- offs and other		Accumulated	Net book
	Cost	amortization	value	Additions	write-offs	Transfers	charge	reclassifications	Cost	amortization	value
Intangible assets:
Concession assets	7,365,215	(3,618,333)	3,746,882	775	(2,073)	35,294	(162,635)	1,343	7,399,211	(3,779,624)	3,619,586
Concession assets in progress	78,831	-	78,831	79,386	-	(35,294)	-	-	122,924	-	122,924
	7,444,045	(3,618,333)	3,825,712	80,161	(2,073)	-	(162,635)	1,343	7,522,135	(3,779,624)	3,742,511
Total of property, plant and equipment and	7,445,405	(3,619,115)	3,826,290	80,286	(2,337)	-	(162,809)	1,575	7,523,356	(3,780,348)	3,743,009

follows:

During the year ended 31 December 2016, the changes in in intangible assets and property, plant and equipment in the year were as










follows:


		1 January 2016				Changes				31 December 2016

								Depreciation -
								disposals, write-
		Accumulated			Disposals and		Depreciation	offs and other		Accumulated	Net book
	Cost	depreciation	Net book value	Additions	write-offs	Transfers	charge	reclassifications	Cost	depreciation	value
Property, plant and equipment

Transmission and electronic equipment	103	(103)	-	-	-	-	-	-	103	(103)	-

		(469)	569	206	(313)	-	(205)	221	931	(453)	479
Transport equipment	1,038			8	(12)	-	(29)	12	299	(217)	81
Office equipment	302	(201)	102

Buildings and other construction	27	(4)	23	-	-	-	(5)	-	27	(9)	18
	1,470	(776)	695	214	(325)	-	(239)	233	1,360	(782)	578

		1 January 2016				Changes				31 December 2016
								Amortization -
								disposals, write-
		Accumulated	Net book		Disposals and		Amortization			Accumulated	Net book
								offs and other
	Cost	amortization	value	Additions	write-offs	Transfers	charge	reclassifications	Cost	amortization	value
Intangible assets

Concession assets	7,212,146	(3,404,818)	3,807,329	2,524	(1,104)	151,648	(214,524)	1,009	7,365,215	(3,618,333)	3,746,882
Concession assets in progress	61,756	-	61,756	168,723	-	(151,648)	-	-	78,831	-	78,831
	7,273,902	(3,404,818)	3,869,085	171,247	(1,104)	-	(214,524)	1,009	7,444,045	(3,618,333)	3,825,712
Total of property, plant and equipment and intangible assets	7,275,373	(3,405,593)	3,869,779	171,461	(1,429)	-	(214,761)	1,241	7,445,405	(3,619,115)	3,826,290

During the nine month period ended 30 September 2017, the additions recorded are related
essentially to the investments on construction/renovation and expansion of electrical grid.
The main additions verified in the periods ended 30 September 2017 and 31 December 2016 are
made up as follows:
	Sep 2017	Dec 2016
Electricity segment
Power line construction (150 KV, 220 KV and others)	8,955	9,674
Power line construction (400 KV)	23,152	39,982
Construction of new substations	7,111	10,313
Substation Expansion	21,810	78,351
Other renovations in substations	2,098	5,094
Improvements to telecommunications and information system	3,473	8,607
Pilot zone construction - wave energy	150	210
Improvements in buildings related to concession	7,071	3,530
Other assets	932	1,735
Gas segment
Expansion and improvements to gas transmission network	2,516	10,281
Construction project of cavity underground storage of natural gas in Pombal	671	1,629
Construction project and operating upgrade - LNG facilities	2,222	1,842
Others segment
Other assets	125	214
Total of additions

Gas segment



Others segment


The main transfers that were concluded and began activity during the periods ended 30


Electricity segment
Power line construction (150 KV, 220 KV and others)	60	11,505
Power line construction (400 KV)	14,792	39,829
Substation Expansion	18,353	68,929
Other renovations in substations	-	4,744
Telecommunications and information system	26	8,992
Buildings related to concession	-	4,402
September 2017 and 31 December 2016 are made up as follows: Other assets under concession	571 -	34 -
Gas segment
Expansion and improvements to natural gas transmission network	1,163	9,640
Construction project of cavity underground storage of natural gas in Pombal	76	2,275
Construction project and operating upgrade - LNG facilities	253	1,298

Dec 2016

29,142
23,502
14,854
1,127
1,086

6,459
2,220
441
78,831
Financial costs capitalized in intangible assets in progress in the period ended 30 September
2017 amounted to 1,913 thousand Euros (2,088 thousand Euros as of 30 September 2016), while
overhead and management costs capitalized amounted to 10,448 thousand Euros (9,321

Financial costs capitalized in intangible assets in progress in the period ended 30 September 2017 amounted to 1,913 thousand Euros (2,088 thousand Euros as of 30 September 2016), while overhead and management costs capitalized amounted to 10,448 thousand Euros (9,321 thousand Euros as of 30 September 2016) (Note 19). Cost 5,714 6,153 Accumulated depreciation and amortization (2,798) (2,506)

Net book value	2,916	3,647

6 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES

	Net book value							2,916			3,647
At 30 September 2017 and 31 December 2016, the financial information regarding the financial
investments in associates and joint ventures held is as follows:
							Financial information						Capital owned
Company	Activity	Head office	Current assets	Current assets	Non- current assets	Current liabilities	Non- current liabilities	30 September 2017 Revenues	Net profit/(loss)	Share capital	Total comprehe nsive		Carrying amount %	Group share of profit / (loss)
Equity method:
Associate:
OMIP - Operador do Mercado Ibérico (Portugal), SGPS, S.A.	Holding company	Lisbon	2,610	697	26,502	438	208	1,013	(937)	26,553	(937)	40	10,414	(1,252)
Electrogas, S.A.	Transport Gas	Chile	18,013	9,799	48,247	6,248	15,837	24,461	12,967	35,961	13,054	42.5	151,925 162,339	5,840 4,589
Joint venture
Centro de Investigação em Energia REN - STATE GRID, S.A.	Research & Development	Lisbon	3,000	5,424	684	359	-	1,085	(240)	5,749	(240)	50	2,872	(120)
													165,211	4,469

							Financial information						Capital owned
Company	Activity	Head office	Share capital	Current assets	Non- current assets	Current	Non- current	31 December 2016 Revenues	Net profit/(loss)	Share capital	Total comprehe		Carrying %	Group share of profit /
Equity method:						liabilities	liabilities				nsive		amount	(loss)
Associate: OMIP - Operador do Mercado Ibérico (Portugal), SGPS, S.A. Joint venture	Holding company	Lisbon	2,610	680	30,302	1,092	208	1,638	1,070	29,681	30,752	40	11,666	515
Centro de Investigação em Energia REN - STATE GRID, S.A.	Research & Development	Lisbon	3,000	6,409	1,109	1,527	1	3,902	1,603	5,989	7,592	50	2,991 14,657	798 1,314
Associates
2017 were as follows:	The changes in the caption "Investments in associates" during the period ended 30 September
	Investments in associates
	At 1 January 2016									12,395
	Effect of aplying the equity method Others									(1,244)	515
	At 31 December 2016									11,666
	Effect of aplying the equity method										4,589

Associates

					Non-	Current	Non- current	31 December 2016			Total comprehe	Carrying	Group share of profit /
	Activity	Head office	Share capital	Current assets	current assets	liabilities	liabilities	Revenues	Net profit/(loss)	Share capital	nsive	% amount	(loss)



	Investments in associates
	At 1 January 2016									12,395
Others	Effect of aplying the equity method									(1,244)	515
	At 31 December 2016									11,666
	Effect of aplying the equity method Dividends allocation									4,589 (7,345)
	Acquisition of interest of Electrogas Conversion of financial statements into foreign currency									169,285 (15,855)

During the nine-month period ended September 30, 2017, the Group acquired a 42.5% interest in the share capital of the Chilean company - Electrogas S.A., for the amount of 169,285 thousand Euros. This company owns a gas pipeline in the central zone of Chile and its social object is the provision of natural gas transportation services and other fuels.

At the General Shareholders Meeting of Electrogas, on March 31, 2017, was approved the allocation of 7,345 thousand Euros related to dividends to the REN Group, of which 4,545 thousand Euros have already been paid.

The proportional value of the result in OMIP, SGPS includes the effect of the adjustment arising from changes to the financial statements of the previous year, after the application of the equity method.

Joint ventures

The movement in the caption "Investments in joint ventures" during the period ended 30 September 2017 was as follows:

The movement in the caption "Investments in joint ventures" during the period ended 30
Joint ventures
At 1 January 2016	2,193
Effect of aplying the equity method	798
At 31 December 2016	2,991
Effect of aplying the equity method	(120)

Following a joint agreement for a technology partnership between REN – Redes Energéticas Nacionais and the State Grid International Development (SGID), it was incorporated in May 2013 a R&D center in Portugal, dedicated to power systems designated – Centro de Investigação em Energia REN – STATE GRID, S.A. ("Centro de Investigação") jointly controlled by the two entities.

Nacionais and the State Grid International Development (SGID), it was incorporated in May 2013
a R&D center in Portugal, dedicated to power systems designated – Centro de Investigação em
Energia REN – STATE GRID, S.A. ("Centro de Investigação") jointly controlled by the two entities.
This Entity aims to become a platform for international knowledge, a catalyst for innovative
solutions and tools, applied to the planning and operation of transmission power.
As of 30 September 2017 and 31 December 2016, the financial information regarding the joint venture held is as follows:
				Other financial information
				30 September 2017
	Cash and cash equivalents	Current financial liabilities	Non current financial liabilities	Depreciations and amortizations	Financial income	Financial costs	Income tax- (cost)/income
Joint venture Centro de Investigação em Energia REN - STATE GRID, S.A.	5,054	3	-	(426)	-	(1)	4
				Other financial information 31 December 2016
	Cash and cash	Current financial	Non current financial	Depreciations and	Financial	Financial	Income tax-
	equivalents	liabilities	liabilities	amortizations	income	costs	(cost)/income
Joint venture Centro de Investigação em Energia REN - STATE GRID, S.A.	5,166	6	1	(522)	-	(1)	209

7 INCOME TAX

REN is taxed based on the special regime for the taxation of group of companies ("RETGS"), which includes all companies located in Portugal that REN detains directly or indirectly at least 75% of the share capital, which should give more than 50% of voting rights, and comply with the conditions of the article 69º of the Corporate Income Tax law.

