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

Consolidated Financial Statements 30 June 2018

(Translation of consolidated financial statements originally issued in Portuguese – Note 34)

Consolidated financial statements

30 JUNE 2018

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

Index

1.		FINANCIAL PERFORMANCE IN THE 1ST HALF OF 2018	5
2.		CONSOLIDATED FINANCIAL STATEMENTS	14
3.		NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2018	19
	1	GENERAL INFORMATION	19
	2	BASIS OF PRESENTATION	24
	3	MAIN ACCOUNTING POLICIES	25
	4	SEGMENT REPORTING	32
	5	TANGIBLE AND INTANGIBLE ASSETS	35
	6	GOODWILL	39
	7	INVESTMENTS IN ASSOCIATES AND JOIN VENTURES	39
	8	INCOME TAX	41
	9	FINANCIAL ASSETS AND LIABILITIES CLASSIFIED	46
	10	ASSETS AND LIABILITIES HELD FOR SALE	48
	11	INVESTMENTS IN EQUITY INSTRUMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME	49
	12	TRADE AND OTHER RECEIVABLES	51
	13	DERIVATIVE FINANCIAL INSTRUMENTS	52
	14	CASH AND CASH EQUIVALENTS	57
	15	EQUITY INSTRUMENTS	57
	16	RESERVES	58
	17	BORROWINGS	59
	18	POS-EMPLOYMENT BENEFITS AND OTHERS BENEFITS	62
	19	PROVISIONS FOR OTHER RISKS AND CHARGES	63
	20	TRADE AND OTHER PAYABLES	64
	21	SALES AND SERVICES RENDERED	65

	4. APPENDIX	75
34	EXPLANATION ADDED FOR TRANSLATION	73
33	SUBSEQUENT EVENTS	73
32	RELATED PARTIES	71
31	CONTINGENT ASSETS AND LIABILITIES	70
30	DIVIDENDS PER SHARE	69
29	EARNINGS PER SHARE	69
28	EXTRAORDINARY CONTRIBUTION OVER THE ENERGY SECTOR	68
27	FINANCIAL COSTS AND FINANCIAL INCOME	68
26	OTHER OPERATING COSTS	67
25	PERSONNEL COSTS	67
24	EXTERNAL SUPPLIES AND SERVICES	66
23	OTHER OPERATING INCOME	66
22	REVENUE AND COSTS FOR CONSTRUCTION ACTIVITIES	65

1. FINANCIAL PERFORMANCE IN THE 1ST HALF OF 2018

__________________________________________________________________________

1.1. First half results

In the first half of 2018, REN's net income was 52.8 million euros, 0.1 million euros (-0.3%) lower than in the same period of the prior year, reflecting the consolidation of Portgás - a Natural Gas Distribution company acquired in October of 2017- results with an impact of 11.8 million euros in EBIT (21.2 million euros in EBITDA), offset by the 11.1 million euros decrease in Electricity and Natural Gas Transmission EBIT (-11.5 million euros in EBITDA) and by the 1.4 million euros (+5.0%) increase in income taxes.

Similarly to the previous years, the results for 2018 reflect the continuation of the Extraordinary Levy on the Energy Sector (25.4 million euros in 2018 and 25.8 million euros in 2017¹ ).

Investment was 39.4 million euros, a 3.8% y.o.y decrease (-1.6 million euros), and transfers to RAB grew 17.0 million euros to 19.3 million euros. Average RAB grew by 384.9 million euros (+11.1%), to 3,855.2 million euros, reflecting REN Portgás acquisition (+459.9 million euros).

The average cost of debt improved 0,3 p.p., from 2.6% in June 2017 to 2.3% in June 2018. On the other hand, net debt increased to 2,686.7 million euros, +4.2% (+109.2 million euros) over the same period of the previous year, reflecting REN Portgás acquisition partially offset by the capital increase in 2017.

MAIN INDICATORS (MILLIONS OF EUROS)	June 2018	June 2017	VAR.%
EBITDA	252.4	242.7	4.0%
Financial results2	-27.3	-27.5	0.6%
Net income1	52.8	53.0	-0.3%
Recurrent net income	78.4	80.9	-3.0%
Total Capex	39.4	41.0	-3.8%
Transfers to RAB3 (at historic costs)	19.3	2.3	733.8%

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 The cost of 0.4 million euros in June 2018 and 0.3 million euros in June 2017 from electricity interconnection capacity auctions between Spain and Portugal – referred to as FTR (Financial Transaction Rights), were reclassified from financial income to Revenue.

³ Includes direct acquisitions (RAB related).

MAIN INDICATORS (MILLIONS OF EUROS)	June 2018	June 2017	VAR.%
Average RAB (at reference costs)	3,855.2	3,470.3	11.1%
Net debt	2,686.7	2,577.4	4.2%
Average cost of debt	2.3%	2.6%	-0.3p.p.

Operational results – EBITDA

Electricity and Natural Gas Transmission Business

EBITDA for the Transmission business reached 231.2 million euros in the first 6 months of 2018, a 4.8% decrease over the same period of the previous year (-11.5 million euros).

EBITDA - TRANSMISSION (MILLIONS OF EUROS)	June 2018	June 2017	VAR.%
1) Revenues from assets	207.5	227.5	-8.8%
RAB remuneration	87.6	106.2	-17.6%
Smoothing differences (gas)	0.0	0.6	-100.0%
Hydro land remuneration	0.1	0.1	-4.9%
Lease revenues from hydro protection zone	0.4	0.4	-1.2%
Economic efficiency of investments	10.8	10.8	0.0%
Recovery of amortizations (net of investment subsidies)	99.6	100.4	-0.7%
Amortização dos subsídios ao Investimento	9.0	9.0	-0.5%
2) Revenues from opex	52.8	48.3	9.4%
3) Other revenues	13.0	13.2	-1.7%
4) Own works (capitalised in investment)	7.8	6.2	25.3%
5) Earnings on Construction (excl. own works capitalised in investment) – Concession assets	22.9	34.7	-34.0%
6) OPEX	49.7	52.3	-5.1%
Personnel costs4	24.9	25.1	-0.7%
External costs	24.8	27.2	-9.1%
7) Construction costs – Concession assets	22.9	34.7	-34.0%
8) Provisions	0.1	0.0	n.m.
9) Impairments	0.2	0.2	-5.1%
10) EBITDA (1+2+3+4+5-6-7-8-9)	231.2	242.7	-4.8%

⁴ Includes training and seminars costs and personnel related provisions

The decrease in EBITDA resulted mainly from:

The decrease of 18.6 million euros in RAB remuneration (-17.6%), explained by:

__________________________________________________________________________

o The reduction of 13.6 million euros in the remuneration of electricity transportation regulated assets, reflecting (i) the reduction in the base rate of return (RoR) from 6.4% in June 2017 to 5.2% in June 2018– with the new regulatory period for the electricity sector started in January of 2018, the starting point for the RoR was updated from 6.4% to 5.9%; and (ii) the reduction of 21.5 million euros (-1.0%) in electricity transportation average RAB.
o Reduction of 5.1 million euros in the remuneration of natural gas transportation regulated assets, reflecting (i) the reduction in the rate of return from 6.3% in June 2017 to 5.5% in June 2018 – following the evolution of the Portuguese Republic 10Y Treasury Bills; and (ii) the reduction of 40.8 million euros (-3.8%) in natural gas transportation average RAB.

On the other hand, there following positive effects were recorded:

Increase of 4.5 million euros in Revenues from Opex (+9.4%);
Decrease of 2.7 million euros in Opex (-5.1%), of which -2.5 million euros (-9.1%) in External Costs and -0.2 million euros (-0.7%) in Personnel Costs;
Increase of 1.6 million euros in Own Works capitalised in investment (+25.3%).

Natural Gas Distribution Business

The consolidation of Portgás results, acquired in October of 2017, in the Group REN, generated an EBITDA in the first 6 months of 21.2 million euros, reflecting the following main effects:

RAB remuneration of 13.4 million euros, resulting from a 5.8% rate of return (similarly to the transportation business, the rate of return for the distribution is indexed to the evolution of the Portuguese Republic 10Y Treasury Bills) and an average RAB of 459.9 million euros;
Recovery of amortizations of 6.3 million euros;
Revenues from opex of 10.1 million euros
Opex of 11.3 million euros, of which 2.6 million euros of personnel costs and 8.7 million euros of external costs. External costs include 3.8 million euros of pass-through costs, namely the Soil Occupation Levies.

EBITDA - DISTRIBUTION	June
(MILLIONS OF EUROS)	2018
1) Revenues from assets	19.7
RAB remuneration	13.4
Recovery of amortizations (net of investment subsidies)	6.3
2) Revenues from OPEX	10.1
3) Other revenues	1.6
4) Own works (capitalised in investment)	1.1
5) Earnings on Construction (excl. own works capitalised in investment) – Concession assets	7.5
6) OPEX	11.3
Personnel costs5	2.6
External costs	8.7
7) Construction costs – Concession assets	7.5
8) Provisions	0.0
9) Impairments	-0.1
10) EBITDA (1+2+3+4+5-6-7-8-9)	21.2

Net income

Overall, the Group's net income for the first 6 months of 2018 decreased 0.1 million euros (-0.3%) y.o.y., reaching 52.8 million euros, reflecting the increase in amortizations (+9.0 million euros) – resulting from the consolidation of Portgás, acquired in October of 2017, partially offset by the following positive effects:

Increase in financial results (+0.2 million euros, +0.6%), reflecting the increase in net debt to 2,686.7 million euros, +4.2% (+109.2 million euros; +4.2%), driven by the acquisition of REN Portgás partially offset by the capital increase in 2017, despite the improvement in the average cost of debt from 2.6% in June 2017 to 2.3% in June 2018.
Increase in EBITDA by 4.0% (+9.7 million euros), reflecting the new Natural Gas distribution business's EBITDA (+21.2 million euros), partially offset by the decrease of 11.5 million euros in Electricity and Natural Gas Transportation businesses' EBITDA.

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

Excluding non-recurring items, Net Income for the first 6 months of 2018 dropped 2.4 million euros (-3.0%). Non-recurring items considered in the first 6 months of 2018 and 2017 are as follows:

__________________________________________________________________________

i) In 2018: i) Extraordinary Levy on the Energy Sector laid down in the State Budget for 2018 (25.3 million euros); ii) operating one-off costs with the process of sale of REN Portgás GPL (0.3 million euros, 0.2 million euros after taxes) that was concluded in July 2018
ii) Em 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 (2.9 million euros, 2.1 million euros after taxes)

NET INCOME		June
(MILLIONS OF EUROS)	June 2018	2017	VAR.%
EBITDA	252.4	242.7	4.0%
Depreciations and amortizations	117.7	108.6	8.3%
Financial results	-27.3	-27.5	0.6%
Income tax expenses	29.2	27.9	5.0%
Extraordinary levy on the energy sector 6	25.4	25.8	-1.5%
Net income	52.8	53.0	-0.3%
Non-recurring items	25.6	27.9	-8.2%
Recurrent net income	78.4	80.9	-3.0%

1.2. Average RAB and Capex

In the first half of 2018, Capex reached 39.4 million euros, a 3.8% y.o.y. decrease (-1.6 million euros), and transfers to RAB reached 19.7 million euros, a 17.0 million euros increase over the first half of 2017. In electricity, investment dropped 26.5% to 27.6 million euros, and transfers to RAB were 12.4 million euros, a y.o.y. increase of 11.4 million euros. Main projects include: (i) the remodelling of power line Rio Maior – Alto Mira (2.4 million euros), (ii) the remodelling of control and protection systems in Riba d'Ave (2.0 million euros), (iii) the uprating of power line Carregado-Rio Maior 1 (1.8 million euros), (iv) the uprating of power line Riba de Ave – Recarei 1 (1.8 million euros), (v) the remodelling of control and protection systems in Canelas (1.5 million euros) and (iii) the remodelling of control and protection systems in Falagueira (1.0 million euros).

⁶ The full amount of the levy was recognized in the 1st quarter of 2018 and 2017, according to the Portuguese securities market commission (CMVM) recommendations

In natural gas transmission, investment reached 3.0 million euros, 8.2% lower than the same period of the previous year, and trasfers to RAB decreased 0.6 million euros (-45.2%) to 0.7 million euros.

In natural gas distribution, investment was 8.8 million euros, 35% for new supply points and 50% with the expansion of the distribution network.

Average RAB was 3,855.2 million euros, a 384.9 million euros (+11.1%) y.o.y increase, driven by the acquisition of REN Portgás which had a 459.9 million euros average RAB in June 2018. In electricity, the average RAB (excl.lands) reached 2,107.6 million euros (-21.5 million euros, -1.0%), of which 1,130.8 million euros in assets remunerated at a premium rate of return, while lands reached 246.1 million euros (-12.7 million euros, -4.9%). In natural gas transportation, the average RAB was 1,041.7 million euros (-40.8 million euros, -3.8%).

1.3. Main REN Group events

January REN issued 300 million euros in 10-year bonds with an interest rate equal to 10 years'mid swap rate plus 0.8%.

February REN inaugurated the Data Centre in Riba de Ave, an infrastructure which allows to significantly strengthen the security of the Security Telecommunications Network (RTS - Rede de Telecomunicações de Segurança). The official opening was attended by Minister of the Economy, Manuel Caldeira Cabral, and by the Secretary of State for Energy, Jorge Seguro Sanches. The Data Centre will be used, in addition to REN, by the EDP group and the NOS group, clients of RENTELECOM, REN group's telecommunications network operator.

Mach		The national electricity generation hit a new record of 12,043 MW, 555 MW more than the previous record in 2016.
		REN and the Green Project Awards (GPA) launch the GPA - REN Biodiversity and Forests Award to promote the innovation and development of best practices in forest and biodiversity protection.
		Recorded a new all-time high in daily wind production in Portugal, with 101 GWh, surpassing the 96,7 GWh recorded on January 2017
		Renewable production was sufficient to meet electricity consumption needs in Portugal for 2 periods – 63 hours and 68 hours
April		REN Energy App won the Grand Prize of the Associação Portuguesa de Comunicação de Empresa - APCE (Portuguese Corporate Communication Association), in the Mobile Communication and Apps category.
		REN delivered eight vehicles to eight fire brigades within the scope of its policy of supporting the local communities and preventing forest fires.
		REN and the Portuguese Government, through the State Department of Energy, signed an agreement for the expansion of the Portuguese Pilot Zone (PZ) for the production of wave power in Viana do Castelo.
May		REN's General Shareholders Meeting approved REN´s governing bodies for the 2018-2020 period, including two new members in the Board of Directors, Li Lequan, Senior Vice President of the State Grid International Development Corporation Limited and member of the Board of Directors of ElectraNet, and Manuela Veloso, Herbert A. Simon University Professor, at Carnegie Mellon University, as well as head of the Department of Machine Learning of the School of Computer Science. Longhua Jian, Vice President of the China Electric Power Equipment and Techology Co.Ltd, terminated his duties as member of the REN's Board of Direct.
		REN presented its strategic plan for the 2018-2021 period which maintains commitment to the operation in Portugal and openness to investment opportunities
		REN and ONEE - Office National de l'Electricité et de l'Eau Potable of Morocco were mandated by the Governments of Portugal and Morocco to submit, within six months, a preliminary draft proposal for the construction and financing model for the construction of the Portugal-Morocco electric interconnection.
		REN Energia App received two prizes at the Communicator Awards - in the category of Mobile General Business and in the category of Best User Interface.
June		REN presented, the findings of the activities carried out in the past three years by 13 researchers from REN Biodiversity Chair, who studied the impact of the electrical infrastructure on birds. The 2nd Symposium of REN was attended by the North American biologist, Rick Harness, an expert in the study of the interaction between birds and electrical facilities.

