REN-Redes Energeticas Nacionais

Earnings Release • Mar 21, 2019

RESULTS PRESENTATION 2018

2018 HIGHLIGHTS

• In 2018, EBITDA stood at €492.3M, an increase of 1.0% compared with the previous year, mainly driven by the Portgás consolidation (€34.2M). Additionally, there was a positive contribution from the sale of the LPG(1) business (€3.7M) and Electrogas (∆€0.7M). However, these gains were partially offset by the decline in asset remuneration (-∆€35.3M), following the parameters set in the current electricity regulatory period and the decrease in bond yields;
• Net profit and Recurrent Net Profit decreased to €115.7M (-8.1%) and €137.2M (-11.4%), respectively, in spite of the positive contribution of Financial Results that reached €57.8M (5.7% YoY). Financials benefited from the reduction in the average cost of debt (2.2% versus 2.5% in 2017) and the decrease in Net Debt (-€103.1M to €2,653.1M);
• The maintenance of CESE(2) led to an effective tax rate of 42.0% for the full year;
• The deceleration of demand for new gas and electricity infrastructures resulted in a reduction in Total CAPEX and Transfers to RAB. Capex amounted to €121.9M (€155.6M in 2017) and Transfers to RAB to €88.5M (€158.8M in 2017);
• The Cabinet of the Energy Secretary of State approved the PDIRGN(3) , in January 04, and the PDIRT-E include a total amount of CAPEX of €55M and €535.1M, respectively, for the period 2018-2027.

(4) , in February 19, which

⁽¹⁾ Liquefied Petroleum Gas; (2) Extraordinary energy sector levy; (3) Natural Gas System's Development and Investment Plan; (4) Electricity Transmission System's Development and Investment Plan. 2

RESULTS AT A GLANCE

€M	4Q18	2018	2017	Δ%	Δ Abs.
EBITDA	113.9	492.3	487.5	1.0%	4.8
Financial Result	-14.3	-57.8	-61.2	5.7%	3.5
Net Profit	24.8	115.7	125.9	-8.1%	-10.2
Recurrent Net Profit	24.7	137.2	154.8	-11.4%	-17.6
Average RAB	3 832.0	3 832.0	3 924.7	-2.4%	-92.8
CAPEX	54.7	121.9	155.6	-21.6%	-33.6
Net Debt	2 653.1	2 653.1	2 756.2	-3.7%	-103.1

PT 10Y Treasury Bond Yields

Source: Bloomberg, Bank of Portugal, REN.

SOVEREIGN DEBT RISK OF PORTUGAL with a slightly decreasing trend

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TRANSFERS TO RAB

CAPEX REACHED €121.9M Of which Portgás accounted for €24.9M

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

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RAB REMUNERATION PORTGÁS (1) (€M)

1) In 2017, Portgás contributed with €7.1M (last 3 months of 2017) for REN's RAB remuneration.

RAB REMUNERATION DROPPED BY €36.7M Driven by the decrease in both RoR and asset bases (Electricity and NG^T )

External Supplies and Services include €1.2M from Electrogas acquisition in 2017.

OPERATIONAL COSTS (€M)

OPEX WAS €131.3M, 8.0% ABOVE 2017 VALUE Without Portgás, OPEX fell by 2.3%

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

CORE OPEX

With the new electricity regulatory period starting in 2018, "Forest clearing" costs are now subject to revenue cap (Core OPEX), and therefore no longer a pass-through cost. This amounted to €3.8M in extra Core OPEX.

CORE OPEX WAS €13.8M HIGHER YOY

Excluding Portgás and Forest clearing it was €0.4M above the previous year

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(1) Includes -Δ€0.6M of NG tariff smoothing effect (natural gas);

(2) Includes €1.2M related to the one-off costs with Electrogas (in 1Q17) and Δ€0.09M of OPEX own works.

EBITDA

EBITDA REACHED €492.3M Portgás contributed with €34.2M

TAXES (1) (€M)

(1) In 2018, without taking into account the special levy on the energy sector, the effective tax rate reached 29.3%, versus 25.7% in the previous year, which led to a €5.9M difference in taxes. This variation was mainly due to a higher State surcharge (∆€2.2M), to 9% in 2018 from 7% in 2017, and a higher amount of deferred taxes, due to the increase in receivables from tariff deviations (∆€2M).

BELOW EBITDA Financials benefited from both lower stock and lower cost of debt

NET DEBT (€M)

(1) Includes Δ€6.4M of positive tariff deviations.

NET DEBT DOWN BY 3.7% TO €2,653.1M

NET PROFIT

(€M)

NET PROFIT DECREASED BY 8.1% TO €115.7M On the back of higher amortizations (€13.1M) due to the Portgás acquisition

• In 2018, REN's EBITDA was stable, with the contribution from Portgás almost fully compensating for the decrease in returns from assets. Operational income also benefitted from the sale of the LPG business that belonged to Portgás;
• Financials improved as a result of the reduction in the amount of Debt and its effective average cost;
• Despite these positive effects, Net Income was hurt by an increased level of Amortization, higher Taxes and the payment for the fifth time of CESE. By year-end, the Company paid €25.3M, which brought the effective corporate tax rate to 42.0%. Over the last five years, the total CESE payments made by REN amounted to €127.5M;
• During this year, S&P upgraded REN's rating to 'BBB/A‐2' from 'BBB‐/A‐3' (in October) and Fitch reaffirmed REN's Rating at 'BBB', with a stable outlook (in April). Consequently, REN maintained its position as the Portuguese listed Company with the best rating from all three major agencies;
• With reference to 2018 results, the Board of Directors will propose, at the General Shareholders' Meeting that will take place on May 3, the payment of a dividend of 17.1 cents per share. This decision is in line with the previous year and with REN's dividend policy.

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