In accordance with current legislation, tax returns are subject to review and correction by the tax authorities for a period of four years (five years for social security), except when there are tax losses, tax benefits granted or tax inspections, claims or appeals in progress, in which case the period can be extended or suspended, depending on the circumstances.

The Company's Board of Directors understands that possible corrections to the tax returns resulting from tax reviews /inspections carried out by the tax authorities will not have a significant effect on the financial statements as of 30 September 2017.

In 2017, in accordance with Law n. 7-A/2016, December 30, the Group is taxed at a Corporate Income Tax rate of 21%, increased by a municipal surcharge up the maximum of 1.5% over the taxable profit and (i) a state surcharge of an additional 3.0% of taxable profit between 1,500 thousand Euros and 7,500 thousand Euros,(ii) an additional 5.0% of taxable profit between 7,500 thousand Euros and 35,000 thousand Euros and (iii) 7.0% over the taxable profit in excess of 35,000 thousand Euros, which results in a maximum aggregate tax rate of 29.5%. Sep 2017 Sep 2016

The tax rate used in the valuation of temporary taxable and deductible differences as of 30 September 2017, were calculated using the average tax rate expected in accordance with future perspective of taxable profits of the Company recoverable in the next periods.

Income tax registered in the nine months period ended 30 September 2017 and 2016 is detailed as follows:

thousand Euros and 7,500 thousand Euros,(ii) an additional 5.0% of taxable profit between 7,500 thousand Euros and 35,000 thousand Euros and (iii) 7.0% over the taxable profit in excess of 35,000 thousand Euros, which results in a maximum aggregate tax rate of 29.5%. The tax rate used in the valuation of temporary taxable and deductible differences as of 30 September 2017, were calculated using the average tax rate expected in accordance with future perspective of taxable profits of the Company recoverable in the next periods. Income tax registered in the nine months period ended 30 September 2017 and 2016 is detailed Sep 2017 Sep 2016 Current income tax 74,746 43,882 Adjustaments of income tax from previous year (2,904) (270) Deferred income tax (29,449) (6,749)	Income tax 42,392 36,862	taxable profit and (i) a state surcharge of an additional 3.0% of taxable profit between 1,500

Reconciliation between tax calculated at the nominal tax rate and tax recorded in the consolidated statement of profit and loss is as follows: Sep 2017 Sep 2016 Consolidated profit before income tax 157,057 133,253 Permanent differences Non deductible costs 515 369 Non taxable income 1,027 (11,722) Timing differences Tariff deviations 109,314 28,859 Provisions and impairments (608) (57) Revaluations 3,474 3,801 Pension, helthcare assistence and life insurance plans (3,582) (3,538) Derivative financial instruments (9) 9,754 Others (40) (43) Taxable income 267,147 160,677 Tax rate 55,641 33,683 State surcharge tax 14,682 7,275 Municipal surcharge 3,952 2,325 Autonomous taxation 471 600 74,746 43,882 Current income tax Deferred income tax (29,449) (6,749) (29,449) (6,749) Deferred income tax Adjustments of estimated tax in previous years (2,904) (270) Income tax 42,392 36,862 Effective tax rate 27.0% Sep 2017 Dec 2016 Corporate income tax - estimated tax 74,746 67,566
27.7% Income tax The caption "Income tax" payable and receivable as of 30 September 2017 and 31 December 2016 is detailed as follows:































	Corporate income tax - payments on account	(38,565)	(40,648)
Income withholding tax by third parties (794) (43) Income tax payable 35,388 26,875

Income tax

	Sep 2017	Dec 2016

Corporate income tax - estimated tax	74.746	67,566
Corporate income tax - payments on account	(38, 565)	(40, 648)
Income withholding tax by third parties	(794)	(43)
Income tax payable	35,388	26,875

Deferred taxes

Deferred taxes
The effect of deferred taxes recorded in the consolidated financial statements is as follows:
				Sep 2017		Sep 2016
	Impact on the statement of profit and loss
Deferred tax assets Deferred tax liabilities				20,051	9,399	(2,986) 9,735
				29,449		6,749
Impact on equity
Deferred tax assets					(558)	3,327
Deferred tax liabilities					(590) (1,148)	(1,889) 1,439
	Net impact of deferred taxes			28,301		8,188
The changes in deferred tax by nature is as follows:
Change in deferred tax assets – September 2017
	Provisions /Impairments	Retirement benefits	Tariff deviations	Derivative financial instruments	Impairment of revalued assets	Others	Total
At 1 January 2017	1,901	36,433	11,679	3,687	8,962	162	62,825
Increase/decrease through reserves Reversal through profit and loss	- (127)	(126) (1,037)	- -	(432) (2,087)	- (444)	- (12)	(558) (3,706)
Increase through profit and loss Change in the period	- (127)	- (1,163)	13,105 13,105	- (2,518)	- (444)	- (12)	13,105 8,841

Change in deferred tax assets – September 2017

				29,449		6,749

Impact on equity




The changes in deferred tax by nature is as follows:
Change in deferred tax assets – September 2017
	Provisions /Impairments	Retirement benefits	Tariff deviations	Derivative financial instruments	Impairment of revalued assets	Others	Total
At 1 January 2017	1,901	36,433	11,679	3,687	8,962	162	62,825
Increase/decrease through reserves	-	(126)	-	(432)	-	-	(558)
Increase through profit and loss	-	-	13,105	-	-	-	(3,706) 13,105
Change in the period	(127)	(1,163)	13,105	(2,518)	(444)	(12)	8,841
At 30 September 2017	1,774	35,270	24,784	1,169	8,519	150	71,666
Reversal through profit and loss	(127)	(1,037)	-	(2,087)	(444)	(12)
Change in deferred tax assets – December 2016
	Provisions	Retirement	Tariff	Derivative financial	Impairment of revalued
	/Impairments	benefits	deviations	instruments	assets	Others	Total
At 1 January 2016	1,873	37,462	13,761	2,382	10,182	178	65,838
Increase/decrease through reserves Reversal through profit and loss	- -	407 (1,436)	- (2,082)	1,302 -	- (1,219)	- (16)	1,709 (4,754)
Increase through profit and loss	28	-	-	3	-	-	31
Change in the period	28	(1,028)	(2,082)	1,306	(1,219)	(16)	(3,012)

Change in deferred tax assets – December 2016

	Provisions /Impairments	Retirement benefits	Tariff deviations	financial instruments	of revalued assets	Others	Total






Change in deferred tax assets – December 2016
	Provisions /Impairments	Retirement benefits	Tariff deviations	Derivative financial instruments	Impairment of revalued assets	Others	Total


	-	407	-	1,302	-	-	1,709
	28	-	-	3	-	-	31
Increase/decrease through reserves Increase through profit and loss

Evolution of deferred tax liabilities – September 2017

Evolution of deferred tax liabilities – September 2017

			Derivative	Fair value of
	Tariff deviations	Revaluations	financial instruments	Available-for-sale financial assets	Total

	38,878	24,688	-	9,461	73,027

	- (18,614)	- (1,437)	- -	590 -	590 (20,051)
	(18,614)	(1,437)	-	590	(19,461)
	20,264	23,251	-	10,051	53,567


At 1 January 2017 Increase/decrease through equity Reversal trough profit and loss Change in the period At 30 September 2017 Evolution of deferred tax liabilities – December 2016			Derivative	Fair value of

Evolution of deferred tax liabilities – December 2016

	Tariff deviations	Revaluations	Derivative financial instruments	Fair value of Available-for-sale financial assets	Total



Evolution of deferred tax liabilities – December 2016
	Tariff deviations	Revaluations	Derivative financial instruments	Fair value of Available-for-sale financial assets	Total
At 1 January 2016	52,930	26,645	9	8,665	88,249
Increase/decrease through equity Reversal trough profit and loss Increase through profit and loss Change in the period	- (14,052) - (14,052)	- (1,957) - (1,957)	- (9) - (9)	796 - - 796	796 (16,018) - (15,222)

Deferred tax liabilities relating to revaluations result from revaluations made in preceding years under legislation. The effect of these deferred taxes reflects the non tax deductibility of 40% of future depreciation of the revaluation component (included in the assets considered cost at the time of the transition to IFRS).

The legal documents that establish these revaluations were the following:

Legislation (Revaluation)
Electricity segment	Natural gas segment
Decree-Law nº 430/78	140/2006
Decree-Law nº 399-G/81
Decree-Law nº 219/82
Decree-Law nº 171/85
Decree-Law nº 118-B/86
Decree-Law nº 111/88
Decree-Law nº 7/91
Decree-Law nº 49/91
Decree-Law nº 264/92

8 FINANCIAL ASSETS AND LIABILITIES

September 2017

8			FINANCIAL ASSETS AND LIABILITIES
The accounting policies for financial instruments in accordance with the IAS 39 categories have
been applied to the following financial assets and liabilities:

September 2017

	Notes	Credits and other receivables	Fair value - hedging derivative financial instruments	Fair value - Negotiable derivatives	Available-for- sale	Fair value - through profit and loss	Other financial assets/liabilities	Total carrying amount	Fair value
Assets
Cash and cash equivalents Trade and other receivables	12 10	- 404,193	- -	- -	- -	- -	6,372 -	6,372 404,193	6,372 404,193
Other financial assets		-	-	-	-	-	24	24	24
Available-for-sale financial assets Derivative financial instruments	9 11	- -	- 9,431	- -	150,574 -	- -	- -	150,574 9,431	150,574 9,431
Total financial assets		404,193	9,431	-	150,574	-	6,396	570,595	570,595
Liabilities
Borrowings	14	-	-	-	-	-	2,561,371	2,561,371	2,637,461
Trade and other payables	17	-	-	-	-	-	335,565	335,565	335,565
Income tax payable	7	-	-	-	-	-	35,388	35,388	35,388
Drivative financial instruments Total financial liabilities	11	- -	6,821 6,821	794 794	- -	- -	- 2,932,324	7,615 2,939,939	7,615 2,939,939
December 2016
	Notes	Credits and other receivables	Fair value - hedging derivative financial instruments	Fair value - Negotiable derivatives	Available-for- sale	Fair value - through profit and loss	Other financial assets/liabilities	Total carrying amount	Fair value
Assets
Cash and cash equivalents	12	-	-	-	-	-	10,783	10,783	10,783
Trade and other receivables Other financial assets	10	458,971 -	- -	- -	- -	- 1,317	- 14	458,971 1,331	458,971 1,331
Available-for-sale financial assets	9	-	-	-	150,118	-	-	150,118	150,118
Income tax receivable Derivative financial instruments	7 11	- -	- 20,425	- -	- -	- -	- -	- 20,425	- 20,425
Total financial assets		458,971	20,425	-	150,118	1,317	10,797	641,628	641,628
Liabilities
Borrowings	14	-	-	-	-	-	2,515,137	2,515,137	2,570,554
Trade and other payables	17	-	-	-	-	-	332,091	332,091	332,091