Quarterly statements of profit and loss and comprehensive income for the periods from 1 April to 30 June 2018 and 2017

Consolidated statements of profit and loss (unaudited information)

(Amounts expressed in thousands of euros – tEuros)
	01.04.2018 to	01.04.2017 to
	30.06.2018	30.06.2017
	26	-
	142,065	133,532
	25,396	27,745
	1,394	927
Other operating income	5,626	8,115
Sales Services rendered Revenue from construction of concession assets Gains from associates and joint ventures Operating income Cost of goods sold Cost with construction of concession assets External supplies and services Employee compensation and benefit expense Depreciation and amortizations Provisions Impairments Other expenses Operating costs Operating results Financial costs Financial income Investment income - dividends Financial results Profit before income taxes Income tax expense Extraordinary contribution on energy sector (CESE) Net profit for the period Attributable to: Equity holders of the Company Non-controlled interest Consolidated profit for the period	174,507	170,319
	(388)	(78)
	(20,754)	(24,611)
	(11,433)	(10,564)
	(13,892)	(12,638)
	(58,985)	(54,236)
	(57)	(40)
	(86)	(105)
	(3,797)	(3,180)
	(109,392)	(105,452)
	65,115	64,868
	(19,702)	(18,007)
	4,003	946
	4,968	5,013
	(10,731)	(12,048)
	54,384	52,819
	(14,569)	(13,329)
	(65)	-
	39,750	39,490

	39,750	39,490
	-	-
	39,750	39,490
Earnings per share (expressed in euro per share)	0.06	0.07

Consolidated statements of comprehensive income (unaudited information)

(Amounts expressed in thousands of euros – tEuros)
	01.04.2018 to	01.04.2017 to
	30.06.2018	30.06.2017
Net Profit for the year	39,750	39,490
Other income and cost recorded in equity:	-	-
Items that will not be reclassified subsequently to profit or loss:
Actuarial gains / (losses)	248	(52)
Tax effect on actuarial gains / (losses)	(75)	16
Other changes in equity	36	-
Items that will be reclassified subsequently to profit or loss:
Currency exchange differences (Associates)	8,084	(10,608)
Increase/(decrease) in hedging reserves - cash flow derivatives	(2,356)	643
Tax effect on hedging reserves	495	180
Gain/(loss) in fair value reserve - available-for-sale assets	4,037	1,606
Tax effect on fair value reserves	(848)	(616)
Comprehensive income for the year	49,372	30,660
Attributable to:
Shareholders of the company	49,372	30,660
Non-controlling interests	-	-
	49,372	30,660

2. CONSOLIDATED FINANCIAL STATEMENTS

Consolidated statements of financial position as of 30 June 2018 and 31 December 2017

(Amounts expressed in thousands of Euros – tEuros)
	Notes	Jun 2018	Dec 2017
ASSETS
Non-current assets
Property, plant and equipment	5	3,029	3,227
Goodwill	6	18,913	19,102
Intangible assets	5	4,227,485	4,306,417
Investments in associates and joint ventures	7	163,888	162,027
Investments in equity instruments at fair value through other comprehensive income	9 and 11	149,768	156,439
Derivative financial instruments	9 and 13	14,689	7,907
Other financial assets	9	36	27
Trade and other receivables	9 and 12	92,880	6,528
Deferred tax assets	8	106,030	97,737
		4,776,718	4,759,411
Current assets
Inventories		2,966	2,958
Trade and other receivables	9 and 12	354,451	540,849
Cash and cash equivalents	14	52,107	61,458
		409,524	605,265
Assets held-for-sale associated with discontinued operations	10	665	-
		410,189	605,265

Total assets	4	5,186,907	5,364,676
EQUITY
Shareholders' equity
Share capital	15	667,191	667,191
Own shares	15	(10,728)	(10,728)
Share premium		116,809	116,809
Reserves	16	309,290	310,191
Retained earnings		247,124	225,342
Other changes in equity		(5,561)	(5,541)
Net profit for the period		52,823	125,925
Total equity		1,376,948	1,429,189
LIABILITIES
Non-current liabilities
Borrowings	9 and 17	2,303,315	2,205,390
Liability for retirement benefits and others	18	119,566	121,977
Derivative financial instruments	9 and 13	8,695	6,960
Provisions	19	9,071	9,035
Trade and other payables	9 and 20	384,741	364,961
Deferred tax liabilities	8	100,360	99,534
		2,925,748	2,807,857
Current liabilities
Borrowings	9 and 17	450,872	624,336
Trade and other payables	9 and 20	397,839	473,337
Income tax payable	8 and 9	34,980	29,957
		883,691	1,127,630

Liabilities directly associated with the assets held-for-sale	10	520	-
		884,211	1,127,630
Total liabilities	4	3,809,959	3,935,487
Total equity and liabilities		5,186,907	5,364,676

The accompanying notes form an integral part of the consolidated statement of financial position as of 30 June 2018.

Consolidated statements of profit and loss for the six month periods ended 30 June 2018 and 2017

	Notes	Jun 2018	Jun 2017

Sales	21	34	15
Services rendered	21	286,976	272,977
Revenue from construction of concession assets	22	39,277	40,857
Gains / (losses) from associates and joint ventures	7	2,542	2,753
Other operating income	23	15,561	13,611
Operating income		344,390	330,213
Cost of goods sold		(821)	(124)
Costs with construction of concession assets	22	(30,410)	(34,667)
External supplies and services	24	(22,176)	(20,252)
Personnel costs	25	(27,253)	(24,800)
Depreciation and amortizations	5	(117,656)	(108,636)
Provisions	19	(57)	27
Impairments		(105)	(199)
Other expenses	26	(10,740)	(7,131)
Operating costs		(209,218)	(195,782)
Operating results		135,172	134,432
Financial costs	27	(37,648)	(36,716)
Financial income	27	4,975	3,889
Investment income - dividends	11	4,968	5,013
Financial results		(27,705)	(27,813)
Profit before income tax		107,467	106,619
Income tax expense	8	(29,246)	(27,856)
Energy sector extraordinary contribution (ESEC)	28	(25,398)	(25,798)
Net profit for the year		52,823	52,965
Attributable to:
Equity holders of the Company		52,823	52,965
Non-controlled interest		-	-
Consolidated profit for the year		52,823	52,965
Earnings per share (expressed in euro per share)	29	0.08	0.10

The accompanying notes form an integral part of the consolidated statement of profit and loss for the six month period ended 30 June 2018.

Consolidated statements of comprehensive income for the six month periods ended 30 June 2018 and 2017

(Amounts expressed in thousands of Euros – tEuros)
	Notes 8 7 13 8 and 13 11 8 and 11	Jun 2018	Jun 2017
Consolidated Net Profit for the period		52,823	52,965
Items that will not be reclassified subsequently to profit or loss:
Actuarial gains / (losses) - gross of tax		(64)	125
Tax effect on actuarial gains / (losses)		19	(36)
Other changes in equity		87	-
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations		4,118	(10,860)
Increase / (decrease) in hedging reserves - cash flow derivatives		330	4,548
Tax effect on hedging reserves		(69)	(435)
Gain/(loss) in fair value reserve - Investments in equity instruments at fair value through other comprehensive income		(6,684)	2,012
Tax effect on items recorded directly in equity		1,404	(868)
Comprehensive income for the period		51,963	47,452
Attributable to:
Equity holders of the company		51,963	47,452
Non-controlled interest		-	-
		51,963	47,452

The accompanying notes form an integral part of the consolidated statement of comprehensive income for the six month period ended 30 June 2018.

Consolidated statements of changes in equity for the six month periods ended 30 June 2018 and 2017

			(Amounts expressed in thousands of Euros – tEuros)
							Attributable to shareholders
Changes in the year		Notes Share capital	Own shares	Share premium	Legal Reserve	Fair Value reserve (Note 11)	Hedging reserve (Note 13)	Other reserves	Other changes in equity	Retained earnings	Profit for the year	Total
At 1 January 2017		534,000	(10,728)	-	106,800	48,781	(13,858)	177,482	30	216,527	100,183	1,159,218
Net profit of the period and other comprehensive income		-	-	-	-	1,144	4,113	(10,860)	-	89	52,965	47,452
Transfer to other reserves Distribution of dividends	30	- -	- -	- -	- -	- -	- -	- -	- -	100,183 (90,650)	(100,183) -	- (90,650)
At 30 June 2017		534,000	(10,728)	-	106,800	49,925	(9,745)	166,622	30	226,149	52,965	1,116,019
At 31 December 2017		667,191		(10,728) 116,809	106,800	53,778	(9,702)	159,315	(5,541)	225,342	125,925	1,429,189
Adoption of IFRS 9 - Financial instruments	3	-	-	-	-	-	-	-	-	9,223	-	9,223
At 1 January 2018		667,191		(10,728) 116,809	106,800	53,778	(9,702)	159,315	(5,541)	234,565	125,925	1,438,411
Net profit of the period and other comprehensive income		-	-	-	-	(5,280)	261	4,118	(20)	61	52,823	51,963
Transfer to other reserves		-	-	-	-	-	-	-	-	125,925	(125,925)	-
Distribution of dividends	30	-	-	-	-	-	-	-	-	(113,426)	-	(113,426)
At 30 June 2018		667,191		(10,728) 116,809	106,800	48,498	(9,441)	163,433	(5,561)	247,124	52,823	1,376,948

The accompanying notes form an integral part of the consolidated statement of changes in equity for the six month period ended 30 June 2018.

Consolidated statements of cash flow for the six month periods ended 30 June 2018 and 2017

(Amounts expressed in thousands of Euros – tEuros)
	Note	Jun 2018	Jun 2017
Cash flow from operating activities:
Cash receipts from customers		1,179,006	1,284,930 a)
Cash paid to suppliers		(836,534)	(944,205) a)
Cash paid to employees		(36,384)	(32,754)
Income tax received/paid		(30,660)	(25,414)
Other receipts / (payments) relating to operating activities		6,108	(4,701)
Net cash flows from operating activities (1)		281,536	277,856
Cash flow from investing activities:
Receipts related to:
Property, plant and equipment		15	-
Other financial assets		-	1,309
Investment grants		3,648	1,471
Interests and other similar income		197	-
Dividends	7 and 11	3,664	5,890
Payments related to:
Financial investments	7	(12)	(169,285)
Property, plant and equipment		(53)	(191)
Intangible assets - Concession assets		(82,419)	(93,135)
Net cash flow used in investing activities (2)		(74,960)	(253,941)
Cash flow from financing activities:
Receipts related to:
Borrowings		1,400,091	2,417,150
Interests and other similar income		-	8
Payments related to:
Borrowings		(1,465,734)	(2,298,551)
Interests and other similar expense		(43,105)	(41,925)
Dividends	30	(113,426)	(90,650)
Net cash from / (used in) financing activities (3)		(222,175)	(13,968)
Net (decrease) / increase in cash and cash equivalents (1)+(2)+(3)		(15,599)	9,947
Effect of exchange rates	14	(91)	1,710
Cash and cash equivalents at the beginning of the year	14	60,448	10,680
Cash and cash equivalents at the end of the period		44,759	22,296
Detail of cash and cash equivalents
Cash	14	23	21
Bank overdrafts	14	(7,348)	(374)
Bank deposits	14	52,084	22,649
		44,759	22,296

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.

The accompanying notes form an integral part of the consolidated statement of cash flow for the six month period ended 30 June 2018.

3.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2018

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(Translation of notes originally issued in Portuguese – Note 34)

1 GENERAL INFORMATION

REN – Redes Energéticas Nacionais, SGPS, S.A. (referred to in this document as "REN" 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., incorporated on 26 September 2006, whose activities are carried out under a concession contract for a period of 50 years as from 2007 which establishes the overall management of the Public Electricity Supply System (Sistema Eléctrico de Abastecimento Público - SEP);

b) REN Trading, S.A., was incorporated on 13 June 2007, whose main function 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 Contracts for the Maintenance of the Contractual Equilibrium (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, to domestic and international distributors;

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c) Enondas, Energia das Ondas, S.A. was incorporated on 14 October 2010, its capital being fully owned by REN - Redes Energéticas Nacionais, SGPS, S.A., with the main activity being management of the concession to operate a pilot area for the production of electric energy 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;

e) REN Gás Distribuição SGPS S.A., acquired as part of the expansion of the gas business on 4 October 2017. The operations of this company comprise the management of financial interests in other companies as an indirect form of economic activity;

f) REN Portgás Distribuição, SA ("REN Portgás"), acquired as part of the expansion of the gas business on 4 October 2017. The operations of this company comprise the distribution of natural gas in low and medium pressure, as well as production and distribution of other channelled fuel gases and other activities related, namely the production and sale of flaring equipment;

g) REN Portgás GPL, SA, acquired as part of the expansion of the gas business on 4 October 2017. The operations of this company comprise: a) the sale of energy in the form of liquefied petroleum gas, propane or other, in accordance with the licenses it holds, in particular the purchase and sale, including the resale, of liquefied petroleum gas, for selling to final customers or other agents, through the conclusion of bilateral contracts or participation in other markets; b) the development and operation of gas infrastructures not reserved by law; (c) the provision of audit, maintenance and repair services for liquefied petroleum gas consumption facilities and the provision of value added services in the area of marketing and consumption; d) the provision of study, consultancy and research services for systems and processes in the liquefied petroleum gas sector.

The operations of the companies indicated in b) to d) above are developed in accordance with the three concession contracts separately granted for periods of 40 years starting 2006. The company indicated in f) above develops its activities in accordance with one concession contract granted for 40 years starting 2008.

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.

