REN-Redes Energeticas Nacionais

Earnings Release • Nov 15, 2019

RESULTS PRESENTATION 9M19

9M19 HIGHLIGHTS

• EBITDA for the period stood at €368.0M, 2.7% (€10.4M) lower than the same period of the previous year. As expected, this was mainly due to the decrease in rates of return, following the drop in the Portuguese bond yield and the reduction in the Regulated Asset Base;
• Net Profit and Recurrent Net Profit amounted to €86.3M (-5.0%) and €110.7M (-1.6%), respectively. Financial Results (-€39.4M) impacted the results positively, benefiting from the decrease in Net Debt (-€57.4M) and the continuing decline in the average cost of debt (2.2% in 9M19, from 2.3% in 9M18). Taxes reached €42.0M, less 0.9% when compared with last year. Nevertheless, the payment of the extraordinary energy sector levy (CESE) penalized REN's results (€24.4M in 2019), raising the effective tax rate to 39.5%;
• CAPEX rose by 64.1% to €110.3M while Transfers to RAB increased by 84.8% to €60.1M. Both benefited from more investment in the electricity business, which represented 79.3% and 72.2% of the total, respectively;
• On October 01st , REN acquired the entire share capital of Transemel, for 168.6 million USD. This transaction was supported by debt. Since the announcement of this acquisition, all three major rating agencies have reaffirmed REN's rating at investment grade level. Despite this acquisition, Portugal continues to be REN's main target and natural market.

RESULTS AT A GLANCE

€M	3Q19	9M19	9M18	Δ%	Δ Abs.
EBITDA	120.6	368.0	378.4	-2.7%	-10.4
Financial Results	-12.6	-39.4	-43.5	9.3%	4.0
Net Profit	35.3	86.3	90.9	-5.0%	-4.5
Recurrent Net Profit	35.3	110.7	112.5	-1.6%	-1.8
Average RAB	3,717.8	3,717.8	3,835.2	-3.1%	-117.3
CAPEX	60.4	110.3	67.2	64.1%	43.1
Net Debt	2,586.5	2,586.5	2,643.8	-2.2%	-57.4

PT 10Y Treasury Bond Yields

Source: Bloomberg, Bank of Portugal, REN.

SOVEREIGN DEBT RISK OF PORTUGAL Yields have decreased significantly throughout 2019

CAPEX AND TRANSFERS TO RAB ROSE BY €43.1M AND €27.6M, RESPECTIVELY

AVERAGE RAB DECREASED BY 3.1% Despite the €9.0M rise in Portgás

RAB REMUNERATION PORTGÁS (€M) -€0.41M Impact of the decrease in the rate of return, to 5.70% from 5.82%. Impact of the €9.0M increase in the asset base, to a total of €469.5M. 20.1 20.1 9M18 9M19 €-0.03M (-0.1%)

RAB REMUNERATION DECLINED BY 6.7% Following the reduction in RoR and RAB (excluding Portgás)

7

OPERATIONAL COSTS (€M)

OPERATIONAL COSTS INCREASED BY €1.4M Of which €2.5M were pass-through

(1) ITC - Inter Transmission System Operator Compensation for Transits; (2) Item related to Portgás.

CORE OPEX WAS €1.1M LOWER YOY Portgás had a €3.6M positive evolution

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

TAXES

(2)

(€M)

(1) Average cost of debt was 2.2% (2.3% in 9M18);

(2) In 9M19, without taking into account the special levy on the energy sector, the effective tax rate reached 27.5%, versus 26.7% in the previous year.

BELOW EBITDA Financial Results were strengthened by lower Net Debt and average cost of debt

NET DEBT REDUCED BY €66.6M TO €2,586.5M Reflecting a cash flow higher than CAPEX and financing needs

NET PROFIT

(€M)

NET PROFIT DECLINED BY 5.0% TO €86.3M Despite better Financial Results (€4.0M)

• Until September 2019, REN's results were mostly penalized by both lower asset remuneration and a lower RAB, despite better financials;
• REN's effective tax rate was 39.5%, impacted by the special levy on energy companies;
• During 2019, REN reinforced one of its medium to long term objectives, expanding its international presence through the acquisition of Transemel. The Company is mostly located mainly in northern Chile, operating 92 km of electricity transmission lines and 5 substations, with approximately 93% of its revenues coming from regulated activities. This operation is in line with REN's strategic plan, which is based on a conservative growth strategy.

FINAL REMARKS

This presentation and all materials, documents and information used therein or distributed to investors in the context of this presentation do not constitute, or form part of, a public offer, private placement or solicitation of any kind by REN, or by any of REN's shareholders, to sell or purchase any securities issued by REN and its purpose is merely of informative nature and this presentation and all materials, documents and information used therein or distributed to investors in the context of this presentation may not be used in the future in connection with any offer in relation to securities issued by REN without REN's prior consent.

DISCLAIMER

Visit our web site at www.ren.pt or contact us:

Ana Fernandes – Head of IR Alexandra Martins Telma Mendes

Av. EUA, 55 1749-061 Lisboa Phone number: +351 210 013 546 ir@ren.pt