December 2016

	Notes	Credits and other receivables	Fair value - hedging derivative financial instruments	Fair value - Negotiable derivatives	Available-for- sale	Fair value - through profit and loss	Other financial assets/liabilities













December 2016			Fair value - hedging
Assets		Credits and other receivables	derivative financial instruments	Fair value - Negotiable derivatives	Available-for- sale	Fair value - through profit and loss	Other financial assets/liabilities	Total carrying amount	Fair value
	12	-	-	-	-	-	10,783	10,783	10,783
	10	458,971	-	-	-	-	-	458,971	458,971
		-	-	-	-	1,317	14	1,331	1,331
	9	-	-	-	150,118	-	-	150,118	150,118
	7	-	-	-	-	-	-	-	-
	11	-	20,425	-	-	-	-	20,425	20,425
		458,971	20,425	-	150,118	1,317	10,797	641,628	641,628
Cash and cash equivalents Trade and other receivables Other financial assets Available-for-sale financial assets Income tax receivable Derivative financial instruments Total financial assets Liabilities
	14	-	-	-	-	-	2,515,137	2,515,137	2,570,554
Borrowings Trade and other payables	17	-	-	-	-	-	332,091	332,091	332,091
Income tax payable	7	-	-	-	-	-	26,875	26,875	26,875
Drivative financial instruments Total financial liabilities	11	- -	13,275 13,275	- -	- -	- -	- 2,874,103	13,275 2,887,378	13,275 2,942,796

Loans obtained, as mentioned in Note 3.6, are initially measured at fair value and subsequently at amortized cost, except for those which it has been contracted a fair value hedge derivative (Note 11) which are measured at fair value. Nevertheless, REN proceeds to the fair value disclosure of the caption Borrowings, based on a set of relevant observable data, which fall within Level 2 of the fair value hierarchy.

The fair value of borrowings and derivatives is calculated by the discounted cash flows method, using the interest rate curve on the date of the statement of financial position in accordance with the characteristics of each loan.

The range of market rates used to calculate the fair value ranges between -0.349% and 1.360% (maturities of one day and fifteen years, respectively).

The fair value of borrowings contracted by the Group at 30 September 2017 is 2,637,461 thousand Euros (at 31 December 2016 was 2,570,554 thousand Euros), of which 404,092 thousand Euros are recorded partly at amortized cost and includes an element of fair value resulting from interest rates changes (at 31 December 2016 was 408,664 thousand Euros).

Estimated fair value – assets measured at fair value

Level 1: the fair value of financial instruments is based on net market prices as of the date of the statement of financial position;
Level 2: the fair value of financial instruments is not based on active market prices but rather on valuation models; and
Level 3: the fair value of financial instruments is not based on active market prices, but rather on valuation models, for which the main inputs are not taken from the market.

resulting from interest rates changes (at 31 December 2016 was 408,664 thousand Euros).
Estimated fair value – assets measured at fair value
The following table discloses the Group's assets and liabilities measured at fair value at 30
September 2017 in accordance with the following hierarchy levels of fair value:
Level 1: the fair value of financial instruments is based on net market prices as of the  date of the statement of financial position;

Level 2: the fair value of financial instruments is not based on active market prices but  rather on valuation models; and
Level 3: the fair value of financial instruments is not based on active market prices, but  rather on valuation models, for which the main inputs are not taken from the market.
		Level 1	Level 2	Level 3	Total

Available-for-sale financial assets	Shares	96,275	54,299	-	150,574
Financial assets at fair value	Cash flow hedge derivatives	-	1,336	-	1,336
Financial assets at fair value	Fair value hedge derivatives	-	8,095	-	8,095
		96,275	63,730	-	160,006
Liabilities:	Loans
Financial liabilities at fair value Financial liabilities at fair value		-	404,092	-	404,092
Financial liabilities at fair value through profit and loss	Cash flow hedge derivatives	-	6,821	-	6,821
	Negotiable derivatives	- -	794 411,707	- -	794 411,707

With respect to the current receivables and payables balances, its carrying amount corresponds to a reasonable approximation of its fair value.

The non-current accounts receivable and accounts payable refers, essentially, to tariff deviations whose amounts are communicated by ERSE, being its carrying amount a reasonable approximation of its fair value, given that they include the time value of money, being incorporated in the next two years tariffs.

Financial risk management

From the last annual report period until 30 September 2017, there were no significant changes in the financial risk management of the Company compared to the risks disclosed in the consolidated financial statements as of 31 December 2016. A description of the risks can be found in Section 4 - Financial Risk Management of the consolidated financial statements for the year ended 2016. City Country % owned Sep 2017 Dec 2016 Head office Book value

9 ASSETS AVAILABLE FOR SALE

From the last annual report period until 30 September 2017, there were no significant changes
in the financial risk management of the Company compared to the risks disclosed in the
consolidated financial statements as of 31 December 2016. A description of the risks can be

found in Section 4 - Financial Risk Management of the consolidated financial statements for the
year ended 2016.
9 ASSETS AVAILABLE FOR SALE

The assets recognized in this caption as of 30 September 2017 and 31 December 2016 correspond
to equity interests held on strategic entities for the Group, which can be detailed as follows:

			Head office			Book value
		City	Country	% owned	Sep 2017	Dec 2016
OMEL - Operador del Mercado Ibérico de Energia (Polo Espanhol)		Madrid	Spain	10.00%	3,167	3,167
Red Electrica Corporacion, S.A. ("REE")		Madrid	Spain	1.00%	96,275	97,060
Hidroeléctrica de Cahora Bassa		Maputo	Mozambique	7.50%	50,757	49,516
Coreso, S.A.		Brussels	Belgium	8.30%	173	173
MIBGAS, S.A.		Madrid	Spain	6.67%	202	202
					150,574	150,118
The changes in this caption were as follows:
	OMEL	HCB	REE	Coreso	MIBGÁS	Total
At 1 January 2016	3,167	47,104	104,384	208	-	154,862
Acquisitions	-	-	-	-	202	202
Fair value adjustments Disposals	- -	2,412 -	(7,324) -	- (35)	- -	(4,912) (35)
At 31 December 2016	3,167	49,516	97,060	173	202	150,118
At 1 January 2017 Acquisitions	3,167 -	49,516 1,241	97,060 (785)	173 -	202 -	150,118 456

The changes in this caption were as follows:

					150,574	150,118
The changes in this caption were as follows:
	OMEL	HCB	REE	Coreso	MIBGÁS	Total
At 1 January 2016	3,167	47,104	104,384	208	-	154,862
Acquisitions	-	-	-	-	202	202
Fair value adjustments	-	2,412	(7,324)	-	-	(4,912)
Disposals At 31 December 2016	- 3,167	- 49,516	- 97,060	(35) 173	- 202	(35) 150,118
At 1 January 2017	3,167	49,516	97,060	173	202	150,118
Acquisitions At 30 September 2017	- 3,167	1,241 50,757	(785) 96,275	- 173	- 202	456 150,574

Red Eléctrica de España ("REE") is the transmission system operator of electricity in Spain. REN, SGPS acquired 1% of equity interests in REE as part of the agreement signed by the Portuguese and Spanish Governments. REE is a listed company in Madrid`s index IBEX 35– Spain and the financial asset was recorded on the statement of financial position at the market price on 30 September 2017.

REN SGPS holds 2,060,661,943 shares which represents 7.5% of Hidroeléctrica de Cahora Bassa S.A. share capital and voting rights, as a result of the conditions established in the agreement signed on 9 April 2012, between REN, Parpublica – Participações Públicas, SGPS, S.A.

("Parpublica"), CEZA – Companhia Eléctrica do Zambeze, S.A. and EDM – Electricidade de Moçambique. This participation was initially recorded at its acquisition cost (38,400 thousand Euros) and subsequently adjusted to its fair value which reflects the price at which the asset would be sold in an orderly transaction.

REN Company holds a financial stake in the Coreso's share capital, a Company which is also hold by other important European TSO's which, as initiative of the Coordination of Regional Security (CRS), assists the TSO's in the safely supply of electricity in Europe. In this context, Coreso develops and implements operational planning activities involving the analysis and coordination of the European regional electricity network, focusing on services coordination, ranging from coordination with several days in advance to near real time.

Within the scope of the creation of a sole operator in the electricity Iberian market (OMI), in 2011 and as agreed between the Portuguese republic and the Rein of Spain regarding the creation of the Iberian electrical energy market, the Group acquired 10% of the share capital of OMEL, Operador del Mercado Ibérico de Energia, S.A., in the amount of 3,167 thousand Euros.

As there are no available market price for the above referred investments (OMEL, MIBGAS and Coreso), and as it is not possible to determine the fair value of the period using comparable transactions, these shares are recorded at its acquisition cost deducted of impairment losses as described in Note 3.6 of the consolidated financial statements for the year ended 2016.

There is no evidence of impairment loss regarding the investments of OMEL, MIBGAS and Coreso at the reporting date.