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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 June 2018 REN SGPS also holds:

a) 42.5% interest in the share capital of Electrogas, S.A., a provider of natural gas and other fuels transportation. The participation was acquired on 7 February 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) 7.9% 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 June 2018 and 31 December 2017:

		Jun 2018		Dec 2017
		% Owned		% 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.	National electricity transmission network operator (high and very
Av. Estados Unidos da América, 55 - Lisboa	high tension)	100%	100%	100%	100%
REN Trading, S.A.	Purchase and sale, import and export of electricity and natural
Praça de Alvalade, nº7 - 12º Dto, Lisboa	gas	100%	100%	100%	100%
Enondas-Energia das Ondas, S.A.	Management of the concession to operate a pilot area for the
Mata do Urso - Guarda Norte - Carriço- Pombal	production of electric energy from ocean waves	100%	100%	100%	100%
Telecommunications segment:
RENTELECOM - Comunicações S.A.
Av. Estados Unidos da América, 55 - Lisboa	Telecommunications network operation	100%	100%	100%	100%
Other segments:
REN - Serviços, S.A.
Av. Estados Unidos da América, 55 - Lisboa	Back office and management of participations	100%	100%	100%	100%
REN Finance, B.V.
De Cuserstraat, 93, 1081 CN Amsterdam,	Participate, finance, collaborate, conduct management of	100%	100%	100%	100%
The Netherlands	companies related to REN Group.
Natural gas segment:
REN Atlântico , Terminal de GNL, S.A.	Liquified Natural Gas Terminal maintenance and regasification
Terminal de GNL - Sines	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
Santiago do Chile	Investments in assets, shares, companies and associations.	100%	-	100%	-
Owned by REN Gas, S.A.:
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
Estrada Nacional 116, km 32,25 - Vila de Rei - Bucelas	manager	100%	-	100%	-
REN Gás Distribuição SGPS, S.A.	Management of holdings in other companies as an indirect form
Av. Estados Unidos da América, 55 - Lisboa	of economic activity	100%	-	100%	-
Owned by REN Gás Distribuição SGPS S.A.:
REN Portgás Distribuição, S.A.	Distribution of natural gas
Rua Linhas de Torres, 41 - Porto		100%	-	100%	-
Owned by REN Portgás Distribuição, S.A. .:		100%	-	100%	-
REN Portgás GPL, S.A.	The commercialization of energy in the form of liquefied
Rua Linhas de Torres, 41 - Porto	petroleum gas, propane or other

There were no changes in the consolidation perimeter in 2018 with respect to what was reported on

31 December 2017.

1.2. Approval of the consolidated financial statements

These consolidated financial statements were approved by the Board of Directors at a meeting held on 26 July 2018. 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).

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2 BASIS OF PRESENTATION

The consolidated financial statements for the six month period ended 30 June 2018 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 2017.

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 June 2018, current liabilities in the amount of 884,211 thousand Euros are greater than current assets, which total 410,189 thousand Euros.

However, in addition to the consolidated results and cash flows estimated for 2018, the Group has, as of 30 June 2018, credit lines in the form of commercial paper available for use in the amount of 825,000 thousands Euros, with a substantial part with guaranteed placement (Note 17).

In result of this assessment, the Board of Directors 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 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 Portugal, 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 2018.

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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 2017, as explained in the notes to the consolidated financial statements for 2017, except in the adoption of IFRS 9 - Financial Instruments, to the detriment of IAS 39, taking into account obligatory application for the first time in the year beginning on January 1, 2018. The remaining policies were consistently applied in the periods presented.

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 effective for annual periods beginning on or after 1 January 2018:

IFRS 9 - Financial Instruments

In July 2014, the International Accounting Standards Board (IASB) issued the final version of IFRS 9 Financial Instruments ("IFRS 9"). IFRS 9 was adopted by European Commission Regulation 2067/2016 of 22 November 2016.

The Group adopted IFRS 9 with the following impacts:(i) an increase in equity, in the caption "Retained earnings" in the amount of 9,223 thousand Euros (net of income taxes in the amount of 2,615 thousand Euros); and (ii) a decrease in liabilities under the caption "Borrowings" in the amount 11,838 thousand Euros, on the date of adoption on January 1, 2018, mainly related to changes in the measurement of financial liabilities in connection with the exchange bond operation completed by the Group in 2016.

I. Classification and measurement

IFRS 9 presents a new classification and measurement approach for financial assets that reflects the business model used in its management and the characteristics of contractual cash flows.

IFRS 9 determines three main categories of classification of financial assets: measured at amortized cost, fair value through other comprehensive income (FVOCI) and fair value through profit or loss (FVTPL). IFRS 9 eliminates the categories of IAS 39: Held-to-Maturity (HTM), Accounts Receivable and Available-for-Sale (AFS).

In accordance with IFRS 9, embedded derivative contracts may not be forked. Instead, the hybrid financial instrument should be evaluated and classified as a single financial asset measured at fair value through profit or loss.

Based on the evaluation of the new classification requirements there are no significant impacts on the accounting of its financial assets.

II. Impairment

IFRS 9 replaces the "loss incurred" model in IAS 39 with an expected credit loss (ECL) model. As such, it will no longer be necessary for the loss event to occur so that impairment is recognized.

The new impairment model will be applied to financial assets measured at amortized cost or FVOCI, except for investments in equity instruments.

In accordance with IFRS 9, losses will be measured on one of the following bases:

• 12-month ECL, which results from possible default events within 12 months after the reporting date; and

• Lifetime ECLs, which result from all default events during the expected life of a financial instrument.

If the credit risk of a financial asset has not increased significantly since its initial recognition, an accumulated impairment equal to the expectation of loss estimated to occur within the next 12 months must be recognized. If the credit risk has increased significantly, an accumulated impairment equal to the expectation of loss that is estimated to occur until the respective maturity of the asset should be recognized.

There are no significant impacts on impairment due to the adoption of IFRS 9.

III. Classification - Financial Liabilities

IFRS 9 maintains the requirements in IAS 39 for the classification of financial liabilities.

However, in accordance with IAS 39, all changes in Fair Value of liabilities designated as FVTPL are recognized in profit or loss, whereas, in accordance with IFRS 9, these changes in Fair Value are generally presented as follows:

The amount of changes in Fair Value that is attributable to changes in the liability credit risk is presented in the Other Comprehensive Income (OCI) and is not recycled to profit or loss; and
The remaining amount of changes in Fair Value is shown in Profit or Loss.

The Group has not yet designated any financial liability as FVTPL and, currently, does not intend to do so. The Group's preliminary valuation did not indicate any material impact if the requirements of IFRS 9 relating to the classification of financial liabilities were applied as of 1 January 2018.

In addition, in accordance with IFRS 9 and as confirmed by the IASB Interpretations Committee, modified financial liabilities that do not result in derecognition shall be measured at the date of their modification at their present value by applying the original effective rate of the liability as the discount rate and any difference recognized as a gain or loss in the results of the year. The treatment under IAS 39 allowed the deferral of this differential by reviewing the

effective interest rate, a treatment applied by REN in connection with the exchange bond operation completed in 2016. This change has an impact on the book value of REN's financial liabilities in the amount of 11,838 thousand Euros and in the caption "Retained earnings" in the amount of 9,223 thousand Euros (net of income taxes in the amount of 2,615 thousand Euros).

IV. Coverage Accounting

At the date of initial application of IFRS 9, the Group may choose as an accounting policy to maintain the requirements relating to the hedge accounting of IAS 39 instead of those of IFRS 9. The actual plan of the Group is the application of IFRS 9.

The REN Group has decided to adopt the hedge accounting component of IFRS 9, and there are no significant impacts arising from the adoption of the hedge accounting component of IFRS 9.

V. Disclosures

IFRS 9 requires new disclosures, in particular with respect to hedge accounting, credit risk and expected loss. The Group will make such disclosures in the context of its annual report.

IFRS 15 - Revenue from Contracts with Customers

This new standard only applies to contracts for the delivery of assets or rendering of services; i) establishes that the company recognizes the revenue when the contractual obligation to deliver assets or provide services is satisfied; ii) and the amount that reflects the consideration to which the company is entitled, as established in the "5 step methodology. The adoption of this standard does not result in significant impacts on REN's consolidated financial statements.

Amendments to IFRS 2 - Share-based payment

This amendment clarifies the basis for measuring the transactions of share-based payment transactions, which are cash-settled, as well as the accounting changes to a share-based payment plan that change its classification from cash-settled to equity-settled.

A further amendment is the introduction of an exception to the principles of IFRS 2, which now requires that a equity-based payment plan has to be treated as if it were fully equitysettled, when the employer is obliged to withhold an amount of the value of the plan to pay the tax to which the employee is subject, and to deliver the amount to the tax authority. The adoption of this standard does not result in significant impacts on REN's consolidated financial statements.

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Annual improvements to IFRS (2014-2016 cycle)

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 (this improvement eliminates the temporary exemptions foreseen in the transition to the IFRS, to IFRS 7 and IAS 19 that are no longer applicable); (ii) IFRS 12 (this improvement clarifies that the scope of IFRS 12 includes financial investments in subsidiaries, associates and / or joint ventures that are part of groups held for disposal (under IFRS 5) and that the exemption from IFRS 12 only relates to the disclosure on the summary of financial information of these entities); and (iii) standard IAS 28 (this improvement clarifies that investments in associates or joint ventures held by a venture capital company can be measured at fair value in accordance with IFRS 9, individually). The adoption of this standard does not result in significant impacts on REN's consolidated financial statements.

Amendments to IFRIC 22 - Foreign Currency Transactions and Advance Consideration

IFRIC 22 corresponds to an interpretation to IAS 21 - 'The effects of changes in exchange rates', referring to the determination of the 'transaction date' when an entity pays or receives in advance, the counterpart of contracts denominated in foreign currency, being the factor that sets the exchange rate to be used for currency translation of transactions in foreign currency at the date of the transaction. The adoption of this standard does not result in significant impacts on REN's consolidated financial statements.

Amendments to IAS 40 - Transfers of Investment Property

This amendment clarifies that the transfer of assets can only be made (from and to the investment property category) when there is evidence of its change of use, meaning that the intention change of management is not sufficient to make the transfer. The adoption of this standard does not result in significant impacts on REN's consolidated financial statements.

The following standards, interpretations, amendments and revisions have been endorsed by the European Union and are only mandatory in future financial years:

IFRS 16 – Leases (new standard to be applied for periods beginning on or after 1 January 2019)

This standard replaces IAS 17 – Leases and the associated interpretations, with impact on the accounting performed by lessees, which are obliged to recognize for lease contracts a lease liability corresponding to future lease payments and, respectively, an asset related with the "right of use". The future adoption of this standard is not expected to have significant impacts on REN's consolidated financial statements.

Amendment to IFRS 9 - Prepayment Features with Negative Compensation new standard to be applied for periods beginning on or after 1 January 2019)

This amendment allows the classification / measurement of financial assets at amortized cost even if they include conditions that allow the prepayment for a lower value than the nominal value ("Negative compensation"), being an exemption to the requirements predicted in IFRS 9 for the classification of financial assets at amortized cost. Additionally, it is also clarified that when there is a change in the conditions of a financial liability that does not implies a derecognition, the measurement difference must be registered immediately in the year's results. The future adoption of this standard is not expected to have significant impacts on REN's consolidated financial statements.

The Company did not use any early adoption option of any of the above standards in the consolidated financial statements for the period ended 30 June 2018.

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

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The following standards, interpretations, amendments and revisions, with mandatory application in future years, have 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 17 - Insurance Contracts	01/jan/21	This standard is intended to replace IFRS 4 and requires that all insurance contracts to be accounted for consistently.
IFRIC 23 - Uncertainty Over Income Tax Treatments 01/jan/19		Clarifies how the recognition and measurement requirements of IAS 12 - Income Tax are applied when there is uncertainty about the tax treatment.
Amendments to IAS 28: Long-term Interests in Associates and Joint Ventures	01/jan/19	These amendments clarify that companies account for long-term interests in an associate or joint venture to which the equity method is not applied using IFRS 9.
Annual Improvements to IFRS Standards 2015- 2017 Cycle	01/jan/19	The changes introduced in the 2015-2017 cycle focused on the revision of: (i) IAS 23 - Borrowing Costs (clarifies the computation of the average interest rate); (ii) IAS 12 - Income Tax (establishes that the tax impact of the dividends distribution should be accounted for when the account payable is recorded); and (iii) IFRS 3 and IFRS 11 (clarifies that when obtaining control of a joint venture the financial interest should be accounted for at fair value).
Amendments to IAS 19: Plan Amendment, Curtailment or Settlement	01/jan/19	If a plan amendment, curtailment or settlement occurs, it is now mandatory that the current service cost and the net interest for the period after the remeasurement are determined using the assumptions used for the remeasurement. In addition, amendments have been included to clarify the effect of a plan amendment, curtailment or settlement on the requirements regarding the asset ceiling.
Amendments to References to the Conceptual Framework in IFRS	01/jan/20	The revised Conceptual Framework includes: a new chapter on measurement; guidance on reporting financial performance; improved definitions of an asset and a liability, and guidance supporting these definitions; and clarifications in important areas, such as the roles of stewardship, prudence and measurement uncertainty in financial reporting.

These standards and interpretations were not yet endorsed by the European Union and consequently REN has not adopted them on the 30 June 2018 consolidated financial statements.

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, the distribution of natural gas in low and medium pressure and the underground storage of natural gas.

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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 services to the same users and they are complementary services, 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 six month period ended 30 June 2018 were as follows:

	Electricity	Gas	Telecommunications	Others	Eliminations	Consolidated
Sales and services provided	177,675	111,834	3,110	18,506	(24,114)	287,010
Inter-segments	166	6,723	-	17,225	(24,114)	-
Revenues from external customers	177,509	105,112	3,110	1,280	-	287,010
Revenue from construction of concession assets	27,582	11,695	-	-	-	39,277
Cost with construction of concession assets	(20,773)	(9,637)	-	-	-	(30,410)
Gains / (losses) from associates and joint ventures	-	-	-	2,542	-	2,542
Personnel costs	(19,590)	(21,551)	(811)	(7,352)	27,129	(22,176)
Employee compensation and benefit expense	(9,717)	(6,264)	(135)	(11,137)	-	(27,253)
Other expenses and operating income	6,920	236	(20)	(120)	(3,015)	4,000
Operating cash flow	162,096	86,314	2,143	2,439	-	252,990
Investment income - dividends	-	-	-	4,968	-	4,968
Non reimbursursable expenses
Depreciation and amortizations	(77,720)	(39,829)	(14)	(93)	-	(117,656)
Provisions	(195)	(38)	-	175	-	(57)
Impairments	-	84	-	(189)	-	(105)
Financial results
Financial income	317	6,004	15	76,446	(77,806)	4,975
Financial costs	(22,640)	(14,112)	-	(78,702)	77,806	(37,648)
Profit before income tax	61,858	38,423	2,144	5,044	-	107,467
Income tax expense	(17,932)	(10,344)	(501)	(468)	-	(29,246)
Energy sector extraordinary contribution (ESEC)	(18,123)	(7,275)	-	-	-	(25,398)
Profit for the year	25,802	20,804	1,643	4,576	-	52,823

Results by segment for the six month period ended 30 June 2017 were as follows:

	Electricity	Gas	Telecommunications	Others	Eliminations	Consolidated

Sales and services provided	189,648	80,867	2,563	16,126	(16,212)	272,992
Inter-segments	300	202	31	15,680	(16,212)	-
Revenues from external customers	189,349	80,665	2,532	446	-	272,992
Revenue from construction of concession assets	37,535	3,322	-	-	-	40,857
Cost with construction of concession assets	(32,140)	(2,526)	-	-	-	(34,667)
Gains / (losses) from associates and joint ventures	-	-	-	2,754	-	2,753
Personnel costs	(19,464)	(10,866)	(804)	(8,117)	18,998	(20,252)
Employee compensation and benefit expense	(10,212)	(3,608)	(129)	(10,851)	-	(24,800)
Other expenses and operating income	8,212	940	(13)	5	(2,787)	6,356
Operating cash flow	173,579	68,129	1,617	(84)	-	243,239
Investment income - dividends	-	-	-	5,013	-	5,013
Non reimbursursable expenses
Depreciation and amortizations	(78,449)	(30,073)	(9)	(105)	-	(108,636)
Provisions	(76)	36	-	67	-	27
Impairments	-	(10)	-	(189)	-	(199)
Financial results
Financial income	372	5,281	15	79,589	(81,367)	3,889
Financial costs	(31,837)	(12,499)	-	(73,746)	81,367	(36,716)
Profit before income tax	63,589	30,864	1,624	10,545	-	106,619
Income tax expense	(17,255)	(8,072)	(368)	(2,160)	-	(27,856)
Energy sector extraordinary contribution (ESEC)	(18,362)	(7,435)	-	-	-	(25,798)
Profit for the year	27,971	15,357	1,255	8,385	-	52,965

Inter-segment transactions are carried out under normal market conditions, equivalent to transactions with third parties.

