REN-Redes Energeticas Nacionais

Investor Presentation • Nov 11, 2021

Results Presentation 9M2021

11th November 2021

AGENDA

1. Overview of the period

2. Business performance

3 Closing remarks .

1. Overview of the period

KEY MESSAGES 9M2021

EBITDA amounted to €343.4M, a reduction of 2.6% (-€9.1M) YoY explained by (1) a lower RAB remuneration (-€6.6M), driven by a decrease in RAB (with an impact of -€4.4M) and in RoR (-€2.2M); (2) a lower OPEX contribution (-€3.4M), partially offset by a higher incentive for economic efficiency of investments (+€1.4M) and amortizations recovery (+€0.9M).

International performance had a negative delta of €0.9M, despite a better EBITDA from Transemel (+€0.3M).

Net Profit stood at €68.4M, due to (1) a solid contribution from Financial results (increase of €5.5M to -€31.1M), a consequence of the decrease of the cost of debt (from 1.9% to 1.6%); and (2) a lower energy levy (Δ€1.1M).

Capex increased by €38.0M vs 9M20 to €141.7M, while transfers to RAB reached €80.5M, an increase of €58.6M, driven by the electricity transmission business (+€56.4M). Steadily the transfers that had to be delayed due to the pandemic are getting on target.

Renewable energy sources (RES) reached 60.6% of total supply (approx. +4.7 p.p. than in 9M20). Consumption of electricity and the distribution of natural gas increased.

High levels of service quality were maintained during the first nine months of 2021. The level of energy transmission losses stood at 2.0% for 9M2021, in line with the figure for the previous year while the combined availability rate of gas transmission reached 99.9%.

SECTOR OVERVIEW

The Energy Transition is at the center of the Portuguese Government agenda

new set of rules relating to tariffs and allowed revenues between 2022 and 2025.

network, the tariff treatment to be given to autonomous storage facilities, and other.

New regulatory period for the electricity sector

• On the 15th of October, ERSE announced the proposal of Tariffs and Prices for Electricity in 2022. The regulator defined the Rate of Return applicable to the next regulatory period 2022-2025 with a base rate of 4%, considering 0.224% for the Portuguese 10Y Treasury bonds. An indexation mechanism is kept as before, a variation of 2.5% of the 10YTB leads to a variation of 1% in the RoR. The floor is 3.7% and the ceiling is 7%. The efficiency factor for both TEE and GGS activities are set to 1.5% for the years 2023 to 2025. ERSE has also decided to keep 0.75% premium over all the assets built before the 31st of December 2021 that are entitled to this under the reference cost mechanism.
• The detailed parameter proposal has been submitted to the tariff council and the final parameters will be known on the 15th of December.

ERSE approved and published the reformulation of the Tariffs Regulation for the electricity sector where it approved a

Tariff changes include the elimination of the tariff applied to producers for the injection of energy into the public

With regard to the regulatory regime, new provisions are set to reinforce the monitoring of the financial performance of regulated companies and the scrutiny in the assessment of reported costs, and a new regulatory model is defined, a

Tariffs Regulation for the electricity sector

Network Development Plans reports

• In August, ERSE has published PDIRT and PDIRG assessment reports following the public consultation, revenue cap methodology applied to the controllable TOTEX of electricity transmission and electricity distribution activities in HV and MV.
• recommending investment restrictions to both electricity and gas. The assessment reflects ERSE's particular views on the development of the energy sector which conflict with the government policy and present sector response
• REN is carefully evaluating the full assessment reports to understand the real extent of ERSE's recommendations related to particular investment projects, in order to incorporate in the final version of PDIRT and PDIRG the projects to be approved, and send it to the Government for decision

European Commission presented the legislative package 'Fit-for-55': delivering the EU's 2030 climate target on the way to climate neutrality - the package consists of a set of interlinked legislative proposals that address the common goal of ensuring a fair, competitive and green transition by 2030 and beyond. European Commission new legislative package

2. Business performance

BUSINESS HIGHLIGHTS

Higher share of renewables, in a context of declining gas consumption by the large industrial customers

FINANCIAL HIGHLIGHTS

Net profit declined despite the solid improvement in Financial Results and the improvement in Net Debt

EBITDA evolution breakdown €M

EBITDA contribution by

The decrease in EBITDA is due to the decrease in RAB remuneration, opex contribution and the performance of the international segment

1 Includes Apolo SpA and Aerio Chile SpA costs | 2 Includes amortizations recovery, subsidies amortization, REN Trading incentives, telecommunication sales and services rendered, interest on tariff deviation, consultancy revenues and other services provided, OMIP and Nester results | 3 Excludes the segment "Other", which includes REN SGPS, REN Serviços, REN Telecom, REN Trading, REN PRO and REN Finance B.V. | 4 Refers to Portgás

9M21 RESULTS 9

Return on RAB stable relatively to last year, with regulatory WACC at the set floor

Portuguese 10Y Treasury Bond Yields % Base Return on RAB (RoR)* %

Solid progress in both Transfers to RAB and Capex

Transfers to RAB €M

Capex €M

Key highlights

Electricity

Main investment projects:

• Passage at 400 kV of the Falagueira Estremoz Divor Pegões axis, allowing, among others, the supply of electricity to the railway line between Évora and Elvas / Caia;
• 400 kV axis between Vieira do Minho Ribeira de Pena-Feira: the new axis will allow the connection and reception of capacity of Alto Tâmega hydroelectric power plant;
• New 400 kV Fundão Falagueira axis through the extension of the current Falagueira - Castelo Branco line to Fundão and construction of a new 400/200kV Fundão substation;
• Estremoz Substation: upgrade in voltage level from 150 to 400 kV, with the installation of a new 400/60, kV, 170 MVA transformer;
• New 400 kV overhead line Ponte de Lima V. Nova de Famalicão;

Gas Transmission

Main investment projects:

• Carriço Storage: Water Firefighting System upgrade;
• Pipeline Network and Sines Terminal: replacement and upgrade of equipment and systems at the end-of-life;

Gas Distribution

• Investments in network expansion and densification, mostly for B2C, with new prospects for B2B investments continuing to be monitored, counting with 53 more clients connected in 9M21;
• Licensing of 3 big projects with Capex execution expected to occur in 2H 2021;
• Network decarbonization process on the move;

Downward trend in RAB in most asset categories

Average RAB evolution €M

Return on

Asset base evolution

Return on RAB 9M21

1 From 5.35% to 5.26% for assets with premium, and from 4.60% to 4.51% for assets without premium

1. Business performance

DOMESTIC BUSINESS

RAB remuneration decreased across all businesses, but especially in the electricity business, mostly driven by the decrease in the asset base

Return on RAB evolution breakdown €M

Electricity

Without premium

-2.88

71.12

Return on RAB drop caused by a smaller asset base (by €80.0M to €1,935.8M) and lower rate of return on assets with and without premium¹

75.46

€-4.33M (-5.7%)

RAB 9M20 42.59 32.86

With premium

RoR evolution -1.36

40.01 31.11

Decline in Return on RAB justified by a smaller asset base (by €42.8M to a total of €905.2M) and a lower RoR of 4.51% (-8bps)

Return on RAB reduction attributed to a lower rate of return (from 4.79% to 4.71%) and practically same asset base (+€0.8M to a total of €470.5M)

OPEX increased by 9.6% YoY, with core OPEX rising 8.8%

Key highlights

Core external costs

• Consultancy services and other 3rd party services (+€1.9M), mostly related to strategic plan and bond issuance;
• Insurance costs (+1.4M€);
• Electricity costs (+1.9M€) in LNG terminal;

Non-core costs

• Pass-through costs (costs accepted in the tariff) increased by €2.9M, of which €3.0M correspond to costs with cross-border and system services costs;

INTERNATIONAL BUSINESS

Solid performance from the Chilean businesses

9M20: €5.3M EBITDA €5.6M €0.3M (6.3%)

9M20: €21.7M

€18.3M €3.4M

EBITDA

EBITDA decreased YoY, driven by lower revenues (lower tariff and lower transported volume) and higher opex

9M21 RESULTS 15

(15.7%)

Robust Financial Results, as the cost of debt continued its descending trend

Positive change in financial results (+€5.5M) reflecting the decrease in the average cost of debt of 0.27 p.p. to 1.6%, lower net debt and greater dividends from HCB (€1.5M), despite

Total taxes include the extraordinary levy of €27.1M (€28.2M in 9M20) and income tax which grew by €4.6M to €36.3M

Effective tax rate reached 43.0%, a 4.1 p.p. increment relatively to 9M20 (including the levy)

Increase in the effective tax rate vs 9M20 reflecting the different recovery of previous years taxes in 9M20 (€5.6M) versus 9M21 (€2.4M)

Net Profit decreased as a result of lower EBITDA, partially offset by better financial results and lower CESE

Net profit evolution breakdown €M Key highlights

• The Positive effect of €5.5M from Financial Results as a consequence of better financial conditions and higher dividends from associates (Δ€1.2M)
• Lower charge by CESE (Δ€- 1.1M), reflecting the evolution of the asset base
• Decrease in tax recovery from previous years (Δ€-3.2M)

Net Debt improvement due to a higher operating cash flow and tariff deviations

1 Calculated as Net Debt plus Cash, bank deposits and derivative financial instruments (€467M), excluding effects of hedging on yen denominated debt, accrued interest and bank overdrafts | 2 Includes loans (5.8%) and leasing (0.1%) | 3. Includes amounts received from the Fund for Systemic Sustainability of the Energy Sector (FSSSE)

9M21 RESULTS 18

EIB

Other²

890

After 2025

569

Commercial paper

SHARE PRICE & SHAREHOLDER RETURN

The share price moved in line with the Portuguese index

Annualized closing prices %

Analyst recommendations¹

Average Price target
€2.58	€0.22 (7.9%)
9M20: €2.80

3. Closing remarks

CLOSING REMARKS

Fully committed to deliver solid results and sustainable returns

Unsurprisingly, EBITDA decreased as a consequence of the reduction in both RAB and remuneration rates as well as the activities in Electrogas.

Net Profit stood at €68.4M reflecting the EBIT reduction and the gains from the financial results, the recovery of previous years' taxes and a lower levy.

Net debt was significantly lower than in the previous quarter benefiting from a higher operating cash flow and the cash inflow of tariff deviations, which were both higher than the outflows of CAPEX and financing activities.

CAPEX is improving according to plan and due to the decrease in the pandemic hurdles

On the 15th of October ERSE disclosed the proposal for Tariffs and Prices for Electricity for 2022 and the parameters for the regulatory period of 2022-2025. After evaluation of the opinion expressed by the Tariff Council (due by 15th of November), ERSE will approve the final tariff values, which are to be published until 15 December 2021.

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

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