The adjustments to fair value of available-for-sale financial assets are recognized in the equity caption "Fair value reserve" that as of 30 September 2017 and 31 December 2016 had the following amounts:

The adjustments to fair value of available-for-sale financial assets are recognized in the equity
caption "Fair value reserve" that as of 30 September 2017 and 31 December 2016 had the

Fair value reserve
(Note 13)
1 January 2016	54,489
Changes in fair value	(4,912)
Tax effect	(796)
31 December 2016	48,781
1 January 2017	48,781
Changes in fair value	456
Tax effect 30 September 2017	(590) 48,647



In the nine month periods ended 30 September 2017 and 2016 the dividends attributable to the

	Sep 2017	Sep 2016
Red Eléctrica Corporación, S.A. ("REE")	3,360	3,140
OMEL - Operador del Mercado Ibérico de Energia (Polo Espanhol) Hidroeléctrica de Cahora Bassa	55 1,598	41 1,079

	Fair value reserve (Note 13)









Group are as follows:	In the nine month periods ended 30 September 2017 and 2016 the dividends attributable to the	Sep 2017	Sep 2016

	Red Eléctrica Corporación, S.A. ("REE")	3,360	3,140
	OMEL - Operador del Mercado Ibérico de Energia (Polo Espanhol) Hidroeléctrica de Cahora Bassa	55 1,598	41 1,079

These amounts were recognized in the consolidated statement of profit and loss in the caption "Financial income" being received 4,705 thousand Euros at 30 September 2017 (5,466 thousand Euros at 30 September 2016).

10 TRADE AND OTHER RECEIVABLES

10 TRADE AND OTHER RECEIVABLES Trade and other receivables as of 30 September 2017 and 31 December 2016 are made up as









follows:
Sep 2017 Dec 2016
Current Non-current Total Current	Non-current Total
Trade receivables 288,988 1,618 290,606 290,505
Impairment of trade receivables (843) -
Trade receivables net 288,144 1,618 289,762	355 290,860
	(843) (843) -
	289,662 355 290,017

Tariff deviations 29,565 47,927 77,493 129,007 State and Other Public Entities 36,940 - 36,940 30,157	9,790 138,797 - 30,157

The most significant amounts in trade receivables are the receivables from: (i) EDP – Distribuição de Energia, S.A. in the amount of 73,777 thousand Euros (74,397 thousand Euros as of 31 December 2016); (ii) Galp in the amount of 22,495 thousand Euros (22,751 thousand Euros as of 31 December 2016); and (iii) the amount of 95,000 thousand Euros, as stated by the regulator ERSE in the context of sustainability measures of the National Electric System.

In the trade and other receivables also stands out the not invoicing of the activity of the Market Manager (MIBEL – Mercado Ibérico de Electricidade), in the amount of 11,700 thousand Euros (26,534 at 31 December 2016) and the amount still to invoice to EDP – Distribuição de Energia, S.A., of 5,837 thousand Euros (5,788 thousand Euros at 31 December 2016) regarding the CMEC. This transaction consists in a pass-through, being off set in the Group consolidated financial statement of profit and loss. Sep 2017 Dec 2016 (843) (927) Utilization - 56 Reversal - 28 Ending balance (843) (843)

Changes to the impairment losses for trade receivable and other accounts receivable are made up as follows:

Begining balance

11 DERIVATIVE FINANCIAL INSTRUMENTS

11 DERIVATIVE FINANCIAL INSTRUMENTS

As of 30 September 2017 and 31 December 2016 the REN Group has the following derivative

financial instruments contracted:

			30 September 2017
		Assets		Liabilities
	Notional	Current	Non-current	Current	Non-current
Derivatives designated as cash flow hedges
Interest rate swaps Interest rate and currency swaps	300 000 mEuros 10.000.000 mJPY	- -	- 1,336	- -	6,821 -
		-	1,336	-	6,821

Derivatives designated as fair value hedges
Interest rate swaps	400.000 mEUR	-	8,095	-	-
		-	8,095	-	-
	60.000 mEUR	-	-	-	794
Trading derivatives		-	-	-	794

Derivative financial instruments		-	9,431	-	7,615
				31 December 2016
		Assets		Liabilities
	Notional	Current	Non-current	Current	Non-current
Derivatives designated as cash flow hedges Interest rate swaps	363 462 mEUR	-	-	1,063	11,072
Interest rate and currency swaps	10.000 MJPY	-	8,673	-	-
		-	8,673	1,063	11,072

Derivatives designated as fair value hedges
Interest rate swaps	400.000 mEUR	-	11,753	-	-
		-	11,753	-	-

Derivatives designated as cash flow hedges


		-	1,336	-	6,821
Derivatives designated as fair value hedges

		-	8,095	-	-

		-	-	-	794

				31 December 2016


Derivatives designated as cash flow hedges
Interest rate swaps	363 462 mEUR	-	-	1,063	11,072
Interest rate and currency swaps	10.000 MJPY	-	8,673	-	-
		-	8,673	1,063	11,072
Derivatives designated as fair value hedges
Interest rate swaps	400.000 mEUR	-	11,753	-	-
		-	11,753	-	-

Trading derivatives	60 000 mEUR	-	-	-	1,139
		-	-	-	1,139
		-	20,425	1,063	12,212

The amount recorded in this caption relates to interest rate and cross currency swaps, contracted to hedge the risk of fluctuation of future interest and foreign exchange rates, whose counterpart are financial foreign and domestic entities financial entities with a solid credit rating.

The amounts presented above include the amount of interest receivable or payable at 30 September 2017 relating to these derivatives financial instruments, in the total net amount receivable of 2,183 thousand Euros (1,950 thousand Euros receivable as of 31 December 2016).

	The main features of the derivatives financial instruments contracted associated with financing
operations at 30 September 2017 and 31 December 2016 are:

	Reference value	Currency	REN's payments	REN's receipts	Maturity	Fair value at Sep 2017	Fair value at Dec 2016
Cash flow hedge:				[-0.33%;0.00%] -
Interest rate swaps	300 000 TEuros	EUR	[0,75%;0,751%]	floating rates	2024	(6,821)	(12,136)
Interest rate and currency swaps	10 000 000 TJPY / 72 899 TEuros	EUR/JPY	5.64% (floating rate starting 2019)	2.71%	2024	1,336	8,673
						(5,485)	(3,463)
Fair value hedge:
Interest rate swaps	400 000 TEuros	EUR	[-0,271%;0,091%] - floating rates	[0.61%;1.72%]	[Oct-2020; Feb 2025]		8,095 11,753
						8,095	11,753
Trading: Interest rate swaps	60 000 TEuros	EUR	future floating rates	[0.00%;0.99%]	2024	(794)	(1,139)
						(794)	(1,139)
					Total	1,816	7,150

The schedule of the cash flows of the derivative financial instruments portfolio is quarterly and
semi-annual for cash flow hedge agreements and semi-annual and annual basis for derivative
designated as a fair value hedge and semi-annual for the trading derivative.


The maturity schedule of cash flows and fair value hedge derivatives notional is shown in the
following table:



September 2017			2017 2018	2019 2020	2021 2022	Following years	Total
			- -	- -	-	- 300,000	300,000
Interest rate swap (cash flow hedge)
Interest rate and currency swap (cash flow hedge) Interest rate swap (fair value hedge)			- - - -	- - - 100,000	- -	- 72,899 - 300,000	72,899 400,000
Interest rate swap (trading)			- -	- -	-	- 60,000	60,000

September 2017

The schedule of the cash flows of the derivative financial instruments portfolio is quarterly and
semi-annual for cash flow hedge agreements and semi-annual and annual basis for derivative

designated as a fair value hedge and semi-annual for the trading derivative.
The maturity schedule of cash flows and fair value hedge derivatives notional is shown in the
following table:

September 2017
Interest rate swap (cash flow hedge)	- -	- -	-	- 300,000	300,000
Interest rate and currency swap (cash flow hedge)	- -	- -	-	- 72,899	72,899
Interest rate swap (fair value hedge)	- -	- 100,000	-	- 300,000	400,000
Interest rate swap (trading) Total	- - - -	- - - 100,000	- -	- 60,000 - 732,899	60,000 832,899

Swaps:

Cash flow hedges

The Group hedges part of its future payments of interests on borrowings and bond issues through the designation of interest rate swaps, on which REN pays a fixed rate and receives a variable rate.

As of 30 September 2017, a cash flow hedge expired resulting in a decrease of the total notional to 300,000 thousand Euros (363,462 thousand Euros as of 31 December 2016). This refer to a hedge of the interest rate risk associated with variable interest payments arising from recognized financial liabilities. The hedged risk is the index of the variable rate to which the interest of the financing is associated.

The objective of this hedge is to convert loans at floating interest rates into fixed interest rate, the credit risk is not being hedged. The fair value of interest rate swaps at 30 September 2017 is negative 6,821 thousand Euros (at 31 December 2016, 12,136 thousand Euros negative).

In addition, the Group hedges its exposure to cash flow risk on its bond issue of 10,000 million JPY resulting from foreign exchange rate risk, through a cross currency swap with the main features equivalent to the debt issued. The same hedging instrument is used to hedge the fair value of the exchange rate risk of the bond issue through the forward start swap component which will only start in June 2019. The changes in the fair value of the hedging instrument are also recognized in hedging reserves. As from June 2019 the object will be to hedge exposure to JPY and the interest rate risk, transforming the operation into a fair value hedge, the changes in fair value of the debt issued resulting from the risks covered becoming recognized in the statement of profit and loss. The credit risk is not hedged.

The amounts resulting from the hedging instrument are recognized in the statement of profit and loss when the transaction hedged affects results for the year.

The fair value of the cross currency swap at 30 September 2017 was 1,336 thousand Euros positive (8,673 thousand Euros positive at 31 December 2016).

The underlying (borrowing) foreign exchange change for 30 September 2017, 5,747 thousand Euros positive (12,130 as of 30 September 2016 negative), was offset by a similar change in the hedging instrument in the statement of profit and loss.

The ineffective component of the fair value hedge amounted to 5,847 thousand Euros positive (6,196 thousand Euros positive at 31 December 2016). The effect recorded in the consolidated income statement for the nine-month period ended September 30, 2017 amounts to Euro 349 thousand.