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 six month period ended 30 June 2018 were as follows:

	Electricity	Gas	Telecommunications	Others	Eliminations	Consolidated

Segment assets
Group investments held	-	918,524	-	1,691,460	(2,609,984)	-
Property, plant and equipment and intangible assets	2,577,398	1,652,669	46	400	-	4,230,513
Other assets	512,000	616,099	6,439	6,406,301	(6,584,445)	956,394
Total assets	3,089,398	3,187,292	6,485	8,098,161	(9,194,429)	5,186,907
Total liabilities	2,435,183	1,631,255	3,108	6,324,842	(6,584,429)	3,809,959
Capital expenditure - total	27,682	11,595	-	451	-	39,728
Capital expenditure - property, plant and equipment (Note 5)	-	-	-	451	-	451
Capital expenditure - intangible assets (Note 5)	27,682	11,595	-	-	-	39,277
Investments in associates (Note 7)	-	-	-	161,227	-	161,227
Investments in joint ventures (Note 7)	-	-	-	2,661	-	2,661

Assets and liabilities by segment at 31 December 2017 as well as investments on tangible assets and intangible assets were as follows:

	Electricity	Gas	Telecommunications	Others	Eliminations	Consolidated

Segment assets
Group investments held	-	1,036,482	-	1,754,181	(2,790,663)	-
Property, plant and equipment and intangible assets	2,627,875	1,537,819	60	503	143,386	4,309,644
Other assets	621,858	690,228	6,619	6,098,689	(6,362,361)	1,055,032
Total assets	3,249,733	3,264,528	6,680	7,853,373	(9,009,638)	5,364,676
Total liabilities	2,582,858	1,670,210	2,593	6,008,028	(6,328,202)	3,935,487
Capital expenditure - total	134,891	20,090	-	286	-	155,267
Capital expenditure - property, plant and equipment (Note 5)	-	330	-	286	-	616
Capital expenditure - intangible assets (Note 5)	134,891	19,760	-	-	-	154,651
Investments in associates (Note 7)	-	-	-	159,216	-	159,216
Investments in joint ventures (Note 7)	-	-	-	2,811	-	2,811

The liabilities included in the segment "Others" are essentially related to external borrowings obtained directly by REN SGPS, S.A. and REN Finance, BV 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 eliminations of the inter-segment transactions.

5 TANGIBLE AND INTANGIBLE ASSETS

During the six month period ended 30 June 2018, the changes in intangible assets and property, plant and equipment in the period were as follows:

__________________________________________________________________________

		1 January 2018		Changes				30 June 2018
	Cost	Accumulated depreciation	Net book value	Additions	Disposals and write offs	Transfers	Depreciation charge	Depreciation - disposals, write-offs and other reclassifications	Cost	Accumulated depreciation	Net book value
Property, plant and equipment: Transmission and electronic equipment	259	(107)	152	403	-	330	(131)	-	992	(238)	754
Transport equipment	1,112	(365)	748	45	(77)	-	(185)	64	1,080	(486)	595
Office equipment	1,791	(386)	1,405	3	(1)	-	(317)	1	1,793	(702)	1,091
Property, plant and equipment in progress	27	(14)	13	-	-	-	(3)	-	27	(17)	10
Assets in progress	910	-	910	-	-	(330)	-	-	580	-	580
	4,099	(871)	3,227	451	(78)	-	(636)	65	4,472	(1,442)	3,029
		1 January 2018			Changes					30 June 2018
	Cost	Accumulated depreciation	Net book value	Additions	Disposals and write offs	Transfers	Depreciation charge	Depreciation - disposals, write-offs and other reclassifications	Cost	Accumulated depreciation	Net book value
Intangible assets:
Concession assets	8,072,173	(3,838,256)	4,233,918	323	(1,683)	18,641	(117,020)	497	8,089,454	(3,954,779)	4,134,674
Concession assets in progress	72,499	-	72,499	38,954	-	(18,641)	-	-	92,811	-	92,811
	8,144,672	(3,838,256)	4,306,417	39,277	(1,683)	-	(117,020)	497	8,182,265	(3,954,779)	4,227,485
Total of property, plant and equipment and intangible assets	8,148,770	(3,839,128)	4,309,644	39,728	(1,761)		- (117,656)	562	8,186,737	(3,956,222)	4,230,514

The changes in tangible and intangible assets in the in the year ended 31 December 2017 were as follows:

__________________________________________________________________________

		1 January 2017				Changes					31 December 2017
	Cost	Accumulated depreciation	Net book value	Fair value	Additions	Disposals and write offs	Transfers	Depreciation charge	Depreciation - disposals, write-offs and other reclassifications	Cost	Accumulated depreciation	Net book value
Property, plant and equipment:
Transmission and electronic equipment	103	(103)	-	156	-	-		- (4)	-	259	(107)	152
Transport equipment	931	(453)	479	393	227	(439)		- (235)	323	1,112	(365)	748
Office equipment	299	(217)	81	1,297	65	(8)	138	(177)	8	1,791	(386)	1,405
Property, plant and equipment in progress	27	(9)	18	-	-	-		- (5)	-	27	(14)	13
Assets in progress	-	-	-	724	324	-	(138)	-	-	910	-	910
	1,360	(782)	578	2,570	616	(447)	-	(421)	331	4,099	(871)	3,227
		1 January 2017				Changes					31 December 2017
	Cost	Accumulated depreciation	Net book value	Fair value	Additions	Disposals and write offs	Transfers	Depreciation charge	Depreciation - disposals, write-offs and other reclassifications	Cost	Accumulated depreciation	Net book value
Intangible assets:
Concession assets	7,365,215	(3,618,333)	3,746,882	542,219	6,599	(2,436)	160,576	(221,570)	1,646	8,072,173	(3,838,256)	4,233,918
Concession assets in progress	78,831	-	78,831	6,192	148,052	-	(160,576)	-	-	72,499	-	72,499
	7,444,045	(3,618,333)	3,825,712	548,411	154,651	(2,436)	-	(221,570)	1,646	8,144,672	(3,838,256)	4,306,417
Total of property, plant and equipment and intangible assets	7,445,405	(3,619,115)	3,826,290	550,981	155,267	(2,883)		- (221,991)	1,978	8,148,770	(3,839,128)	4,309,644

The main additions verified in the periods ended 30 June 2018 and 31 December 2017 are made up as follows:

	Jun 2018	Dec 2017

Electricity segment:
Power line construction (150 KV, 220 KV and others)	5,418	12,660
Power line construction (400 KV)	5,218	49,317
Construction of new substations	301	6,671
Substation Expansion	11,425	38,071
Other renovations in substations	1,999	4,428
Telecommunications and information system	2,255	7,390
Pilot zone construction - wave energy	102	205
Buildings related to concession	395	13,472
Other assets	568	2,676
Gas segment
Expansion and improvements to gas transmission network	1,531	8,228
Construction project of cavity underground storage of natural gas in Pombal	349	1,586
Construction project and operating upgrade - LNG facilities	1,169	4,416
Natural gas distribution projects	8,546	5,859
Others segment
Other assets	451	286
Total of additions	39,728	155,267

The main transfers during the periods ended 30 June 2018 and 31 December 2017 are made up as follows:

	Jun 2018	Dec 2017

Electricity segment:
Power line construction (150 KV, 220 KV and others)	5,783	12,607
Power line construction (400 KV)	-	51,149
Substation Expansion	6,313	49,763
Other renovations in substations	130	5,155
Telecommunications and information system	-	7,623
Buildings related to concession	-	13,803
Other assets under concession	-	1,491
Gas segment:
Expansion and improvements to natural gas transmission network	-	7,931
Construction project of cavity underground storage of natural gas in Pombal	-	1,269
Construction project and operating upgrade - LNG facilities	628	4,410
Natural gas distribution projects	6,117	5,512
Total of transfer	18,971	160,714

The intangible assets in progress at 30 June	2018	and 31 December 2017 are as follows:
----------------------------------------------	------	-----------------------------------------

	Jun 2018	Dec 2017

Electricity segment:
Power line construction (150KV/220KV e 400KV)	32,215	27,363
Substation Expansion	33,817	26,785
New substations projects	6,124	5,823
Buildings related to concession	1,142	796
Other projects	3,456	710
Gas segment:
Expansion and improvements to natural gas transmission network	7,515	6,047
Construction project of cavity underground storage of natural gas in Pombal	2,839	2,490
Construction project and operating upgrade - LNG facilities	942	403
Natural gas distribution projects	4,763	2,082
Total of assets in progress	92,811	72,499

Financial costs capitalized in intangible assets in progress in the period ended 30 June 2018 amounted to 877 thousand Euros (2,703 thousand Euros as of 31 December 2017), while overhead and management costs capitalized amounted to 7,989 thousand Euros (15,265 thousand Euros as of 31 December 2017) (Note 22).

As of 30 June 2018 and 31 December 2017, the net book value of the intangible assets financed through lease contracts was as follows:

	Jun 2018	Dec 2017

Cost	5,700	6,517
Accumulated depreciation and amortization	(2,609)	(2,624)
Net book value	3,091	3,893

6 GOODWILL

Goodwill represents the difference between the amount paid for the acquisition and the net assets fair value of the companies acquired, with reference to the acquisition date, and at 30 June 2018 and 31 December 2017 is detailed as follows:

__________________________________________________________________________

Subsidiaries	Year of acquisition	Acquisition cost	%	Jun 2018	Dec 2017
REN Atlântico, Terminal de GNL, S.A.	2006	32,580	100%	2,831	3,020
REN Gás Distribuição SGPS, S.A.	2017	517,862	100%	16,082	16,082
				18,913	19,102

The movement in the Goodwill caption for the period end 30 June 2018 was:

Subsidiaries	At 1 de january de 2017	Increases	Decreases	At 31 December 2017	Increases	Decreases	At 30 June 2018
REN Atlântico, Terminal de GNL, S.A.	3,397	-	(377)	3,020		- (189)	2,831
REN Gás Distribuição SGPS, S.A.	-	16,082		- 16,082	-	-	16,082
	3,397	16,082	(377)	19,102	-	(189)	18,913

7 INVESTMENTS IN ASSOCIATES AND JOIN VENTURES

At 30 June 2018 and 31 December 2017, the financial information regarding the financial interest held is as follows:

Total Share Current Non-current Current Non-current Net Share Carrying Revenues comprehensive % capital assets assets liabilities liabilities profit/(loss) capital amount profit / (loss) Activity Head office income Equity method: Associate: OMIP - Operador do Mercado 2,610 209 26,010 404 - 425 (604) 25,815 25,211 40 10,119 (229) Ibérico (Portugal), SGPS, S.A. Holding company Lisbon Electrogas, S.A. Gas Transportation Chile 18,242 7,233 45,957 11,154 12,078 13,991 7,138 29,958 37,096 42.5 151,108 161,227 Joint venture: Centro de Investigação em Energia Research & 3,000 5,726 291 670 19 628 (302) 5,327 5,025 50 2,661 REN - STATE GRID, S.A. Development Lisbon 163,888 31 December 2017 Net Total Share Current Non-current Current Non-current Share Carrying Head liabilities Revenues profit/(loss comprehensive % capital assets assets liabilities capital amount Activity office ) income Equity method: Associate: OMIP - Operador do Mercado 2,610 480 26,467 561 - 1,488 (1,103) 26,387 25,284 40 10,348 Ibérico (Portugal), SGPS, S.A. Holding company Lisbon Electrogas, S.A. Gas Transportation Chile 17,732 6,456 46,773 6,227 13,220 31,129 16,062 33,782 49,844 42.5 148,868 159,216 Joint venture: Centro de Investigação em Energia Research & 3,000 5,841 572 764 20 1,453 (360) 5,623 5,263 50 2,811 (180) REN - STATE GRID, S.A. Development Lisbon 162,027				30 June 2018
								Group share of




								2,922
								2,692
								(150)
								2,542

								Group share of profit / (loss)


								(1,317)
								7,247
								5,930


								5,749

Associates

The changes in the caption "Investments in associates" during the period ended 30 June 2018 and 31 December 2017 was as follows:

Investments in associates

At 1 de january de 2017	11,666
Acquisition of the participation of Electrogas	169,285
Effect of applying the equity method	5,930
Dividends of Electrogas	(9,497)
Changes in equity	(18,239)
Others	73
At 31 December 2017	159,216
Effect of applying the equity method	2,692
Changes in equity	4,118
Dividends of Electrogas	(4,815)
Others	16
At 30 June 2018	161,227

In the year ended December 31, 2017, the Group acquired a 42.5% interest in the share capital of the Chilean company - Electrogas S.A., for 169,285 thousand Euros. This company owns a pipeline in the central zone of Chile with 165.6 km of length. It is a pipeline of great relevance in the country, linking the regasification terminal of Quintero to Santiago (the capital and largest Chilean population center) and Valparaiso (one of Chile's most important ports). The company's corporate purpose is to provide transportation services for natural gas and other fuels. The total amount of dividends recognized as associates during the six month period ended 30 June 2018 in the consolidated income statement was 4,815 thousand Euros, of which 2,192 thousand Euros were received and included in the Cash Flow Statement.

The proportional value of the OMIP, SGPS includes the effect of the adjustment resulting of changes to the Financial Statement of the previous year, made after the equity method application. This participation is recorded as an Associate.

Joint ventures

The movement in the caption "Investments in joint ventures" during the period ended 30 June 2018 and 31 December 2017 was as follows:

Investments in joint ventures
At 1 January 2017	2,991
Effect of applying the equity method	(180)
At 31 December 2017	2,811
Effect of applying the equity method	(150)
At 30 June 2018	2,661

Following a joint agreement of technology partnership between REN – Redes Energéticas Nacionais and the State Grid International Development (SGID), in May 2013 an R&D centre in Portugal dedicated to power systems designed – Centro de Investigação em Energia REN – STATE GRID, SA ("Centro de Investigação") was incorporated, being jointly controlled by the above mentioned two entities.