The amount recorded in reserves relating to the above mentioned cash flow hedge was 13,009 thousand Euros (17,542 thousand Euros at 31 December 2016).

hedging instrument in the statement of profit and loss.	Euros positive (12,130 as of 30 September 2016 negative), was offset by a similar change in the The ineffective component of the fair value hedge amounted to 5,847 thousand Euros positive (6,196 thousand Euros positive at 31 December 2016). The effect recorded in the consolidated income statement for the nine-month period ended September 30, 2017 amounts to Euro 349
















		Hedging
Fair value	Deferred taxes	reserves
(11,342)	2,382	8,960
(6,200)	1,302	(4,898)
17,542	(3,684)	13,858


17,542 (4,533)	(3,684) 432	13,858 (4,101)
		The amount recorded in reserves relating to the above mentioned cash flow hedge was 13,009 thousand Euros (17,542 thousand Euros at 31 December 2016). The changes in this caption (Note 13) were as follows:

The changes in this caption (Note 13) were as follows:

Fair value hedge

To manage the fair value changes of debt issues, the Group trades interest rate swaps on which it pays a variable interest rate and receives a fixed interest rate.

As of 30 September 2017 the notional amount of fair value hedge derivatives reached 400,000 thousand Euros (400,000 thousand Euros in 31 December 2016). The covered risk is the fixed rate index to debt issued. The covered risk is the fair value changes of debt issues related to interest rate fluctuations. The objective of this hedging is to convert debt at fixed interest rates into variable interest rate, the credit risk is not being hedged.

The fair value of these interest rate swaps at 30 September 2017 was 8,095 thousand Euros positive (11,753 thousand Euros positive as of 31 December 2016).

Changes in the fair value of the debt issued resulting from the interest rate risk are recorded in the statement of profit and loss in order to offset changes in the fair value of the hedge instrument recorded in the statement of profit and loss.

As of 30 September 2017, the fair value change of the 400,000 thousand Euros debt related with interest rate risk amounted to 4,571 thousand Euros positive (21,388 thousand Euros negative as of 30 September 2016), causing an ineffective component of 222 thousand Euros (positive) (174 thousand Euros positive as of 30 September 2016).

Trading Swap

REN has an interest rate forward start swap with a start date on 2019 and maturity on 2024, on which pays a fixed rate and receives a variable rate.

This derivative despite not being considered as a hedging instrument in accordance with IAS 39, is hedging the economic risk of changes in the forward interest rates for the above mentioned period.

As of 30 September 2017, the notional amount of this trading derivative is 60,000 thousand Euros (60,000 thousand Euros as of 31 December 2016). This is an hedging of interest rate risk of future variable interest rate cash flows associated with the Group finance liabilities. The hedged risk is a variable rate index to which the debt interests are associated. The objective of this hedging is to convert cash flows at a variable rate into a fixed rate, the credit risk is not hedged. The fair value of this negotiation derivative as of 30 September 2017 amounts to 794 thousand Euros negative (1,139 thousand Euros negative as of 31 December 2016).

The fair value changes of this negotiation derivative are recorded in the profit and loss statement. As of 30 September 2017 the amount related with the fair value of the trading derivative was an income of 346 thousand Euros (expense of 3,280 thousand Euros as of 30 September 2016).

12 CASH AND CASH EQUIVALENTS

12 CASH AND CASH EQUIVALENTS
The amounts considered as cash and cash equivalents as of 30 September 2017 and 31 December
2016 are made up as follows:

		Sep 2017	Dec 2016
Cash		21	1
Bank deposits		6,351	10,782
Cash and cash equivalents in the statement of financial position		6,372	10,783
Bank overdrafts (Note 14) Cash and cash equivalents in cash flow statement		(13,812) (7,440)	(103) 10,680

EQUITY INSTRUMENTS 13


Share capital

REN's subscribed and paid up share capital as of 30 September 2017 and 31 December 2016 was
made up of 534,000,000 shares of 1 Euro each.
	Number of shares	Share capital
Share Capital	534,000,000	534,000
Own shares

13 EQUITY INSTRUMENTS

Share capital

Number of shares	Share capital

Own shares

Number of shares	Share capital

Number of
shares	Proportion Amount

No own shares were acquired or sold during the nine month period ended 30 September 2017.

In accordance with the Commercial Company Code ("Código das Sociedades Comerciais") REN SGPS must at all times ensure that there are sufficient Equity Reserves to cover the value of treasury shares, limiting the amount of reserves available for distribution.

Reserves and retained earnings

The caption "Reserves" in the amount of 307,317 thousand Euros includes:

Legal reserve: The Commercial Company Code in place requires that at least 5% of the net profit must be transferred to this reserve until it has reached 20% of the share capital. The reserve can only be used to cover losses or to increase capital. At 30 September 2017 this caption amounts to 106,800 thousand Euros;
Fair value reserves: includes changes in the fair value of available for sale financial assets (48,647 thousand Euros positive), as detailed in Note 9;
Hedging reserve: includes changes in the fair value of hedging derivative financial instruments when cash flow hedge is effective (negative 9,757 thousand Euros) as detailed in Note 11;
Free reserves: This caption is changed by (i) application of the results of previous years, being available for distribution to shareholders, except for the limitation set by the Companies Code in respect of own shares (free reserves), and (ii) changes in equity of associates registered under the equity method. At 30 September 2017, this caption amounts to 161,627 thousand Euros.

In accordance with the Portuguese legislation: (i) increases in equity as a result of the incorporation of positive fair value (fair value reserves and hedging reserves) can only be distributed to shareholders when the correspondent assets have been sold, exercised, extinct, settled or used; and (ii) income and other positive equity changes recognised as a result of the equity method can only be distributed to shareholders when paid-up. Portuguese legislation establishes that the difference between the equity method income and the amount of paid or deliberated dividends is equivalent to legal reserve.

14 BORROWINGS

14 BORROWINGS The borrowing segregation between current and non-current and as well as by nature, as of 30














September 2017 and 31 December 2016 is as follows:
		Sep 2017			Dec 2016
	Current	Non-current	Total	Current	Non-current	Total
Bonds	192,800	1,465,048	1,657,848	30,000	1,670,110	1,700,110
Bank Borrowings	46,919	456,818	503,737	61,730	495,349	557,078
Commercial Paper	225,150	150,000	375,150	101,000	152,000	253,000
Bank overdrafts (note 12)	13,812	-	13,812	103	-	103
Finance Lease	1,118 479,799	1,342 2,073,208	2,460 2,553,007	1,400 194,232	1,818 2,319,277	3,218 2,513,510

Accrued interest	44,035	-	44,035	42,174	-	42,174
Prepaid interest	(18,375)	(17,297)	(35,671)	(19,812)	(20,734)	(40,546)
Borrowings	505,460	2,055,911	2,561,371	216,594	2,298,543	2,515,137


At 30 September 2017 the nominal financial debt settlement plan is as follows:

2017	2018	2019	2020	2021	2022 Following years	Total
	- 8,825	228,125	381,085 -	70,525 -	48,886 -	1,335,762 2,073,208 - 479,799
Debt - Non current Debt - Current	247,351 232,448	-

247,351	241,273	228,125	381,085	70,525	48,886	1,335,762	2,553,007

		479,799	2,073,208	2,553,007	194,232	2,319,277		2,513,510




				At 30 September 2017 the nominal financial debt settlement plan is as follows:




	247,351	241,273	228,125	381,085 Detailed information regarding bond issues as of 30 September 2017 is as follows:	70,525	48,886	1,335,762	2,553,007
				Sep 2017
								Interest Payment
Issue Date		Maturity	Inicial Amount	Outstanding Amount		Interest Rate		Frequency

'Euro Medium Term Notes' programme emissions
26/06/2009		26/06/2024	TEUR JPY 10.000.000 (i) (ii)	TEUR JPY 10.000.000	Fixed rate			Semi-Annual
16/01/2013		16/01/2020	TEUR 150.000 (i)	TEUR 90.000	Floating rate			Quarterly
31/01/2013		31/01/2018	TEUR 300.000	TEUR 162.800		Fixed rate EUR 4,125%		Annual
17/10/2013		16/10/2020	TEUR 400.000 (ii)	TEUR 267.755		Fixed rate EUR 4,75%		Annual
12/02/2015		12/02/2025	TEUR 300.000 (ii)	TEUR 500.000		Fixed rate EUR 2,50%		Annual
01/06/2016		01/06/2023	TEUR 550.000	TEUR 550.000		Fixed rate EUR 1,75%		Annual
(i) These issues correspond to private placements.
			(ii) These issues have interest currency rate swaps associated

As of 30 September 2017, the Company has five commercial paper programs in the amount of 1,075,000 thousand Euros, of which 699,850 thousand Euros are available for utilization. Of the total amount, 630,000 thousand Euros have a subscription guarantee.

Bank loans are mainly agreed with the European Investment Bank (EIB), which at 30 September 2017 amounted to 458,738 thousand Euros (at 31 December 2016 it was 497,078 thousand Euros).

The Company has also credit facilities negotiated and not used in the amount of 80,000 thousand Euros, maturing up to one year, which are automatically renewable periodically (if they are not resigned in the contractually specified period for that purpose).

The balance of prepaid interest includes the amount of 27,731 thousand Euros (as of 31 December 2016 it was 31,384 thousand Euros) related to the refinancing of bond issues through an Exchange Offer, carried out during the year 2016.

As a result of the fair value hedge related to the debt emission in the amount of 400,000 thousand Euros, fair value changes concerning interest rate risk were recognized directly in statement of profit and loss, in an amount of 4,571 thousand Euros (positive) (at 30 September 2016 was 21,388 thousand Euros (negative)).

The Company's financial liabilities have the following main types of covenants: Cross default, Pari Passu, Negative Pledge, Leverage ratios and Gearing (ratio of total consolidated equity to the amount of the Group's total concession assets). The Gearing ratio comfortably meets the limits defined being 66% above the minimum.

Banks loans with EIB also include covenants relating to rating and other financial ratios in which the Group may be required to provide an acceptable guarantee to the EIB in the event of verification of the ratios or rating below the stipulated levels.

REN and its subsidiaries are a part of certain financing agreements and debt issues, which include change of control clauses, typical in this type of transactions, (including, though not so expressed, changes of control as a result of takeover bids) and essential to the realization of such transactions on applicable market context. In any case, the practical application of these clauses is limited considering the legal restrictions of REN shares ownership.

Following the legal standards and usual market practices, contractual terms and free market competition, establish that neither REN nor its counterparts in borrowing agreements are authorized to disclose further information regarding the content of these financing agreements.

Leases

The financial leases minimum payments and the present value of the financial leases liabilities


at 30 September 2017 and 31 December 2016 are as follows:




	Sep 2017	Dec 2016

Finance lease liabilities - minimum lease payments
No later than 1 year	1,139	1,439
	1,356	1,844
Later than 1 year and no later than 5 years		3,283
	2,495
Future finance charges on finance leases	(35)	(65)
Present value of finance lease liabilities	2,460	3,218

	Sep 2017	Dec 2016
The present value of finance lease liabilities is as follows
No later than 1 year	1,118	1,400
Later than 1 year and no later than 5 years	1,342	1,818

15 POST-EMPLOYMENT BENEFITS AND OTHER BENEFITS

REN – Rede Eléctrica Nacional, S.A. grants supplementary retirement, early-retirement and survivor pensions (hereinafter referred to as pension plan), provides its retirees and pensioners with a health care plan on a similar basis to that of its serving personnel, and grants other benefits such as long service bonuses, retirement bonuses and a death grant (referred to as "Other benefits"). Long services bonuses were extended to the remaining Group companies. Sep 2017 Dec 2016 Pension plan 79,628 83,871 Healthcare plan and other benefits 42,025 41,802

As of 30 September 2017 and 31 December 2016 the Group had the following amounts recorded relating to liabilities for retirement and other benefits:

Liability on the statement of financial position


	121,653	125,673

During the nine month period ended 30 September 2017 and 30 September 2016 the following operating expenses were recorded regarding benefit plans with employees:

Charges to the statement of profit and loss (Note 22)	Sep 2017	Sep 2016
During the nine month period ended 30 September 2017 and 30 September 2016 the following operating expenses were recorded regarding benefit plans with employees: Pension plan	3,375	3,616
Healthcare plan and other benefits	971	1,085

	Charges to the statement of profit and loss (Note 22)


		4,346 4,701
	The amounts reported to 30 September 2017 result from the projection of the actuarial
	valuation as of 31 December 2016 and 2015 for the nine month period ended 30 September
	2017 and 2016, considering the estimated increase in salaries for 2017 and 2016.



	The actuarial assumptions used to calculate the post-employment benefits, which are
	considered by the REN Group and the entity specialized in actuarial studies to be those that

	best meet the commitments established in the pension plan and related retirement benefit
	liabilities, are as follows:

		Dec 2016	Dec 2015

Annual discount rate		1.80%	2.00%
	Expected percentage of serving employees elegíble for early retirement (more than 60 years of age	20.00%	20.00%
	and 36 years in Service) by Collective Work Agreement Expected percentage of serving employees elegíble for early retirement - Management act	20.00%	20.00%
Rate of salary increase		2.50%	2.80%
Pension increase		1.50%	1.50%
	Future increases of Social Security Pension amount	0.50%	-
Inflation rate		1.50%	1.50%
Medical trend		2.50%	3.50%
	Management costs (per employee/year)	242 €	238 €
Expenses medical trend		1.50%	1.50%
	Retirement age (number of years)	66	66

16 PROVISIONS

	Sep 2017	Dec 2016

Begining balance Increases	6,955 85	6,888 1,012
Reversing	(112)	(496)
Utilization	(581)	(449)
Ending balance	6,347	6,955

Current provision Non-current provision	- 6,347	801 6,154

The changes in provisions in the reported periods is as follows:

As of 30 September 2017 the caption "Provisions" corresponds essentially to estimates of the payments to be made by REN resulting from legal processes in progress for damage caused to third parties, in the amount of 5,932 thousand Euros, and a restructuring provision in the amount of 415 thousand Euros, related to the Group's restructuring plan in course.

Tejo Energia – Produção e Distribuição de Energia Eléctrica, S.A. ("Tejo Energia") has initiated a dispute settlement proceeding against REN - Rede Eléctrica Nacional, S.A. ("REN Elctrica")and REN Trading, S.A. (REN Trading) regarding the repayment of the social tariff.

This procedure is foreseen under the Dispute Resolution Procedure of the Power Purchase Agreement ("PPA"), dated 24th November 1993 (later amended). Under that PPA, Tejo Energia acts as generator and seller and REN Trading as purchaser of the power produced in the coalfired power station operated by Tejo Energia at Pego, Portugal. REN Eléctrica is jointly and severally liable with REN Trading, with respect to the performance of the PPA towards Tejo Energia. Though the scope of the dispute is not yet formally defined, it is expected that Tejo Energia will claim the existence of an obligation by REN Trading (and REN Eléctrica as joint and severally liable) to reimburse Tejo Energia for the payments made and related with the social tariff. The amount as of 30 September 2017 is 5,808 thousand Euros, plus interest.

17 TRADE AND OTHER PAYABLES

TRADE AND OTHER PAYABLES
17





The caption "Trade and other payables" as of 30 September 2017 and 31 December 2016 was
made up as follows:


		Sep 2017			Dec 2016
	Current	Non current	Total	Current	Non current	Total


Trade payables
Current suppliers (Note 8)	100,297	-	100,297	127,388	-	127,388
Other creditors
Other creditors (Note 8)	59,640	29,550	89,190	44,355	29,884	74,239
Tariff deviations (Note 8)	16,207	53,518	69,725	12,923	8,792	21,715
Fixed assets suppliers (Note 8)	49,055	-	49,055	104,230	-	104,230
Tax payables (Note 8) (i)	21,754	-	21,754	-	-	-

Deferred income Grants related to assets	18,020	269,416	287,436	18,124	279,450	297,574

Accrued costs Holidays and holidays subsidies (Note 8)	5,545	-	5,545	4,520	-	4,520
Trade and other payables	270,517	352,484	623,001	311,539	318,126	629,665

The caption "Trade and other payables" includes: (i) the amount of 40,124 thousand Euros, regarding the management of CAEs from Turbogás and Tejo Energia (46,102 thousand Euros at 31 December 2016); (ii) the amount of 19,347 thousand Euros of investment projects not yet invoiced (34,707 thousand Euros at 31 December 2016); (iii) the amount of 11,700 thousand Euros (26,534 thousand Euros at 31 December 2016) from the activity of the Market Manager (MIBEL – Mercado Ibérico de Electricidade); and (iv) the amount to invoice to EDP – Gestão da Produção de Energia, S.A., of 5,837 thousand Euros (5,788 thousand Euros at 31 December 2016) regarding the CMEC, which was also reflected in the caption of "Trade and other receivables" (Note 10). This last transaction sets a pass-through in the consolidated income statement of REN.

In the nine month period ended 30 September 2017 the caption "Other creditors" include the Energy Sector Extraordinary Contribution ("ESEC"), in the amount of 25,798 thousand Euros (Note 25) (25,938 thousand Euros at 30 September 2016).

18 SALES AND SERVICES RENDERED

Sales and services rendered recognized in the consolidated statement of profit and loss are made up as follows:

SALES AND SERVICES RENDERED

Sales and services rendered recognized in the consolidated statement of profit and loss are


	Sep 2017	Sep 2016


Goods:
Domestic market	23	201
Services:	23	201
Electricity transmission and overall systems management	279,921	270,229
Natural gas transmission	87,946	83,489
Regasification	22,891	26,636
Underground gas storage	10,037	15,276
Telecommunications network	3,729	4,004
Trading	2,636	2,812
Others	899	1,184
	408,058	403,632

19 REVENUE AND COSTS FROM CONSTRUCTION ACTIVITIES

As part of the concession contracts treated under IFRIC 12, the construction activity is subcontracted to specialized suppliers. Therefore the Group obtains no margin in the construction of these assets.

The detail of the revenue and expenses with the acquisition of concession assets for the nine month periods ended 30 September 2017 and 30 September 2016 is the following:

	408,058		403,632


REVENUE AND COSTS FROM CONSTRUCTION ACTIVITIES
As part of the concession contracts treated under IFRIC 12, the construction activity is
subcontracted to specialized suppliers. Therefore the Group obtains no margin in the





The detail of the revenue and expenses with the acquisition of concession assets for the nine

month periods ended 30 September 2017 and 30 September 2016 is the following:



	Sep 2017	Sep 2016
Revenue from construction of concession assets
- Acquisitions	67,800	61,910
- Own work capitalised :
Financial expenses (Note 5)	1,913	2,088
Overhead and management costs (Note 5)	10,448	9,321
	80,161	73,320


Cost of construction of concession assets
- Acquisitions	67,800	61,910

	67,800	61,910


			59 69
REN - Redes Energéticas Nacionais, SGPS, S.A.

20 OTHER OPERATING INCOME

The caption "Other operating income" is made up as follows:

The caption "Other operating income" is made up as follows:


	Sep 2017	Sep 2016
Recognition of investment subsidies	13,515	13,592
Disposal of unused materials Supplementary income	2,966 966	- 1,200
Others	2,174	528
	19,621	15,320



The caption "External supplies and services" for the nine month periods ended 30 September



	Sep 2017	Sep 2016
Fees relating to external entities i)	8,352	5,969
Maintenance costs	5,666	5,477
Electric energy costs	4,928	3,210
Insurance costs	2,417	2,395

21 EXTERNAL SUPPLIES AND SERVICES

The caption "External supplies and services" for the nine month periods ended 30 September 2017 and 2016 is made up as follows:

	19,621	15,320

The caption "External supplies and services" for the nine month periods ended 30 September




	Sep 2017	Sep 2016

Fees relating to external entities i)	8,352	5,969
Maintenance costs	5,666	5,477
Electric energy costs	4,928	3,210
Insurance costs	2,417	2,395
Gas transport subcontracts	2,077	2,249
Cross border interconnection costs ii)	3,204	1,627
Security and surveillance	1,263	1,246
Fuel and other utilities	1,037	982
Travel and transportation costs	858	885
Advertising and communication costs	608	661
Other (less than 500 thousand Euros) External supplies and services	1,843 32,253	1,581 26,283

i) The fees paid to external entities refer to specialized work and fees paid by REN for contracted services and specialized studies.

ii) The cross border interconnection costs refer to the cost assumed on cross-border trade in electricity.