The Research Centre aims to become a platform for international knowledge, a catalyst for innovative solutions and tools, applied to the planning and operation of transmission power.

At 30 June 2018 and 31 December 2017, the financial information regarding the joint venture held is as follows:

		30 June 2018
	Cash and cash equivalents	Current financial liabilities	Non-current financial liabilities	Depreciations and amortizations	Financial costs	Income tax- (cost) / income
Joint venture:
Centro de Investigação em Energia
REN - STATE GRID, S.A.	5,131	6	19	(282)		(1) (3)
				31 December 2017
	Cash and cash equivalents	Current financial liabilities	Non-current financial liabilities	Depreciations and amortizations	Financial costs	Income tax- (cost) / income
Joint venture: Centro de Investigação em Energia REN - STATE GRID, S.A.	5,025	10	20	(568)	(1)	2

8 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 June 2018.

In 2018 the Group is taxed in Corporate Income Tax rate of 21%, increased by a municipal surcharge up the maximum of 1.5% over the taxable profit; and a State surcharge of an additional (i) 3% of taxable profit between 1,500 thousand Euros and 7,500 thousand Euros; (ii) of 5% over the taxable profit in excess of 7,500 thousand Euros and up to 35,000 thousand Euros; and (iii) 9% for taxable profits in excess of 35,000 thousand Euros, which results in a maximum aggregate tax rate of 31.5%.

The tax rate used in the valuation of temporary taxable and deductible differences as of 30 June 2018, 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 six months period ended on 30 June 2018 and 2017 is detailed as follows:

	Jun 2018	Jun 2017
Current income tax	38,773	49,767
Adjustaments of income tax from previous years	(792)	(2,674)
Deferred income tax	(8,735)	(19,237)
Income tax	29,246	27,856

Reconciliation between tax calculated at the nominal tax rate and tax recorded in the consolidated statement of profit and loss is as follows:

	Jun 2018	Jun 2017
Consolidated profit before income tax	107,467	106,619
Permanent differences:
Positive / (negative) equity variation	3,490	-
Non deductible costs	1,143	389
Non taxable income	375	460
Timing differences:
Tariff deviations	25,740	72,725
Provisions and impairment	(137)	(434)
Revaluations	(1,242)	2,603
Pension, helthcare assistence and life insurance plans	(2,281)	(2,405)
Derivative financial instruments	-	(17)
Others	(25)	(27)
Taxable income	134,529	179,912
Income tax	27,451	37,424
State surcharge tax	8,742	9,331
Municipal surcharge	2,193	2,685
Autonomous taxation	387	327
Current income tax	38,773	49,767
Deferred income tax	(8,735)	(19,237)
Adjustments of income tax from previous years	(792)	(2,674)
Income tax	29,246	27,856
Effective tax rate	27.2%	26.1%

Income tax

The caption "Income tax" payable and receivable as of 30 June 2018 and 31 December 2017 is detailed as follows:

	Jun 2018	Dec 2017
Income tax:
Corporate income tax - estimated tax	38,773	91,404
Corporate income tax - payments on account	(1,184)	(63,790)
Income withholding tax by third parties	(384)	(1,137)
Income payable / (recoverable)	(2,225)	3,480
Income tax payable	34,980	29,957

Deferred taxes

The effect of the changes in the deferred tax captions in the years presented was as follows:

	Jun 2018	Dec 2017
Impact on the statement of profit and loss:
Deferred tax assets	6,697	21,563
Deferred tax liabilities	2,038	14,402
	8,735	35,965
Impact on equity:
Deferred tax assets	1,596	(797)
Deferred tax liabilities	(2,864)	(1,328)
	(1,268)	(2,125)
Net impact of deferred taxes	7,467	33,840

The changes in deferred tax by nature were as follows:

Change in deferred tax assets – June 2018

	Provisions and Impairments	Pensions	Tariff deviations	Derivative financial instruments	Revalued assets	Others	Total
At 1 January 2018	2,886	36,506	36,227	928	21,117	74	97,737
Increase/decrease through reserves	-	19	-	(69)	-	1,646	1,596
Reversal through profit and loss	(4)	(740)	(8)	(80)	(1,019)	-	(1,850)
Increase through profit and loss	-	-	8,474	-	-	74	8,548
Change in the period	(4)	(721)	8,466	(149)	(1,019)	1,720	8,293
At 30 June 2018	2,881	35,786	44,692	778	20,098	1,794	106,030

Change in deferred tax assets – December 2017

	Provisions and Impairments	Pensions	Tariff deviations	Derivative financial instruments	Revalued assets	Others	Total
At 1 January 2017	1,901	36,433	11,679	3,687	8,962	162	62,825
Perimeter changes	727	61	713	-	12,752	(108)	14,145
Increase/decrease through reserves	-	308	-	(1,105)	-	-	(797)
Reversal through profit and loss	(64)	(296)	(102)	(1,655)	(591)	(13)	(2,721)
Increase through profit and loss	321	-	23,936	-	(6)	33	24,284
Change in the period	984	73	24,547	(2,760)	12,155	(88)	34,911
At 31 December 2017	2,886	36,506	36,227	928	21,117	74	97,737

Deferred tax assets at 30 June 2018 correspond essentially to: (i) to liabilities for benefit plans granted to employees; (ii) tariff deviations liabilities to be settled in subsequent years; and (iii) revalued assets.

Evolution of deferred tax liabilities – June 2018

	Tariff deviations	Revaluations	Fair value	Investments in equity instruments at fair value through other comprehensive income	Others	Total
At 1 January 2018	26,639	22,856	39,240	10,790	9	99,534
Increase/decrease through equity	-	-	-	(1,404)	4,268	2,864
Reversal trough profit and loss	(159)	(729)	(759)	-	(391)	(2,038)
Increase through profit and loss	-	-	-	-	-	-
Change in the period	(159)	(729)	(759)	(1,404)	3,877	826
At 30 June 2018	26,480	22,127	38,481	9,386	3,886	100,360

__________________________________________________________________________

Evolution of deferred tax liabilities – December 2017

	Tariff deviations	Revaluations	Fair value	Investments in equity instruments at fair value through other comprehensive income	Others	Total
At 1 January 2017	38,878	24,688	-	9,461	-	73,027
Perimeter changes	-	-	39,567	-	12	39,579
Increase/decrease through equity	-	-	-	1,328	-	1,328
Reversal trough profit and loss	(12,240)	(1,832)	(327)	-	(3)	(14,402)
Change in the period	(12,240)	(1,832)	39,240	1,328	9	26,505
At 31 December 2017	26,639	22,856	39,240	10,790	9	99,534

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	Decree-Law nº 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

9 FINANCIAL ASSETS AND LIABILITIES CLASSIFIED

The accounting policies for financial instruments have been applied to the following financial assets and liabilities:

June 2018

	Notes	Credits and other receivables	Fair value - hedging derivative financial instruments	Fair value - Trading derivatives	Investments in equity instruments at fair value through other comprehensive income	Other financial assets/liabilities	Total carrying amount	Fair value
Assets
Cash and cash equivalents	14	-	-	-	-	52,107	52,107	52,107
Trade and other receivables	12	447,331	-	-	-	-	447,331	447,331
Other financial assets		-	-	-	-	36	36	36
Investments in equity instruments
at fair value through other	11	-	-	-	149,768	-	149,768	149,768
comprehensive income
Derivative financial instruments	13	-	14,689	-	-	-	14,689	14,689
		447,331	14,689	-	149,768	52,143	663,930	663,930
Liabilities
Borrowings	17	-	-	-	-	2,754,187	2,754,187	2,806,039
Trade and other payables	20	-	-	-	-	504,344	504,344	504,344
Income tax payable	8	34,980	-	-	-	-	34,980	34,980
Drivative financial instruments	13	-	7,275	1,420	-	-	8,695	8,695
		34,980	7,275	1,420	-	3,258,531	3,302,206	3,354,058

December 2017

Notes	Credits and other receivables	Fair value - hedging derivative financial instruments	Fair value - Trading derivatives	Investments in equity instruments at fair value through other comprehensive income	Other financial assets/liabilities	Total carrying amount	Fair value

14	-	-	-	-	61,458	61,458	61,458
12	547,377	-	-	-	-	547,377	547,377
	-	-	-	-	27	27	27

11	-	-	-	156,439	-	156,439	156,439

13	-	7,907	-	-	-	7,907	7,907
	547,377	7,907	-	156,439	61,485	773,208	773,208

17	-	-	-	-	2,829,726	2,829,726	2,764,868
20	-	-	-	-	552,672	552,672	552,672
8	29,957	-	-	-	-	29,957	29,957
13	-	6,960	-	-	-	6,960	6,960
	29,957	6,960	-	-	3,382,398	3,419,315	3,354,457

The Loans obtained, as referred to in Note 3.6 to the annual consolidated financial statements for the period ended December 31, 2017, 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 13) 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 -0.358% and 1.264% (maturities of one day and fifteen years, respectively).

The fair value of borrowings contracted by the Group at 30 June 2018 is 2,806,039 thousand Euros (at 31 December 2017 was 2,764,868 thousand Euros), of which 404,840 thousand Euros are recorded partly at amortized cost and includes an element of fair value resulting from interest rates changes (at 31 December 2017 was 403,689 thousand Euros).

Estimated fair value – assets measured at fair value

The following table presents the Group's assets and liabilities measured at fair value at 30 June 2018 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.
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.

	Jun 2018
	Level 1	Level 2	Level 3	Total	Level 1	Level 2	Level 3	Total

Investments in equity instruments at fair value through								152,902

Cash flow hedge derivatives	-	6,300	-	6,300	-	724	-	724
Fair value hedge derivatives	-	8,388	-	8,388	-	7,183	-	7,183
Treasury funds	-	-		-	-	-	-	-
	94,434	66,472	-	160,906	101,311	59,498	-	160,809

Loans	-	404,840	-	404,840	-	403,689	-	403,689
Cash flow hedge derivatives	-	7,275	-	7,275	-	6,109	-	6,109
Financial liabilities at fair value through profit and loss Trading derivatives	-	1,420	-	1,420	-	851	-	851
	-	413,535	-	413,535	-	410,649	-	410,649
	Shares	94,434	51,783	-	146,217 -	101,311	51,591	Dec 2017 -

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 June 2018, 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 2017. A description of the risks can be found in Section 4 - Financial Risk Management of the consolidated financial statements for the year ended 2017.

10 ASSETS AND LIABILITIES HELD FOR SALE

	Jun 2018
Assets held-for-sale associated with discontinued operations:
REN Portgás GPL, S.A.		665
Liabilities directly associated with the assets held-for-sale:
REN Portgás GPL, S.A.		520

Assets and liabilities held for sale as of 30 June 2018 are made up as follows:

REN sold the liquefied petroleum gas (LPG) business to ENERGYCO II, S.A. on July 2, 2018, so at June 30, 2018 the business was already held for sale (Note 33).

The operation was carried out through REN Portgás Distribuição, which entered into a share purchase and sale agreement in which it disposed of the total shares representing the share capital of REN Portgás GPL.

11 INVESTMENTS IN EQUITY INSTRUMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

__________________________________________________________________________

The assets recognized in this caption as of 30 June 2018 and 31 December 2017 correspond to equity interests held on strategic entities for the Group, which can be detailed as follows:

		Head office		Book value
	City Country		% owned	Jun 2018	Dec 2017
OMEL - Operador del Mercado Ibérico de Energia (Pólo Espanhol)	Madrid	Spain	10.00%	3,167	3,167
Red Eléctrica Corporación, S.A. ("REE")	Madrid	Spain	1.00%	94,434	101,311
Hidroeléctrica de Cahora Bassa ("HCB")	Maputo	Mozambique	7.50%	51,783	51,591
Coreso, S.A.	Brussels	Belgium	7.90%	164	164
MIBGAS, S.A.	Madrid	Spain	6.67%	202	202
Others	-	-	-	17	5
				149,768	156,439

The changes in this caption were as follows:

	OMEL	HCB	REE	Coreso	MIBGÁS	Others	Total

At 1 January 2017	3,167	49,516	97,060	173	202	-	150,118
Perimeter changes	-	-	-	-	-	5	5
Fair value adjustments	-	2,075	4,251	-	-	-	6,325
Disposals	-	-	-	(9)	-	-	(9)
At 31 December 2017	3,167	51,591	101,311	164	202	5	156,439
At 1 January 2018	3,167	51,591	101,311	164	202	5	156,439
Acquisitions	-	-	-	-	-	12	12
Fair value adjustments	-	192	(6,877)	-	-	-	(6,685)
At 30 June 2018	3,167	51,783	94,434	164	202	17	149,768

Red Eléctrica Corporácion, S.A. ("REE") is the transmission system operator of electricity in Spain. The Group 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 June 2018.

REN holds 2,060,661,943 shares representing 7.5% of the stock capital and voting rights of HCB, a company incorporated under Mozambican law, at the Hidroeléctrica de Cahora Bassa, SA ("HCB"), as a result of fulfilling the conditions of the contract entered into on April 9, 2012, between REN, Parpública - Participações Públicas, SGPS, SA, CEZA - Companhia Eléctrica do Zambeze, SA and EDM - Electricidade de Moçambique, EP. This participation was initially recorded at its acquisition cost (38,400 thousand Euros) and subsequently adjusted to its fair value.

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 executes operational planning activities since several days before until near real time.

On 30 June 2018, REN also holds a 6.67% financial interest in the share capital of MIBGÁS, SA, acquired during the first half of 2016. Coreso is a company in charge of the development of the natural gas wholesale market operator in the Iberian Peninsula.

As part of the process of creating the Single Operator of the Iberian Electricity Market (Operador Único do Mercado Ibérico de Eletricidade – OMI) in 2011 and in accordance with the provisions of the agreement between the Portuguese Republic and the Kingdom of Spain on the establishment of an Iberian electricity market, the Company acquired 10% of the capital stock of OMEL, Operador del Mercado Iberico de Energia, SA, a Spanish operator of the sole operator, for a total value 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 2017. REN understands that there is no evidence of impairment loss regarding the investments of OMEL, Coreso and MIBGÁS at 30 June 2018.

The adjustments in the investments in equity instruments at fair value through other comprehensive income are recognised in the equity caption "Fair value reserve" that as of 30 June 2018 and 31 December 2017 had the following amounts:

	Fair value reserve
	(Note 16)
1 January 2017	48,781
Changes in fair value	6,325
Tax effect	(1,328)
31 December 2017	53,778
1 January 2018	53,778
Changes in fair value	(6,684)
Tax effect	1,404
30 June 2018	48,498

In the six month periods ended 30 June 2018 and 2017 the dividends attributable to the Group are as follows:

__________________________________________________________________________

	2018	2017
Red Electrica Corporación, S.A. ("REE")	3,595	3,360
Hidroeléctrica de Cahora Bassa, S.A ("HCB")	1,281	1,598
OMEL - Operador del Mercado Ibérico de Energia (Pólo Espanhol)	91	55
	4,968	5,013

These amounts were recognized in the consolidated statement of profit and loss in the caption "Financial income" being received 1,471 thousand Euros in the first half of 2018.