22 PERSONNEL COSTS

Personnel costs are made up as follows:

	Sep 2017	Sep 2016
Remuneration
Board of directors	1,803	1,768
Personnel	24,088	24,392
	25,891	26,160

Social charges and other expenses
Post-employement and other benefits cost (Note 15)	4,346	4,701
Charges on remuneration	5,325	5,373
Social support costs Other	86 1,383	83 1,246
	11,140	11,404

Total personnel costs	37,031	37,563



The Corporate Bodies remuneration includes remunerations paid to the Board of Directors as well as to the Board of the General Shareholders meeting.






	Sep 2017	Sep 2016
ERSE operating costs i)	7,346	7,305
Donations	125	108
Taxes	740	745
	905	870
Quotizations Others	1,081	605

The Corporate Bodies remuneration includes remunerations paid to the Board of Directors as well as to the Board of the General Shareholders meeting.

23 OTHER OPERATING COSTS

Other operating costs are made up as follows:

	11,140	11,404

The Corporate Bodies remuneration includes remunerations paid to the Board of Directors as
well as to the Board of the General Shareholders meeting.









	Sep 2017	Sep 2016
ERSE operating costs i)	7,346	7,305
Donations	125	108
Taxes	740	745
Quotizations	905	870

Others	1,081 10,197	605 9,633

i) The caption "ERSE operating costs" corresponds to ERSE's operating costs, to be recovered through electricity and gas tariffs.

24 FINANCIAL COSTS AND INCOME

Financial costs and income are made up as follows:

Financial costs and income are made up as follows:

	Sep 2017	Sep 2016


Financial costs
Interest on bonds issued	37,627	50,873
Interest on commercial paper issued	3,212	3,716
Other borrowing interests	11,415	15,062
Derivative financial instruments	349	3,280
Other financing expenditure	1,749	1,070
	54,353	74,001
Financial income
Interest income	29	3
Derivative financial instruments	2,511	5,882
Other financial investments	2,026 4,566	26 5,911

25 ENERGY SECTOR EXTRAORDINARY CONTRIBUTION

Law No. 83-C / 2013 of 31 December introduced a specific contribution of entities operating in the energy field, called Energy Sector Extraordinary Contribution ("ESEC"), which was extended by Law No. 82-B/2014, of 31 December, and Law No. 15—C/2016, of 30 December, for the year of 2016 and 2017, respectively.

The regime introduced is aimed at financing mechanisms that promote systemic sustainability of the sector through the setting up of a fund with the main objective of reducing the tariff deficit. Are subject to this regime, among others, the entities that are dealers of transport activities or distribution of electricity and natural gas.

The calculation of the ESEC is levied on the value of the assets with reference to the first day of the financial year 2017 (1 January 2017) that include cumulatively, the property, plant and equipment, intangible assets, with the exception of industrial property elements, and financial assets related with regulated activities. In the case of regulated activities, the ESEC is levied on the value of regulated assets (i.e. the amount recognised by ERSE in the calculation of the allowed income with reference to 1 January 2017) if it is greater than the value of those assets, over which the rate of 0.85% is applied.

To the extent that it is a present obligation whose facts originating already occurred, with timing and amounts certain or ascertainable, REN recorded a liability in the amount of 25,798

26 EARNINGS PER SHARE

thousand Euros (Note 17) (for the nine months period ended 30 September 2016 was 25,938 thousand Euros) against a cost in the statement of profit and loss.
26 EARNINGS PER SHARE Earnings per share attributable to REN's shareholders were calculated as follows:
Consolidated net profit used to calculate earnings per share	(1)	Sep 2017 88,867	Sep 2016 70,453
Number of ordinary shares outstanding during the period (Note 13)	(2)	534,000,000	534,000,000
Effect of treasury shares (Note 13) (average number of shares)		3,881,374	3,881,374
Number of shares in the period	(3)	530,118,626	530,118,626

27 DIVIDENDS PER SHARE

During the General Shareholders Meeting held on 11 May 2017, the shareholders approved the distribution of dividends with respect to the net profit of 2016, in the amount of 91,314 thousand Euros, corresponding to a gross dividend amount of 0.171 Euros per share, which include 664 thousand Euros attributable to own shares.

During the General Shareholders Meeting held on 13 April 2016, the shareholders approved the distribution of dividends with respect to the net profit of 2015, in the amount of 91,314 thousand Euros, corresponding to a gross dividend amount of 0.171 Euros per share, which include 664 thousand Euros attributable to own shares, having been paid to the shareholders an amount of 90,650 thousand Euros.

28 GUARANTEES GIVEN

28 GUARANTEES GIVEN guarantees: Beneficiary Scope Sep 2017 European Investment Bank (EIB) To guarantee loans 263,951 To guarantee compliance with the obligations assumed resulting from the contract relating to the General Directorate of Energy and Geology 20,500 public service concession Court of the District of Lisbon Ensure suspension of the continuation of the pending enforcement process 10,707 Judge of District Court Guarantee for expropriation processes 5,549 Municipal Council of Seixal Guarantee for litigation 2,459 Tax Authority and Customs Ensure the suspension of tax enforcement proceedings 1,916 Municipal Council of Odivelas Guarantee for litigation 1,119 Municipal Council of Silves Guarantee for expropriation processes 352 NORSCUT - Concessionária de Auto-estradas, SA To guarantee prompt payment of liabilities assumed by REN in the contract ceding utilization 200 European Union To comply with the contractual requirements on a financing agreement 177 Labour Court of Lisbon Guarantee for litigation - Municipal Council of Aveiro Guarantee for litigation 87 EP - Estradas de Portugal To guarantee compliance with the obligations assumed 79 GSE - Georgian State Electrpsystem JSC Providing services contract - Social Security Institution Ensure compliance with obligations 15 Câmara Municipal de Lisboa Guarantee the suspension of municipal tax 9 Câmara Municipal de Vila Nova de Gaia Guarantee the suspension of process nº 412/13 2 307,122
Dec 2016 278,033 20,500 5,530 5,549 2,152 2,312 1,119 352 200 177 153 87 79 57 15 9 2 316,327

As of 30 September 2017 and 31 December 2016 the REN Group had given the following































Main shareholders and shares held by corporate bodies

As of 30 September 2017 and 31 December 2016, the shareholder structure of Group REN was	as follows:


Set 2017 Dec 2016
Number of Number of
% % shares shares
State Grid Europe Limited (Grupo State Grid) 133,500,000 25.00% 133,500,000 25.00%

29 RELATED PARTIES

Main shareholders and shares held by corporate bodies

				307,122	316,327
29 RELATED PARTIES Main shareholders and shares held by corporate bodies As of 30 September 2017 and 31 December 2016, the shareholder structure of Group REN was as follows:
	Set 2017		Dec 2016
	Number of		Number of
	shares	%	shares	%
State Grid Europe Limited (Grupo State Grid)	133,500,000	25.00%	133,500,000		25.00%
Mazoon B.V. (Grupo Oman Oil Company S.A.O.C.)	80,100,000	15.00%	80,100,000		15.00%
Lazard Asset Management LLC	36,043,972	6.75%	-		-

Fidelidade - Companhia de Seguros, S.A.	28,368,817	5.31%	28,370,665		5.31%
Red Eléctrica Internacional, S.A.U.	26,700,000	5.00%	26,700,000		5.00%
The Capital Group Companies, Inc.	25,365,000	4.75%	26,792,304		5.02%
Great-West Lifeco, Inc.	10,980,987	2.06%	10,980,987		2.06%
EDP - Energias de Portugal, S.A.	-	-	26,707,335		5.00%
Own shares	3,881,374	0.73%	3,881,374		0.73%
Free float	189,059,850	35.40%	196,967,335		36.89%

Transaction over REN shares by the Board of Directors

There were no transactions made by board members, compared to the consolidated financial statements of REN, on 31 December 2016, were made.

Remuneration of the Board of Directors

The Board of Directors of REN, SGPS was considered in accordance with IAS 24 to be the only key entity in the management of the Group.

Remuneration of the Board of Directors of REN, SGPS in the nine months period ended 30 September 2017 amounted to 1,803 thousand Euros (1,768 thousand Euros on 30 September 2016), as shown in the following table:

There were no transactions made by board members, compared to the consolidated financial statements of REN, on 31 December 2016, were made.


The Board of Directors of REN, SGPS was considered in accordance with IAS 24 to be the only



key entity in the management of the Group. Remuneration of the Board of Directors of REN, SGPS in the nine months period ended 30 September 2017 amounted to 1,803 thousand Euros (1,768 thousand Euros on 30 September


	Sep 2017	Sep 2016
Remuneration and other short term benefits Management bonuses	1,161 642	1,110 658

Transactions with group or dominated companies

In its activity REN maintains transactions with Group entities or with dominated parties. The terms in which these transactions are held are substantially identical to those practiced between independent parties in similar operations.

In the consolidation process the amounts related to such transactions or open balances are eliminated (Note 3.2 of the notes to the consolidated financial statements as of 31 December 2016) in the consolidated financial statements.

The main transactions held between Group companies were: (i) borrowings and shareholders loans; and (ii) shared services namely legal, administrative and IT services.

Balances and transactions held with associates and other related parties

Revenue

Balances and transactions held with associates and other related parties
REN Group carried out the following transactions with reference shareholders, qualified shareholders and related parties:

	Sep 2017	Sep 2016
Sales and services rendered
Invoicing issued- EDP	992,324	850,331
Invoicing issued- OMIP	44	-
Invoicing issued - REE	1,637	973
Invoicing issued - Centro de Investigação em Energia REN - State Grid	90	95
Financial income
Dividends received - REE	3,360	3,140
	997,455	854,539
The amounts shown as invoicing issued to EDP relate essentially to the overall management of
the electricity system tariff (UGS) and electricity transmission tariff (TEE) that include pass
through amounts with income and costs being reversed in the consolidated statement of profit



	Sep 2017	Sep 2016
External supplies and services
Invoicing received-EDP	413,460	319,100
Invoicing received - REE	7,163	5,295
Invoicing received - Lazard Chile	1,027	-

Costs

Financial income

	997,455	854,539
the electricity system tariff (UGS) and electricity transmission tariff (TEE) that include pass
through amounts with income and costs being reversed in the consolidated statement of profit
External supplies and services
Invoicing received-EDP	413,460	319,100
Invoicing received - REE	7,163	5,295
Invoicing received - Lazard Chile	1,027	-
Invoicing received - CMS Rui Pena & Arnaut1	96	53

The amounts shown as invoicing received from EDP relate to the intermediation role of REN in the purchase and sale of electricity, where REN acts as an agent, income and costs being reversed in the statement of profit and loss, since they are pass through amounts in the income recognition.