12 TRADE AND OTHER RECEIVABLES

Trade and other receivables as of 30 June 2018 and 31 December 2017 are made up as follows:

		Jun 2018			Dec 2017
	Current	Non-current	Total	Current	Non-current	Total
Trade receivables	307,277	6,005	313,282	396,558	4,168	400,726
Impairment of trade receivables	(3,043)	-	(3,043)	(3,043)	-	(3,043)
Trade receivables net	304,234	6,005	310,239	393,515	4,168	397,683
Tariff deviations	23,221	86,875	110,096	102,999	2,359	105,358
State and Other Public Entities	26,996	-	26,996	44,336	-	44,336
Trade and other receivables	354,451	92,880	447,331	540,849	6,528	547,377

The most relevant balances included in the trade receivables caption as of 30 June 2018 are: (i) the receivable of EDP – Distribuição de Energia, SA in the amount of 72,357 thousand Euros (83,176 thousand Euros at 31 December 2017); (ii) the receivable of Galp in the amount of 20,218 thousand Euros (24,199 thousand Euros at 31 December 2017); and (iii) the amount of 54,138 thousand Euros, as defined 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 amounts not yet invoiced of the activity of the Market Manager (MIBEL – Mercado Ibérico de Electricidade), in the amount of 16,365 thousand Euros (28,374 thousand Euros at 31 December 2017) and the amount to invoice to EDP – Distribuição de Energia, S.A., of 8,190 thousand Euros (5,567 thousand Euros at 31 December 2017) regarding the CMEC, also reflected in the caption "Suppliers and other accounts payable" (Note 20). This transaction is set up as an "Agent" transaction, being off set in the consolidated income statement.

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

__________________________________________________________________________

	Jun 2018	Dec 2017
Begining balance	(3,043)	(843)
Perimeter changes	-	(1,622)
Increases	-	(690)
Reversing	-	112
Ending balance	(3,043)	(3,043)

13 DERIVATIVE FINANCIAL INSTRUMENTS

At 30 June 2018 and 31 December 2017 the REN Group had the following derivative financial instruments contracted:

				30 June 2018
			Assets		Liabilities
	Notional	Current	Non-current	Current	Non-current
Derivatives designated as cash flow hedges
Interest rate swaps	300,000 TEUR	-	-	-	7,275
Interest rate and currency swaps	72,899 TEUR	-	6,300	-	-
		-	6,300	-	7,275
Derivatives designated as fair value hedges
Interest rate swaps	400,000 TEUR	-	8,388	-	-
		-	8,388	-	-
Trading derivatives
Trading derivatives	60,000 TEUR	-	-	-	1,420
		-	-	-	1,420

Derivative financial instruments		-	14,689	-	8,695

			31 December 2017
	Notional		Assets		Liabilities
		Current	Non-current	Current	Non-current
Derivatives designated as cash flow hedges
Interest rate swaps	300,000 TEUR	-	-	-	6,109
Interest rate and currency swaps	72,899 TEUR	-	724	-	-
		-	724	-	6,109
Derivatives designated as fair value hedges
Interest rate swaps	400,000 TEUR	-	7,183	-	-
		-	7,183	-	-
Trading derivatives
Trading derivatives	60,000 TEUR	-	-	-	851
		-	-	-	851

Derivative financial instruments		-	7,907	-	6,960

The valuation of the derivatives financial instruments portfolio is based on fair value valuations made by external entities.

__________________________________________________________________________

The amount recorded in this caption relates to interest rate and cross currency swap, 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 June 2018 relating to these derivatives financial instruments, in the total net amount receivable of 2,065 thousand Euros (2,119 thousand Euros receivable as of 31 December 2017).

The main features of the derivatives financial instruments contracted associated with financing operations at 30 June 2018 and 31 December 2017 are:

Notional	REN pays	REN receives	Maturity	Fair value at	Fair value at


					(6,109)
	Rates
72,899 TEUR	5.64% (floating rate starting 2019)	2.71%	2024	6,300	724
					(5,385)

			[Oct-2020;
			Feb-2025]	8,388	7,183
				8,388	7,183

60,000 TEUR	floating rates, to be determined in the future	[0.00%;0.99%]	2024		(851)
					(851)

			Total	5,994	947
	300,000 TEuros 400,000 TEuros	[0.75%;0.751%] [-0,278%;0,062%] - floating rates	[-0.321%;0.00%] - Floating [0.611%; 1.724%]	2024	30 June 2018 31 December 2017 (7,275) (975) (1,420) (1,420)

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:

		2018	2019	2020	2021	2022	2023	Following years	Total

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)		-	-	-	-	-	-	60,000	60,000
	Total	-	-	100,000	-	-	-	732,899	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 June 2018, the notional amount of cash flow hedge derivatives reached 300,000 thousand Euros (300,000 thousand Euros as of 31 December 2017). 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 June 2018 is negative 7,275 thousand Euros (at 31 December 2017, 6,109 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 June 2018 was 6,300 thousand Euros positive (724 thousand Euros positive at 31 December 2017).

The underlying (borrowing) foreign exchange change for 30 June 2018, 3,427 thousand Euros negative (2,759 as of 30 June 2017 positive), 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 6,551 thousand Euros positive (5,921 thousand Euros positive at 31 December 2017). The effect recorded in the consolidated income statement for the six-month period ended June 30, 2018 amounts to Euro 630 thousand.

The amount recorded in reserves relating to the above mentioned cash flow hedge was 11,951 thousand Euros (12,281 thousand Euros at 31 December 2017).

	Fair value	Deferred taxes impact	Hedging reserves
1 January 2017	(17,542)	3,684	(13,858)
Changes in fair value and ineffectiveness	5,261	(1,105)	4,156
31 December 2017	(12,281)	2,580	(9,702)
1 January 2018	(12,281)	2,580	(9,702)
Changes in fair value and ineffectiveness	330	(69)	261
30 June 2018	(11,951)	2,510	(9,441)

The movements recorded in the hedging reserve 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 June 2018 the notional amount of fair value hedge derivatives reached 400,000 thousand Euros (400,000 thousand Euros in 31 December 2017). 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 June 2018 was 8,388 thousand Euros positive (7,183 thousand Euros positive as of 31 December 2017).

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 June 2018, the fair value change of the 400,000 thousand Euros debt related with interest rate risk amounted to 1,151 thousand Euros positive (5,299 thousand Euros positive as of 30 June 2017), causing an ineffective component of 132 thousand Euros (positive) (151 thousand Euros positive as of 30 June 2017).

Trading derivatives

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 June 2018, the notional amount of this trading derivative is 60,000 thousand Euros (60,000 thousand Euros as of 31 December 2017). 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 June 2018 amounts to 1,420 thousand Euros negative (851 thousand Euros negative as of 31 December 2017).

The fair value changes of this negotiation derivative are recorded in the profit and loss statement. As of 30 June 2018 the amount related with the fair value of the trading derivative was a loss of 569 thousand Euros (income of 533 thousand Euros as of 30 June 2017).

14 CASH AND CASH EQUIVALENTS

The amounts considered as cash and cash equivalents as of 30 June 2018 and 31 December 2017 are made up as follows:

	Jun 2018	Dec 2017
Cash	23	1
Bank deposits	52,084	61,457
Cash and cash equivalents in the statement of financial position	52,107	61,458
Bank overdrafts (Note 17)	(7,348)	(1,009)
Cash and cash equivalents in cash flow statement	44,759	60,448

15 EQUITY INSTRUMENTS

As of 30 June 2018 and of 31 December 2017 REN's subscribed and paid up share capital is made up of 667,191,262 shares of 1 euro each.

	Jun 2018		Dec 2017
	Number of shares	Share Capital	Number of shares	Share Capital
Share Capital	667,191,262	667,191	667,191,262	667,191

At 30 June 2018 REN SGPS had the following own shares:

	Number of shares	Proportion	Amount
Own shares	3,881,374	0.6%	(10,728)

No own shares were acquired or sold in the period end 30 June 2018.

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 own shares, in order to limit the amount of reserves available for distribution.

16 RESERVES

The caption "Reserves" in the amount of 309,290 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. This reserve can only be used to cover losses or to increase capital. At 30 June 2018 this caption amounts to 106,800 thousand Euros;

__________________________________________________________________________

Fair value reserve: includes changes in Investments in equity instruments at fair value through other comprehensive income (48,498 thousand Euros positive), as detailed in Note 11;
Hedging reserve: includes changes in the fair value of hedging derivative financial instruments when cash flow hedge is effective (negative 9,441 thousand Euros) as detailed in Note 13;
Other 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, (ii) exchange rate changes associated to the financial investment whose functional currency is different of Euros; and (iii) changes in equity of associates recorded under the equity method. On 30 June 2018, this caption amounts to 163,433 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 recognized 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.

17 BORROWINGS

The segregation of borrowings between current and non-current and by nature, as of 30 June 2018 and 31 December 2017 was as follows:

__________________________________________________________________________

		Jun 2018		Dec 2017
	Current	Non-current	Total	Current	Non-current	Total

Bonds	30,000	1,736,057	1,766,057	192,800	1,462,768	1,655,568
Bank Borrowings	249,954	591,540	841,495	337,155	606,591	943,746
Commercial Paper	150,000	-	150,000	70,000	150,000	220,000
Bank overdrafts (Note 14)	7,348	-	7,348	1,009	-	1,009
Finance Lease	1,282	1,712	2,994	1,385	2,176	3,561
	438,584	2,329,309	2,767,893	602,349	2,221,535	2,823,884

Accrued interest	26,633	-	26,633	40,085	-	40,085
Prepaid interest	(14,345)	(25,995)	(40,340)	(18,098)	(16,145)	(34,243)
Borrowings	450,872	2,303,315	2,754,187	624,336	2,205,390	2,829,726

The borrowings settlement plan was as follows:

							Following
	2018	2019	2020	2021	2022	2023	years	Total
Debt - Non current	-	34,968	396,042	110,736	98,596	612,990	1,075,977	2,329,309
Debt - Current	92,541	346,043	-	-	-	-	-	438,584
	92,541	381,011	396,042	110,736	98,596	612,990	1,075,977	2,767,893

Detailed information regarding bond issues as of 30 June 2018 is as follows:

30 June 2018
					Periodicity
					of interest
Issue date	Maturity	Inicial amount	Outstanding amount	Interest rate	payment
	'Euro Medium Term Notes' programme emissions
'Euro Medium Term Notes' programme emissions
26/06/2009	26/06/2024	TEUR 72,899 (i) (ii)	TEUR 72,899	Fixed rate	Semi-Annual
16/01/2013	16/01/2020	TEUR 150,000 (i)	TEUR 60,000	Floating rate	Quarterly
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
18/01/2018	18/01/2028	TEUR 300,000	TEUR 300,000	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 June 2018, the Company has five commercial paper programs in the amount of 975,000 thousand Euros, of which 825,000 thousand Euros are available for utilization. Of the total amount, 530,000 thousand Euros have a subscription guarantee.

On the first half 2018, the following changes were made:

o The Group issued debt in the amount of 300,000 thousand Euros at a fixed rate;
o The Group agreed a term facility agreement with Intesa SanPaolo bank in the amount of 150,000 thousand Euros, which it is totally used.

The bond issue of 162,800 thousand Euros reached its maturity during the first quarter (January 31, 2018).

Bank loans are mostly composed of loans contracted with the European Investment Bank (EIB), which at 30 June 2018 amounted to 436,818 thousand Euros (at 31 December 2017 it was 450,349 thousand Euros).

The Company has also credit facilities negotiated and not used in the amount of 91,500 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 the caption Prepaid interest includes the amount of 24,078 thousand Euros (26,500 thousand Euros in 31 December 2017) related with the refinancing of bonds through an exchange offer completed in 2016.

As a result of the fair value hedge related to the debt emission in the amount of 400,000 thousand Euros (Note 13), fair value changes concerning interest rate risk were recognized directly in statement of profit and loss, in an amount of 1,151 thousand Euros (negative) (at 30 June 2017 was 5,299 thousand Euros (positive)).

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 74% 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 June 2018 and 31 December 2017 are as follows:

	Jun 2018	Dec 2017
Finance lease liabilities - minimum lease payments
No later than 1 year	1,306	1,399
Later than 1 year and no later than 5 years	1,733	2,211
	3,039	3,609
Future finance charges on finance leases	(46)	(48)
Present value of finance lease liabilities	2,994	3,561

	Jun 2018	Dec 2017

The present value of finance lease liabilities is as follows
No later than 1 year	1,282	1,385
Later than 1 year and no later than 5 years	1,712	2,176
	2,994	3,561

18 POS-EMPLOYMENT BENEFITS AND OTHERS 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.

As of 30 June 2018 and 31 December 2017 the Group had the following amounts recorded relating to liabilities for retirement and other benefits:

	Jun 2018	Dec 2017
Liability on statement of financial position
Pension plan	76,649	79,154
Healthcare plan and other benefits	42,917	42,823
	119,566	121,977

During the six month period ended 30 June 2018 and 30 June 2017 the following operating expenses were recorded regarding benefit plans with employees:

	Jun 2018	Jun 2017
Charges to the statement of profit and loss (Note 25)
Pension plan	2,147	2,250
Healthcare plan and other benefits	641	647
	2,788	2,897

The amounts reported to 30 June 2018 and 2017 result from the projection of the actuarial valuation as of 31 December 2017 and 2016, for the six month period ended 30 June 2018 and 2017, considering the estimated increase in salaries for 2018 and 2017, respectively.

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 2017	Dec 2016
Annual discount rate	1.80%	1.80%
Expected percentage of serving employees elegíble for early retirement	20.00%	20.00%
(more than 60 years of age and 36 years in service) - by Collective work agreement
Expected percentage of serving employees elegible for early retirement - by Management act	20.00%	20.00%
Rate of salary increase	2.50%	2.50%
Pension increase	1.50%	1.50%
Future increases of Social Security Pension amount	0.80%	0.50%
Inflation rate	1.50%	1.50%
Medical trend	1.80%	2.50%
Management costs (per employee/year)	€306	€242
Expenses medical trend	1.50%	1.50%
Retirement age (number of years)	66	66
Mortality table	TV 88/90	TV 88/90

19 PROVISIONS FOR OTHER RISKS AND CHARGES

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

	Jun 2018	Dec 2017
Begining balance	9,035	6,955
Changes in the perimeter	-	1,389
Increases	232	1,385
Reversing	(175)	(112)
Utilization	(20)	(582)
Ending balance	9,071	9,035

Non-current provision	9,071	9,035
	9,071	9,035

At 30 June 2018, 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 and a restructuring provision amounting to 515 thousand Euros related to the ongoing restructuring process.

20 TRADE AND OTHER PAYABLES

The caption "Trade and other payables" as of 30 June 2018 and 31 December 2017 was made up as follows:

__________________________________________________________________________

		Jun 2018	Dec 2017
	Current	Non current	Total	Current	Non current	Total
Trade payables
Current suppliers	165,500	-	165,500	220,249	-	220,249
Other creditors
Other creditors	70,768	52,914	123,682	45,089	45,951	91,040
Tariff deviations	69,547	71,464	141,011	58,624	51,911	110,534
Fixed assets suppliers	39,625	-	39,625	87,250	-	87,250
Tax payables (i)	29,400	-	29,400	38,485	-	38,485
Deferred income
Grants related to assets	17,873	260,362	278,235	18,527	267,099	285,626
Accrued costs
Holidays and holidays subsidies	5,126	-	5,126	5,114	-	5,114
Trade and other payables	397,839	384,741	782,580	473,337	364,961	838,298

(i) Tax payables refer to VAT, personnel income taxes and other taxes

The caption "Trade and other payables" includes: (i) the amount of 49,469 thousand Euros, regarding the management of CAEs from Turbogás and Tejo Energia (44,619 thousand Euros at 31 December 2017); (ii) the amount of 19,291 thousand Euros of investment projects not yet invoiced (25,080 thousand Euros at 31 December 2017); (iii) the amount of 16,365 thousand Euros (28,374 thousand Euros at 31 December 2017) from the activity of the Market Manager (MIBEL – Mercado Ibérico de Electricidade); and (iv) the amount of 8,190 thousand Euros of "CMEC – Custo para a Manutenção do Equilíbrio Contratual" to be invoiced by EDP – Gestão da Produção de Energia, S.A. (5,567 thousand Euros at 31 December 2017), also reflected in the caption "Trade receivables" (Note 12). This transaction sets a pass-through in the consolidated income statement of REN.

The caption "Other creditors" includes: (i) the amount of 25,097 thousand Euros (24,749 thousand Euros at 31 December 2017) related with the Efficiency Promotion Plan on Energy Consumption ("PPEC"), which aims to financially support initiatives that promote efficiency and reduce electricity consumption, which should be used to finance energy efficiency projects, according to the evaluation metrics defined by ERSE and (ii) the responsibility for the extraordinary contribution on the energy sector in the amount of 25,333 thousand Euros (Note 28) (at June 30, 2017 was 25,798 thousand Euros).

21 SALES AND SERVICES RENDERED

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

	Jun 2018	Jun 2017
Goods:
Domestic market	34	15
	34	15
Services:
Electricity transmission and overall systems management	175,065	186,581
Natural gas transmission	48,629	59,200
Natural gas distribution	31,653	-
Underground gas storage	15,837	6,655
Regasification	7,775	14,759
Telecommunications network	3,075	2,518
Trading	2,235	2,501
Others	2,706	764
	286,976	272,977
Total sales and services rendered	287,010	272,992

22 REVENUE AND COSTS FOR 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 six month periods ended 30 June 2018 and 2017 is the following:

	Jun 2018	Jun 2017
Revenue from construction of concession assets
Acquisitions	30,410	34,667
Own work capitalised :
Financial expenses (Note 5)	877	1,098
Overhead and management costs (Note 5)	7,989	5,093
	39,277	40,857
Cost of construction of concession assets
Acquisitions	30,410	34,667
	30,410	34,667

23 OTHER OPERATING INCOME

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

	Jun 2018	Jun 2017
Recognition of investment subsidies in profit and loss	8,992	9,038
Underground occupancy tax	3,808	-
Supplementary income	1,234	658
Disposal of unused materials	1,228	1,895
Others	299	2,021
	15,561	13,611

24 EXTERNAL SUPPLIES AND SERVICES

The caption "External supplies and services" for the six month periods ended 30 June 2018 and 2017 is made up as follows:

	Jun 2018	Jun 2017

Fees relating to external entities i)	7,703	5,654
Maintenance costs	3,407	2,729
Electric energy costs	2,940	3,052
Gas transport subcontracts	1,749	1,132
Insurance costs	1,382	1,586
Cross border interconnection costs ii)	1,291	2,311
Security and surveillance	985	835
Travel and transportation costs	607	524
Advertising and communication costs	427	419
Other	1,686	2,009
External supplies and services	22,176	20,252

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.

25 PERSONNEL COSTS

Personnel costs are made up as follows:

	Jun 2018	Jun 2017
Remuneration:
Board of directors	1,387	1,220
Personnel	18,070	16,120
	19,457	17,339
Social charges and other expenses:
Social security costs	3,913	3,570
Post-employement and other benefits cost (Note 18)	2,788	2,897
Social support costs	1,013	61
Other	82	931
	7,796	7,460
Total personnel costs	27,253	24,800

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

26 OTHER OPERATING COSTS

Other operating costs are made up as follows:

	Jun 2018	Jun 2017
ERSE operating costs i)	5,107	4,866
Underground occupancy tax	3,761	-
Donations and quotizations	924	912
Taxes	577	486
Others	371	867
	10,740	7,131

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

27 FINANCIAL COSTS AND FINANCIAL INCOME

	Jun 2018	Jun 2017
Financial costs
Interest on bonds issued	29,852	24,984
Other borrowing interests	4,702	7,378
Interest on commercial paper issued	1,755	2,126
Derivative financial instruments	690	563
Other financing expenditure	649	1,665
	37,648	36,716
Financial income
Derivative financial instruments	4,786	1,972
Other financial investments	188	1,561
Interest income	1	356
	4,975	3,889

Financial costs and financial income are made up as follows:

28 EXTRAORDINARY CONTRIBUTION OVER THE ENERGY SECTOR

Law No. 83-C / 2013 of 31 December introduced a specific contribution of entities operating in the energy sector, called Extraordinary Contribution over the Energy Sector ("ECES"), that was extended by Law 114 / 2017 , of 29 December, for the year 2018.

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. The entities subject to this regime are, among others, entities that are dealers of transport activities or distribution of electricity and natural gas.

The calculation of the CESE is levied on the value of the assets with reference to the first day of the financial year 2018 (1 January 2018) that include cumulatively, the tangible fixed assets, intangible assets, with the exception of industrial property elements, and financial assets related with regulated activities. In the case of regulated activities, the CESE is levied on the value of regulated assets (i.e. the amount recognized by ERSE in the calculation of the allowed income with reference to 1 January 2018) 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 liabilities in the amount of 25,333 thousand Euros (Note 20) (for the six months period ended 30 June 2017 was 25,798 thousand Euros) against a cost in the statement of profit and loss.

__________________________________________________________________________

29 EARNINGS PER SHARE

Earnings per share were calculated as follows:

		Jun 2018	Jun 2017
Consolidated net profit used to calculate earnings per share	(1)	52,823	52,965
Number of ordinary shares outstanding during the period (note 15)	(2)	667,191,262	534,000,000
Effect of treasury shares (note 15) (average number of shares)		3,881,374	3,881,374
Number of shares in the period	(3)	663,309,888	530,118,626
Basic earnings per share (euro per share)	(1)/(3)	0.08	0.10

The basic earnings per share are the same as the diluted earnings as there are no situations that could origin dilution effects.

30 DIVIDENDS PER SHARE

During the Shareholders General Assembly meeting held on 3 May 2018, the Shareholders approved the distribution of dividends, with respect to the Net profit of 2017, in the amount of 114,090 thousand Euros (0.171 Euros per share). The dividends attributable to own shares amounted to 664 thousand Euros, being paid to the shareholders a total amount of 113,426 thousand of Euros.

__________________________________________________________________________

31 CONTINGENT ASSETS AND LIABILITIES

31.1 Contingent liabilities

Tejo Energia - Produção e Distribuição de Energia Eléctrica, SA initiated a litigation procedure against REN - Rede Eléctrica Nacional, SA ("REN Eléctrica") and REN Trading SA ("REN Trading") for the right to be considered paid the costs incurred with the financing of the social tariff.

This procedure is foreseen in the CAE dispute settlement procedure, dated 24 November 1993 (amended later). According to this CAE, Tejo Energia acts as producer and seller and REN Trading as purchaser of the energy produced at the coal-fired power plant controlled by Tejo Energia in Pego, Portugal. REN Eléctrica is jointly and severally liable with REN Trading, regarding the execution of the CAE with Tejo Energia. Tejo Energia claims that there is an obligation of REN Trading (and jointly by REN Eléctrica) to reimburse Tejo Energia for the payments made by it related to the social tariff. The amount in question at June 30, 2018 corresponds to approximately 10,315 thousand Euros, plus interest.

31.2 Guarantees given

Beneficiary	Jun 2018	Dec 2017
European Investment Bank (EIB)	To guarantee loans	253,624	262,915
General Directorate of Energy and Geology	To guarantee compliance with the contract relating to the public service concession	23,032	20,500
Judge of District Court	Guarantee for expropriation processes	10,707	10,707
Judge of District Court	Guarantee for expropriation processes	5,549	5,549
Tax Authority and Customs	Ensure the suspension of tax enforcement proceedings	3,727	2,817
Municipal Council of Seixal	Guarantee for litigation	2,777	2,777
Portuguese State	Guarantee for litigation	2,000	2,000
Municipal Council of Maia	Guarantee for litigation	1,564	1,562
Municipal Council of Odivelas	Guarantee for litigation	1,119	1,119
Municipal Council of Matosinhos	Guarantee for litigation	-	822
Municipal Council of Matosinhos	Guarantee for litigation	-	817
Municipal Council of Porto	Guarantee for litigation	368	385
Municipal Council of Silves	Guarantee for expropriation processes	352	352
NORSCUT - Concessionária de Auto-estradas	To guarantee prompt payment of liabilities assumed by REN in the contract ceding utilization	200	200
European Union	To comply with the contractual requirements on a financing agreement	177	177
EP - Estradas de Portugal	Guarantee for litigation	100	158
Direction Roads of Braga	Guarantee for litigation	-	100
Others (loss then 100 thousand Euros)	Guarantee for litigation	325	232
		305,623	313,190

As of 30 June	2018 and	31 December 2017				the REN Group had given the following	guarantees:

32 RELATED PARTIES

Main shareholders and shares held by corporate bodies

As of 30 June 2018 and 31 December 2017, the shareholder structure of Group REN was as follows:

__________________________________________________________________________

	Jun 2018		Dec 2017
	Number of		Number of
	shares	%	shares	%
State Grid Europe Limited (Grupo State Grid)	166,797,815	25.0%	166,797,815	25.0%
Mazoon B.V. (Grupo Oman Oil Company S.A.O.C.)	80,100,000	12.0%	80,100,000	12.0%
Lazard Asset Management LLC	46,570,562	7.0%	45,034,126	6.7%
Fidelidade - Companhia de Seguros, S.A.	35,496,424	5.3%	35,496,424	5.3%
Red Eléctrica Internacional, S.A.U.	33,359,563	5.0%	33,359,563	5.0%
The Capital Group Companies, Inc.	31,691,585	4.8%	31,691,585	4.8%
Great-West Lifeco, Inc.	13,719,885	2.1%	13,719,885	2.1%
Own shares	3,881,374	0.6%	3,881,374	0.6%
Others	255,574,054	38.3%	257,110,490	38.5%
	667,191,262	100%	667,191,262	100%

Management remuneration

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

Remuneration of the Board of Directors of REN, SGPS in the three month period ended 30 June 2018 amounted to 1,163 thousand Euros (1,220 thousand Euros on 30 June 2017), as shown in the following table:

	Jun 2018	Jun 2017

Remuneration and other short term benefits	735	792
Management bonuses (estimate)	428	428
	1,163	1,220

Transaction of shares by the members of the Board of Directors

During the first half of 2018, REN was informed of the purchase transaction of 5.000 shares in financial instruments by the Chairman of the Audit Committee and member of the Board of Directors of REN, Manuel Ramos de Sousa Sebastião.

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 in the consolidated financial statements.

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

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

Revenue

	Jun 2018	Jun 2017

Sales and services provided
Invoicing issued- OMIP	29	44
Invoicing issued - CHINA ELECTRIC POWER RESEARCH INSTITUTE	-	90
Invoicing issued - REE	905	1,171
Invoicing issued - Centro de Investigação em Energia REN - State Grid	83	64
Dividends received
REE	3,595	3,360
	4,612	4,729

Expenses

	Jun 2018	Jun 2017

External supplies and services
Invoicing received - REE	3,425	6,264
Invoicing received - Centro de Investigação em Energia REN - State Grid	1	-
Invoicing received - CMS Rui Pena & Arnaut1	84	85
	3,510	6,349

1 Entity related to the Administrator José Luis Arnaut

Balances

As of 30 June 2018 and 31 December 2017 the balances resulting from transactions with related parties were as follows:

	Jun 2018	Dec 2017

Trade and other receivables
OMIP - Other receivables	8	-
Oman Oil - Other receivables	1	1
Centro de Investigação em Energia REN - State Grid - Other receivables	10	25
REE - Trade receivables	52	19
	71	45

Trade and other payables
Centro de Investigação em Energia REN - State Grid - Other payables	1	171
REE - Trade payables	689	871
CMS - Rui Pena & Arnaut - Trade payables 1	2	40
	692	1,082

1 Entity related to the Administrator José Luis Arnaut

33 SUBSEQUENT EVENTS

At July 2, 2018, REN – Redes Energéticas Nacionais, SGPS, S.A. informs the market and the public that, at that date, its subsidiary REN Portgás Distribuição, S.A. entered into a share purchase agreement to sell, also on the present date, the shares representing the entire share capital of REN Portgás GPL, S.A. to ENERGYCO II, S.A..

The transaction has an estimated impact of, approximately, 4,000 thousand Euros in the consolidated financial statements of REN Group and that the price received for the sale of the shares representing the entire share capital of REN Portgás GPL, S.A. to ENERGYCO II, S.A. corresponds to 4,000 thousand Euros of proceeds.

REN's strategy is focused on regulated businesses and therefore decided to sell the liquefied petroleum gas (LPG) business that was acquired in 2017 with the acquisition of EDP Gás.

34 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 Accountant

Pedro Mateus

The Board of Directors

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

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)

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

Mengrong Cheng (Member of the Board of Directors) Jorge Magalhães Correia (Member of the Board of Directors)

__________________________________________________________________________

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

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

Maria Estela Barbot (Member of the Board of Directors and of the Audit Committee)

José Luis Arnaut (Member of the Board of Directors)

Li Lequan (Member of the Board of Directors)

Omar Al Wahaibi (Member of the Board of Directors) Manuela Veloso (Member of the Board of Directors)

Note – The remaining pages of this Report & Accounts were initialled by the members of the Executive Committee and by the Certified Accountant, Pedro Mateus.