Balances

As of 30 September 2017 and 31 December 2016 the balances resulting from transactions with

related parties were as follows:


	Sep 2017	Dec 2016

Trade and other receivables
EDP - Trade receivables EDP - Guarantees	100,174 155	93,820 155
	2,535	4,813

EDP - Other receivables
OMIP - Other receivables	-	2,976
Oman Oil - Other receivables	1	1
Centro de Investigação em Energia REN - State Grid - Other receivables	2	78
Centro de Investigação em Energia REN - State Grid - Trade receivable	7	8
REE - Trade receivables	49	160
	102,923	102,011

Trade and other payables
EDP - Trade payables	9,547	4,761
Centro de Investigação em Energia REN - State Grid - Other payables	-	78
CMS - Rui Pena & Arnaut - Trade payables1	13	16
REE - Trade payables	202 9,762	678 5,533

30 SUBSEQUENT EVENTS

At October 4, REN – Redes Energéticas Nacionais, S.G.P.S., S.A. ("REN") hereby informs the market and the general public that, on the present date, and following the communications dated as of 7 April and of 21 September 2017, its subsidiary REN Gás, S.A. acquired on this date from EDP Iberia, S.L.U. the entire share capital of EDP Gás, S.G.P.S., S.A. ("EDP Gás") and its subsidiaries, EDP Gás Distribuição, S.A. and EDP Gás GPL – Comércio de Gás Petróleo Liquefeito, S.A..

As previously disclosed, this transaction has been funded with credit facilities and, subject to the approval by REN´s relevant corporate bodies, it is expected to be partially refinanced by a share capital increase consisting of new cash contributions through a rights issue.

The completion of the acquisition has been preceded by the regulatory approvals and the conclusion of the carve out of the natural gas last resort supplier - EDP Gás, Serviço Universal, S.A. - from EDP Gás' perimeter.

31 EXPLANATION ADDED FOR TRANSLATION

These consolidated financial statements are a translation of financial statements originally issued in Portuguese in accordance with IAS 34 – Interim Financial Reporting. In the event of discrepancies, the Portuguese language version prevails.

The Certified Accountant

Susana Neves

The Board of Directors:

Rodrigo Costa (Chairman of the Board of Directors and Chief Executive Officer)

Omar Al Wahaibi (Member of the Board of Directors)

(Member of the Board of Directors)

Jorge Magalhães Correia

João Faria Conceição (Member of the Board of Directors and Chief Operational Officer)

Gonçalo Morais Soares (Member of the Board of Directors and Chief Financial Officer)

Manuel Sebastião (Member of the Board of Directors and Chairman of the Audit Committee)

Guangchao Zhu (Vice-President of the Board of Directors designated by State Grid International Development Limited)

Gonçalo Gil Mata (Member of the Board of Directors and of the Audit Committee)

(Member of the Board of Directors and of the

Mengrong Cheng (Member of the Board of Directors)

Audit Committee)

Longhua Jiang (Member of the Board of Directors) José Luis Arnaut (Member of the Board of Directors)

Maria Estela Barbot

Note – The remaining pages of this Report & Accounts (3rd quarter 2017) were initialled by the members of the Executive Committee, and by the Certified Accountant, Susana Neves.

Deloitte & Associados, SROC S.A. Registo na OROC nº 43 Registo na CMVM nº 20161389 Av. Eng. Duarte Pacheco, 7 1070-100 Lisboa Portugal

Tel: +(351) 210 422 500 Fax: +(351) 210 427 950 www.deloitte.pt

REPORT ON REVIEW OF CONSOLIDATED FINANCIAL STATEMENTS

(Translation of a report originally issued in Portuguese)

Introduction

We have reviewed the accompanying consolidated financial statements of REN – Redes Energéticas Nacionais, S.G.P.S., S.A. (the Entity) and of its subsidiaries (the Group), which comprise the consolidated statement of financial position as of 30 September 2017 (that presents a total of 4,554,798 thousand euros and equity of 1,145,856 thousand euros, including a net profit of 88,867 thousand euros), the consolidated statement of profit and loss by nature, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the nine month period then ended, and the accompanying notes to the consolidated financial statements.

Management's Responsibility

Management is responsible for the preparation of consolidated financial statements in accordance with IAS 34 – Interim Financial Reporting as adopted by the European Union, and for the implementation and maintenance of an appropriate internal control system that allows the preparation of financial statements that are free from material misstatements due to fraud or error.

Auditor's responsibility

Our responsibility is to express a conclusion on the accompanying consolidated financial statements. We conducted our review in accordance with International Standard on Review Engagements 2410 – Review of Interim Financial Information Performed by the Independent Auditor of the Entity and further standards, technical and ethical directives of the Portuguese Institute of Statutory Auditors ("Ordem dos Revisores Oficiais de Contas"). These standards requires us to perform our review in order to conclude whether anything has come to our attention that causes us to believe that the consolidated financial statements are not prepared in all material respects in accordance with IAS 34 – Interim Financial Reporting, as adopted by the European Union.

A review of financial statements is a limited assurance engagement. The auditor performs procedures, primarily consisting of making inquiries and applying analytical procedures, and evaluates the evidence obtained.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing. Accordingly, we do not express an audit opinion on these consolidated financial statements.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying consolidated financial statements of REN – Redes Energéticas Nacionais, S.G.P.S., S.A. as of 30 September 2017, are not prepared, in all materials respects, in accordance with IAS 34 – Interim Financial Reporting, as adopted by the European Union.

Lisbon, 3 November 2017

Deloitte & Associados, SROC S.A.

Represented by Pedro Miguel Gonçalves Carreira Mendes, ROC

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee ("DTTL"), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as "Deloitte Global") does not provide services to clients. Please see www.deloitte.com/about to learn more about our global network of member firms.

Type: Sociedade Anónima | Tax and CRC Registration no.: 501776311| Share capital: € 500,000 | Head offices: Av. Eng. Duarte Pacheco, 7, 1070-100 Lisboa | Porto Office: Bom Sucesso Trade Center, Praça do Bom Sucesso, 61 - 13º, 4150-146 Porto

AI Terminal

REN-Redes Energeticas Nacionais

1903_10-q_2017-11-03_4a12e3f2-bf24-4399-863b-a05935f0b864.pdf

REN – Redes Energéticas Nacionais, SGPS, S.A.

Consolidated financial statements

REN - Redes Energéticas Nacionais, SGPS, S.A.

Index

1. ECONOMIC AND FINANCIAL PERFORMANCE

1.1 3RD QUARTER RESULTS

OPERATIONAL RESULTS – EBITDA

NET INCOME

1.2 AVERAGE RAB AND CAPEX

1.3 QUARTERLY STATEMENTS OF PROFIT OR LOSS AND COMPREHENSIVE INCOME FOR THE PERIODS FROM 1 JULY TO 30 SEPTEMBER OF 2017 AND 2016

Consolidated statements of profit or loss (unaudited information)

(Amounts expressed in thousands of Euros – tEuros)

Consolidated statements of comprehensive income (unaudited information)

CONSOLIDATED FINANCIAL STATEMENTS

2. CONSOLIDATED FINANCIAL STATEMENTS

Consolidated statements of financial position as of 30 September 2017 and 31 December 2016

Consolidated statements of profit or loss for the nine month periods ended 30 September 2017 and 2016

Consolidated statements of comprehensive income for the nine month periods ended 30 September 2017 and 2016

Consolidated statements of changes in equity for the nine month periods ended 30 September 2017 and 2016

Consolidated statements of cash flow for the nine month periods ended 30 September 2017 and 2016

3. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTH PERIOD ENDED 30 SEPTEMBER 2017

1 GENERAL INFORMATION

1.1 Companies included in the consolidation

1.2. Approval of the consolidated financial statements

2 BASIS OF PRESENTATION

3 MAIN ACCOUNTING POLICIES

Adoption of new standards, interpretations, amendments and revisions

Standards and interpretations, amended or revised not endorsed by the European Union

4 SEGMENT REPORTING

The results by segment for the nine month period ended 30 September 2017 were as follows:

Results by segment for the nine month period ended 30 September 2016 were as follows:

5 INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT

follows:

6 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES

Associates

Joint ventures

7 INCOME TAX

Income tax

Deferred taxes

Change in deferred tax assets – September 2017

Change in deferred tax assets – December 2016

Evolution of deferred tax liabilities – September 2017

Evolution of deferred tax liabilities – December 2016

8 FINANCIAL ASSETS AND LIABILITIES

September 2017

December 2016

Estimated fair value – assets measured at fair value

Financial risk management

9 ASSETS AVAILABLE FOR SALE

The changes in this caption were as follows:

10 TRADE AND OTHER RECEIVABLES

11 DERIVATIVE FINANCIAL INSTRUMENTS

September 2017

Swaps:

Cash flow hedges

Fair value hedge

Trading Swap

12 CASH AND CASH EQUIVALENTS

13 EQUITY INSTRUMENTS

Share capital

Own shares

Reserves and retained earnings

14 BORROWINGS

Leases

15 POST-EMPLOYMENT BENEFITS AND OTHER BENEFITS

16 PROVISIONS

17 TRADE AND OTHER PAYABLES

18 SALES AND SERVICES RENDERED

19 REVENUE AND COSTS FROM CONSTRUCTION ACTIVITIES

20 OTHER OPERATING INCOME

21 EXTERNAL SUPPLIES AND SERVICES

22 PERSONNEL COSTS

23 OTHER OPERATING COSTS

24 FINANCIAL COSTS AND INCOME

25 ENERGY SECTOR EXTRAORDINARY CONTRIBUTION

26 EARNINGS PER SHARE

27 DIVIDENDS PER SHARE