4. APPENDIX

4.1 Declaration of Conformity

DECLARATION PROVIDED IN THE ARTICLE 246 (1) (C) OF THE PORTUGUESE SECURITIES CODE

In accordance with and for the purposes of article 246 (1) (c) of the Portuguese Securities Code, each one of the members of the Board of Directors of REN – Redes Energéticas Nacionais, SGPS, S.A., nominally identified below, has underwritten the declaration transcribed hereafter ¹ :

"I hereby declare, pursuant to and for the purposes specified in Article 246, No. 1, paragraph c) of the Portuguese Securities Code, to the best of my knowledge, and serving as and in the scope of the functions that I am entrusted with, based on the information made available to me, that the consolidated financial statements have been prepared in accordance with the applicable accounting standards, thus providing a true and fair view of the assets and liabilities, financial position and results of REN – Redes Energéticas Nacionais, SGPS, S.A. and of the companies included in its scope of consolidation, and that the management report relating to the first semester of 2018 faithfully describes the evolution of the business, the performance and position of those companies, also containing a description of the main future risks and uncertainties.

Lisbon, 26th July 2018"

Rodrigo Costa (Chaiman of the Board of Directors and President of the Executive Committee)

João Faria Conceição (Member of the Board of Directors and of the Executive Committee)

Gonçalo Morais Soares (Member of the Board of Directors and of the Executive Committee)

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

Mengrong Cheng (Member of the Board of Directors)

Li Lequan (Member of the Board of Directors)

Omar Al-Wahaibi (Member of the Board of Directors)

Jorge Magalhães Correia (Member of the Board of Directors)

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

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

Maria Estela Barbot (Member of the Board of Directors and of the Audit Committee)

José Luis Arnaut (Member of the Board of Directors)

Manuela Veloso (Member of the Board of Directors)

___________________________

¹ The original of the mentioned individual statements are available, for consultation, at the Company's head office.

4.2 List of qualified shareholdings [Item c) of no. 1 of Article 9 of CMVM'S Regulation no. 5/2008

__________________________________________________________________________

List of Holders of Qualified Shareholdings	No of Shares	Capital	Voting Rights (%)
(at 30.06.2018)		(%)
State Grid Corporation of China	166,797,8151	25.0%	25.00%
Oman Oil Company SAOC	80,100,0002	12.0%	12.00%
Fidelidade – Companhia de Seguros, S.A.	35,496,4243	5.3%	5.31%
Red Eléctrica Corporación, S.A.	33,359,5634	5.0%	5.00%
The Capital Group Companies, Inc.	25,365,0005	4.7%	4.75%
Great-West Lifeco, Inc.	10,980,9876	2.0%	2.06%
Lazard Asset Management LLC	36,043,9727	5,4%	5.40%

Therefore, pursuant to article 20 of the Portuguese Securities Code, as of 30 June 2018 and following the information provided by the shareholders and/or by the directors, the qualifying holdings of shareholders to which voting rights corresponding to, at least, 2% of the voting rights inherent to REN's share capital were attributable, are as follows:

	Nr. of Shares	% Voting rights
State Grid Corporation of China (through State Grid Europe Limited)	166,797,815	25.00%
Oman Oil Company SAOC (through Mazoon B.V.)	80,100,000	12.00%
Fidelidade – Companhia de Seguros, S.A. (comprises 119,889 shares held by Via Directa, 37,537 shares held by CPR, 98,732 shares held by Fidelidade Assistência and 63,470 shares held by Multicare)	35,496,424	5.31%
Red Eléctrica Corporatión, S.A. (through Red Eléctrica Internacional, S.A.U.)	33,359,563	5.00%
The Capital Group Companies, Inc. (comprises 5,280,000 through accounts under the discretionary management of fund management companies in a controlling or group relationship with The Capital Group Companies, Inc., and includes 20,085,000 shares held through SMALLCAP World Fund, Inc.)	25,365,000	4.75%
Great-West Lifeco, Inc. (comprises 82 shares held through PanAgora Asset Management, Inc., 10,740,000 shares held through collective investment entities managed by Setanta Asset Management Limited, 218,618 shares held through collective investment entities managed by GLC Asset Management Group Ltd., and 22,223 shares held by the sub-fund Indexed World Small Cap Equity, sub-fund of Beresfird Funds plc, managed by Irish Investment Managers Limited.	10,980,987	2.06%
Lazard Asset Management LLC (shares held for clients, and attributable to Lazard as it has agreed to exercise the voting rights on their behalf)	36,043,972	5.40%

1 Through State Grid Europe Limited (SGEL), which is controlled by State Grid International Development Limited (SGID), which is controlled by State Grid Corporation of China.

⁴ Through Red Eléctrica Internacional, S.A.U., which is controlled by Red Eléctrica Corporatión, S.A..
⁵ Comprises 5,280,000 shares through accounts under the discretionary management of fund management companies in a controlling or group relationship with The Capital Group Companies, Inc. and includes 20,085,000 shares held through SMALLCAP World Fund, Inc..
⁶ The qualified shareholding of Great-West Lifeco, Inc. comprises the following shares held by companies in a group relation with Great-West Lifeco, Inc.: (i) 82 shares held through PanAgora Asset Management, Inc. (ii) 10,740,000 shares held through collective investment entities managed by Setanta Asset Management Limited, (iii) 218,618 shares held through collective investment entities managed by GLC Asset Management Group Ltd., and (iv) 22,223 shares held by the sub-fund Indexed World Small Cap Equity, sub-fund of Beresfird Funds plc, managed by Irish Investment Managers Limited.
⁷ Qualified shareholding held by Lazard Asset Management LLC for clients, and attributable to Lazard as it has agreed to exercise the voting rights on their behalf. The qualified holdings are also attributable to (i) Lazard Freres &Co, which owns all of the former; (ii) Lazard Group LLC, which owns all of the latter; and (iv) Lazard Limited, a company with shares admitted to trading on the NYSE, as the respective controller..

² Through Mazoon B.V., which is controlled by Oman Oil Holding Europe B.V. wich is controlled by Oman Oil Company SAOC.

³These qualified shareholdings of Fidelidade – Companhia de Seguros, S.A. (Fidelidade) comprise (i) 35,176,796 shares held directly by Fidelidade, (ii) 119,889 shares held by Via Direta – Companhia de Seguros, S.A. (Via Direta), (iii) 37,537 shares held by CPR – Companhia Portuguesa de Resseguros, S.A. (CPR), companies wholly owned by Fidelidade, (iv) 98,732 shares held by Fidelidade Assistência – Companhia de Segruros, S.A. (Fidelidade Assistência) and (v) 63,470 shares held by Multicare – Seguros de Saúde, S.A. (Multicare) which are controlled by the common shareholder LongRun Portugal, SGPS, SA (Longrun). 84.98% of the share capital and voting rights of Fidelidade are held by LongRun, which is in turn wholly owned by Millennium Gain Limited, which is 100% owned by Fosun Financial Holdings Limited, which is in turn wholly owned by Fosun International Limited, companies to which the abovementioned holdings are attributable.

4.3 Securities held by the members of the corporate bodies Item a) of no. 1 of Article 9 of CMVM'S Regulation no. 5/2008

Board of Directors as per composition at 30.06.2018

	Board of Directors	Acquisitions	Encumbrances	Disposals	Nr. of shares at 30.06.2018
	Rodrigo Costa	-	-	-	0 (zero)
Executive Committee	João Faria Conceição	-	-	-	500
	Gonçalo Morais Soares	-	-	-	0 (zero)
	Guangchao Zhu – designated by State Grid International Development Limited	-	-	-	0 (zero)
	Mengrong Cheng	-	-	-	0 (zero)
	Li Lequan	-	-	-	0 (zero)
	Omar Al-Wahaibi	-	-	-	0 (zero)
	Jorge Magalhães Correia	-	-	-	35,496,4248
	Manuel Sebastião	-	-	-	35,000
Audit Committee	Gonçalo Gil Mata	-	-	-	0 (zero)
	Maria Estela Barbot	-	-	-	0 (zero)
	José Luís Arnaut	-	-	-	7,5879
	Manuela Veloso	-	-	-	0 (zero)

At 30th June 2018, the members of REN's management and supervisory bodies held the following bonds issued by REN:

Board of Directors	Acquisitions	Encumbrances	Disposals	Nr. of bonds at 30.06.2018
Jorge Magalhães Correia	-	-	-	1,200,00010

⁸ Corresponding to shares attributable to Fidelidade Companhia de Seguros, S.A., which are attributable to him pursuant to Article 447 of the Portuguese Companies Code, due to the exercising of the duties of Vice-President of the Board of Directors and CEO of that company.

⁹ Helds 480 shares in his own name and 7,107 shares through the company Platinumdetail – Consultoria e Investimentos, Lda., company where he holds the majority of the capital and is a manager.

¹⁰ Corresponding to the bonds held by Fidelidade – Companhia de Seguros, S.A., due to the exercising of the duties of Vice-President of the Board of Directors and CEO of that company.

During the 1st semester of 2018, REN was informed of the following transactions performed during the period to which this report relates regarding REN's shares and bonds, which are relevant for the purposes of article 14 of CMVM's Regulation 5/2008 and of article 447 of the Portuguese Securities Code:

__________________________________________________________________________

Manuel Sebastião, member of the Board of Directors and Chairman of the Audit Committee of REN, informed on the transaction of REN's shares:

Type of transaction	Place	Amount	Price	Transaction date
Acquisition	Euronext Lisbon	5,000	2.33	30-05-2018

4.4 Limited review Report prepared by an auditor registered at the stock exchange commission (Comissão do Mercado de Valores Mobiliários) on the half year consolidated information

__________________________________________________________________________

4.5 Report and opinion of the Audit Committee in respect of the consolidated half year information

(regarding the six month period ended 30th June 2018)

(Translation of a report originally issued in Portuguese)

Within the scope of the responsibilities attributed, the Audit Committee, during the first semester of 2018, accompanied the development of the activity of REN – Redes Energéticas Nacionais, S.G.P.S., S.A. and its participated companies, ensured compliance with the law, regulations and articles of association, oversaw the fulfillment of the accounting policies and practices and supervised the process of preparation and disclosure of the financial information, the effectiveness of the internal control systems, the management of risk and also the independence and activity of the Statutory Auditor and the External Auditor.

The Audit Committee examined the consolidated financial information included in the section Financial Performance and the condensed consolidated financial statements for the half year ended June 30, 2018 of REN – Redes Energéticas Nacionais, S.G.P.S., S.A., which comprise the Consolidated Statement of Financial Position (that reflects total assets of 5,186,907 thousand Euros and total equity of 1,376,948 thousand Euros, including a consolidated net profit of 52,823 thousand Euros), the Consolidated Statements of Profit and Loss, Comprehensive Income, Changes in Equity and Cash Flows for the half year then ended and the corresponding Notes.

The Audit Committee also examined and agreed with the Limited Review Report on the above mentioned consolidated half year information prepared by the Statutory Auditor and by the External Auditor.

In the light of the above, the Audit Committee is of the opinion that consolidated financial information for the half year ended on June 30, 2018, is in accordance with the applicable accounting, legal and articles of association provisions.

Lisbon, 26th July 2018

Manuel Sebastião

Gonçalo Gil Mata

Maria Estela Barbot

4.6 Contacts

At REN we are happy to pursue a policy of facilitating direct access to the Group's corporate bodies. Feel free to contact us at the following addresses/numbers/emails:

__________________________________________________________________________

Investor Relations Office

Ana Fernandes – Head of Office [email protected]

Alexandra Martins [email protected]

Telma Mendes [email protected]

REN - Redes Energéticas Nacionais, SGPS, S.A. Investor Relations Office Avenida dos Estados Unidos da América, 55 1749-061 LISBOA – Portugal Telephone: +351 21 001 35 46 Telefax: +351 21 001 31 50 E-mail: [email protected]

Communication and Sustainability

Margarida Ferreirinha [email protected]

REN - Redes Energéticas Nacionais, SGPS, S.A. Communication and Sustainability Avenida dos Estados Unidos da América, 55 1749-061 LISBOA - Portugal Telephone: +351 21 001 35 00 Telefax: +351 21 001 31 50 E-mail: [email protected]

AI Terminal

REN-Redes Energeticas Nacionais

1903_ir_2018-06-30_126bdde7-0588-49f8-be2d-4deb4278c5b1.pdf

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

Consolidated financial statements

30 JUNE 2018

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

1. FINANCIAL PERFORMANCE IN THE 1ST HALF OF 2018

1.1. First half results

Operational results – EBITDA

Electricity and Natural Gas Transmission Business

Natural Gas Distribution Business

Net income

1.2. Average RAB and Capex

1.3. Main REN Group events

Quarterly statements of profit and loss and comprehensive income for the periods from 1 April to 30 June 2018 and 2017

Consolidated statements of profit and loss (unaudited information)

Consolidated statements of comprehensive income (unaudited information)

2. CONSOLIDATED FINANCIAL STATEMENTS

Consolidated statements of financial position as of 30 June 2018 and 31 December 2017

Consolidated statements of profit and loss for the six month periods ended 30 June 2018 and 2017

Consolidated statements of comprehensive income for the six month periods ended 30 June 2018 and 2017

Consolidated statements of changes in equity for the six month periods ended 30 June 2018 and 2017

Consolidated statements of cash flow for the six month periods ended 30 June 2018 and 2017

3.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2018

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

IFRS 9 - Financial Instruments

I. Classification and measurement

II. Impairment

III. Classification - Financial Liabilities

IV. Coverage Accounting

V. Disclosures

IFRS 15 - Revenue from Contracts with Customers

Amendments to IFRS 2 - Share-based payment

Annual improvements to IFRS (2014-2016 cycle)

Amendments to IFRIC 22 - Foreign Currency Transactions and Advance Consideration

Amendments to IAS 40 - Transfers of Investment Property

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

4 SEGMENT REPORTING

The results by segment for the six month period ended 30 June 2018 were as follows:

Results by segment for the six month period ended 30 June 2017 were as follows:

5 TANGIBLE AND INTANGIBLE ASSETS

The changes in tangible and intangible assets in the in the year ended 31 December 2017 were as follows:

6 GOODWILL

7 INVESTMENTS IN ASSOCIATES AND JOIN VENTURES

Associates

Joint ventures

8 INCOME TAX

Income tax

Deferred taxes

Change in deferred tax assets – June 2018

Change in deferred tax assets – December 2017

Evolution of deferred tax liabilities – June 2018

Evolution of deferred tax liabilities – December 2017

9 FINANCIAL ASSETS AND LIABILITIES CLASSIFIED

June 2018

December 2017

Estimated fair value – assets measured at fair value

Financial risk management

10 ASSETS AND LIABILITIES HELD FOR SALE

11 INVESTMENTS IN EQUITY INSTRUMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

The changes in this caption were as follows:

12 TRADE AND OTHER RECEIVABLES

13 DERIVATIVE FINANCIAL INSTRUMENTS

Swaps:

Cash flow hedges

Fair value hedge

Trading derivatives

14 CASH AND CASH EQUIVALENTS

15 EQUITY INSTRUMENTS

At 30 June 2018 REN SGPS had the following own shares:

16 RESERVES

17 BORROWINGS

The borrowings settlement plan was as follows:

Detailed information regarding bond issues as of 30 June 2018 is as follows: