REN-Redes Energeticas Nacionais

Quarterly Report • May 6, 2019

Consolidated Financial Statements

31 March 2019

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

INDEX

1. FINANCIAL PERFORMANCE	2
RESULTS FOR THE 3RD QUARTER OF 2019 1 2 AVERAGE RAB AND CAPEX	2 5
2. CONSOLIDATED FINANCIAL STATEMENTS	7
3. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE-MONTH PERIOD ENDED 31 MARCH 2019	12
1 GENERAL INFORMATION 2 BASIS OF PRESENTATION 3 MAIN ACCOUNTING POLICIES 4 SEGMENT REPORTING 5 TANGIBLE AND INTANGIBLE ASSETS 6 GOODWILL 7 INVESTMENTS IN ASSOCIATES AND JOIN VENTURES 8 INCOME TAX 9 FINANCIAL ASSETS AND LIABILITIES 10 INVESTMENTS IN EQUITY INSTRUMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME 11 TRADE AND OTHER RECEIVABLES 12 DERIVATIVE FINANCIAL INSTRUMENTS 13 CASH AND CASH EQUIVALENTS 14 EQUITY INSTRUMENTS 15 RESERVES AND RETAINED EARNINGS 16 BORROWINGS 17 POS-EMPLOYMENT BENEFITS AND OTHERS BENEFITS 18 PROVISIONS FOR OTHER RISKS AND CHARGES 19 TRADE AND OTHER PAYABLES 20 SALES AND SERVICES RENDERED 21 REVENUE AND COSTS FOR CONSTRUCTION ACTIVITIES 22 OTHER OPERATING INCOME 23 EXTERNAL SUPPLIES AND SERVICES 24 PERSONNEL COSTS 25 OTHER OPERATING COSTS	12 15 15 17 20 24 24 26 30 31 33 34 37 37 37 38 40 41 41 42 42 43 43 44 44
26 FINANCIAL COSTS AND FINANCIAL INCOME 27 EXTRAORDINARY CONTRIBUTION OVER THE ENERGY SECTOR 28 EARNINGS PER SHARE	45 45 46
29 DIVIDENDS PER SHARE 30 CONTINGENT ASSETS AND LIABILITIES	46 46
31 RELATED PARTIES 32 SUBSEQUENT EVENTS	47 50
33 EXPLANATION ADDED FOR TRANSLATION	50

1. FINANCIAL PERFORMANCE

1 RESULTS FOR THE 3RD QUARTER OF 2019

In the first 3 months of 2019, net income reached 13.2 million euros, up 0.2 million euros (+1.3%) from the same period of the previous year. Net income growth was mainly driven by the good performance of both financial results (+1.1 million euros) and the Natural Gas Distribution business (+0.3 million euros in EBIT; +0.5 million euros in EBITDA), and the decrease of 0.9 million euros in the Extraordinary Levy on the Energy Sector (following the decrease in the value of the levied regulated assets), partially offset by the drop in Electricity and Natural Gas Transmission business results (-3.2 million euros in EBIT; - 3.5 million euros in EBITDA).

Similarly to the previous years, the results for 2019 reflect the continuation of the Extraordinary Levy on the Energy Sector (24.4 million euros in 2019 and 25.3 million euros in 2018¹ ).

Investment grew 21.1% (+2.9 million euros) to 16.8 million euros and transfers to RAB increased 1.5 million euros to 3.7 million euros. On the other hand, average RAB dropped by 134.7 million euros (-3.5%), to 3,743.0 million euros.

The average cost of debt remained unchanged y.o.y at 2.3%, and net debt decreased to 2,613.9 million euros, -1.1% (-29.8 million euros) over the same period of the previous year.

MAIN INDICATORS (MILLIONS OF EUROS)	March 2019	March 2018	VAR.%
EBITDA	125.3	128.4	-2.4%
Financial results2	-15.5	-16.6	6.8%
Net income1	13.2	13.1	1.3%
Recurrent net income	37.6	38.4	-2.0%
Total Capex	16.8	13.9	21.1%
Transfers to RAB3 (at historic costs)	3.7	2.2	66.4%
Average RAB (at reference costs)	3 743.0	3 877.8	-3.5%
Net debt	2 613.9	2 643.7	-1.1%
Average cost of debt	2.3%	2.3%	0.0p.p.

¹ The full amount of the levy was recorded in the 1st quarter of 2019 and 2018, according to the Portuguese Securities Market Commission (CMVM) recommendations.

² The net financial cost of 0.1 million euros in March 2019 and 0.4 million euros in March 2018 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).

Operational results – EBITDA

Electricity and Natural Gas Transmission Business

EBITDA for the Transmission business reached 114.0 million euros in the first 3 months of 2019, a 3.0% drop over the same period of 2018 (-3.5 million euros).

EBITDA - TRANSMISSION (MILLIONS OF EUROS)	March 2019	March 2018	VAR.%
1) Revenues from assets	102.0	104.2	-2.1%
RAB remuneration	41.5	44.2	-6.0%
Hydro land remuneration	0.0	0.1	-100.0%
Lease revenues from hydro protection zone	0.2	0.2	-1.2%
Economic efficiency of investments	6.3	5.4	15.8%
Recovery of amortizations (net of investment subsidies)	49.5	49.8	-0.6%
Amortização dos subsídios ao Investimento	4.5	4.5	-0.9%
2) Revenues from opex	26.2	26.8	-2.3%
3) Other revenues	6.1	7.1	-14.2%
4) Own works (capitalised in investment)	3.9	3.7	5.7%
5) Earnings on Construction (excl. own works capitalised in investment) – Concession assets	9.2	6.4	44.2%
6) OPEX	24.1	24.2	-0.4%
Personnel costs4	12.5	12.1	3.4%
External costs	11.6	12.1	-4.2%
7) Construction costs – Concession assets	9.2	6.4	44.2%
8) Provisions	0.0	0.0	n.m.
9) Impairments	0.1	0.1	0.0%
10) EBITDA (1+2+3+4+5-6-7-8-9)	114.0	117.5	-3.0%

The decrease in EBITDA resulted mainly from:

• The decrease of 2.7 million euros in RAB remuneration (-6.0%) arising from:
  • o The 1.7 million euros drop in the remuneration of electricity transmission regulated assets, reflecting (i) the reduction in the base rate of return (RoR) from 5.2% in March 2018 to 5.1% in March 2019 – as a result of the negative evolution of the yields of the Portuguese Republic 10Y Treasury Bills; and (ii) the reduction of 80.9 million euros (-3.8%) in electricity transmission average RAB.
  • o Reduction of 1.0 million euros in the remuneration of natural gas transmission regulated assets, reflecting (i) the reduction in the rate of return from 5.5% in March 2018 to 5.4% in March 2019 – as a result of the negative evolution of the yields of the Portuguese Republic 10Y Treasury Bills; and (ii) the reduction of 45.3 million euros (-4.3%) in natural gas transmission average RAB.
• The 1.0 million euros (-14.2%) drop in other revenues, of which -1.5 million euros in REN Trading allowed incentives, partially offset by the positive evolution of the results with the 42.5% stake in Electrogas (+0,5 million euros);
• The decrease of 0.6 million euros (-2.3%) in Opex revenues.

⁴ Includes training and seminars costs

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

• Increase of 0.9 million euros in the incentive to economic efficiency of investments (+15.8%);
• Decrease of 0.1 million euros in Opex (-0.4%), of which -0.5 million euros (-4.2%) in external costs, despite the increase of 0.4 million euros in Personnel Costs (+3.4%).

Natural Gas Distribution Business

The EBITDA for the Natural Gas Distribution business reached 11.4 million euros in the first 3 months of 2019, a 4.4% increase over the same period of 2018 (+0.5 million euros).

The increase in EBITDA resulted mainly from:

• The decrease of 0.9 million euros (-12.0%) in opex, of which -0.2 million euros in personnel costs and -0.7 million euros in external costs. The decrease in external costs was partially driven by the sale of the LPG business in July of 2018;
• The 0.4 million euros growth in Revenues from opex.

On the other hand, EBITDA were penalized by:

The decrease of 0.7 million euros in other revenues, reflecting the sale of LPG business in July of 2018.

EBITDA - DISTRIBUTION	March	March
(MILLIONS OF EUROS)	2019	2018	VAR.%
1) Revenues from assets	10.0	10.1	-0,9%
RAB remuneration	6.7	6.8	-1.4%
Recovery of amortizations (net of investment subsidies)	3.3	3.3	0.0%
2) Revenues from OPEX	7.2	6.8	6.1%
3) Other revenues	0.1	0.7	-92.7%
4) Own works (capitalised in investment)	0.6	0.5	5.4%
5) Earnings on Construction (excl. own works capitalised in investment) – Concession assets	3.2	3.3	-4.0%
6) OPEX	6.4	7.3	-12.0%
Personnel costs5	1.1	1.3	-15.3%
External costs	5.3	6.0	-11.3%
7) Construction costs – Concession assets	3.2	3.3	-4.0%
8) Provisions	0.0	0.0	n.m.
9) Impairments	0.0	-0.1	-100.0%
10) EBITDA (1+2+3+4+5-6-7-8-9)	11.4	10.9	4.4%

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

Net income

Overall, the Group's net income for the first 3 months of 2019 increased 0.2 million euros (+1.3%) y.o.y., reaching 13.2 million euros. The increase was mostly driven by: (i) the increase in financial results (+1.1 million euros, +6.8%), reflecting the decrease in net debt to 2,613.9 million euros, (-29.8 million euros; -1.1%), with the average cost of debt remaining unchanged at 2.3%; and (ii) the decrease of 0.9 million euros in the Extraordinary Levy on the Energy Sector following the decrease in the value of the levied regulated assets. On the other hand, EBITDA dropped 3.0 million euros (-2.4%) reflecting the decrease in Electricity and Natural Gas Transmission business (-3.5 million euros), despite the growth in the Natural Gas Distribution business (+0.5 million euros).

Excluding non-recurring items, Net Income for the first 3 months of 2019 dropped 0.8 million euros (-2.0%). Non-recurring items considered in the first 3 months of 2019 and 2018 are as follows:

• i) In 2019: i) Extraordinary Levy on the Energy Sector laid down in the State Budget for 2019 (24.4 million euros);
• ii) In 2018: i) Extraordinary Levy on the Energy Sector laid down in the State Budget for 2018 (25.3 million euros).

NET INCOME (MILLIONS OF EUROS)	March 2019	March 2018	VAR.%
EBITDA	125.3	128.4	-2.4%
Depreciations and amortizations	58.5	58.7	-0.2%
Financial results	-15.5	-16.6	6.8%
Income tax expenses	13.7	14.7	-6.8%
Extraordinary levy on the energy sector 6	24.4	25.3	-3.7%
Net income	13.2	13.1	1.3%
Non-recurring items	24.4	25.3	-3.7%
Recurrent net income	37.6	38.4	-2.0%

2 AVERAGE RAB AND CAPEX

In the first 3 months of 2019, Capex reached 16.8 million euros, a 21.1% y.o.y. increase (2.9 million euros), and transfers to RAB reached 3.7 million euros, a 1.5 million euros increase over the first 3 months of 2018.

In electricity, investment increased 39.1% to 12.1 million euros, of which 1.2 million euros in the construction of a submarine cable to connect a floating wind power plant in Viana do Castelo to the electricity network (Windfloat), and transfers to RAB increased 0.7 million euros to 0.8 million euros.

In natural gas transmission, investment reached 1.0 million euros, 27.6% lower than the same period of the previous year, and transfers to RAB decreased 0.1 million euros.

In natural gas distribution, investment was 3.7 million euros, 42% for new supply points and 37% with the expansion of the distribution network.

⁶ The full amount of the levy was recorded in the 1st quarter of 2019 and 2018, according to the Portuguese securities market commission (CMVM) recommendations

Average RAB was 3,743.0 million euros, a 134.7 million euros (-3.5%) y.o.y decrease. In electricity, the average RAB (excluding lands) reached 2,036.9 million euros (-80.9 million euros, -1.6%), of which 1,102.3 million euros in assets remunerated at a premium rate of return, while lands reached 235.1 million euros (-12.6 million euros, -5.1%). In natural gas transmission, the average RAB was 1,003.0 million euros (-45.3 million euros, -4.3%), while in natural gas distribution the average RAB reached 468.1 million euros (+4.0 million euros, +0.9%).

2. CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS OF 31 MARCH 2019 AND 31 DECEMBER 2018

(Amounts expressed in thousands of Euros – tEuros) (Translation of statements of financial position originally issued in Portuguese - Note 33)
	Notes	Mar 2019	Dec 2018
ASSETS Non-current assets
Property, plant and equipment	5	485	561
Goodwill	6	3,782	3,877
Intangible assets	5	4,150,709	4,192,619
Investments in associates and joint ventures	7	168,658	167,841
Investments in equity instruments at fair value through other comprehensive income	9 and 10	159,872	162,552
Derivative financial instruments	9 and 12	24,971	21,010
Other financial assets	9	51	45
Trade and other receivables	9 and 11	70,089	50,246
Deferred tax assets	8	92,959	92,495
		4,671,577	4,691,247
Current assets
Inventories		2,138	2,095
Trade and other receivables	9 and 11	500,173	427,126
Current income tax recoverable	8 and 9	21,144	35,371
Cash and cash equivalents	9 and 13	20,536 543,991	35,735 500,327
Total assets	4	5,215,567	5,191,574
EQUITY
Shareholders' equity
Share capital	14	667,191	667,191
Own shares	14	(10,728)	(10,728)
Share premium		116,809	116,809
Reserves	15	321,695	326,906
Retained earnings		370,090	253,505
Other changes in equity		(5,561)	(5,561)
Net profit for the period		13,243	115,715
Total equity		1,472,740	1,463,837
LIABILITIES
Non-current liabilities
Borrowings	9 and 16	2,249,568	2,274,939
Liability for retirement benefits and others	17	95,779	98,288
Derivative financial instruments	9 and 12	21,326	12,952
Provisions	18	8,796	8,852
Trade and other payables	9 and 19	380,901	367,743
Deferred tax liabilities	8	110,405	113,644
		2,866,775	2,876,418
Current liabilities
Borrowings	9 and 16	406,727	431,401
Trade and other payables	9 and 19	469,325	419,917
		876,052	851,319
Total liabilities	4	3,742,827	3,727,737
Total equity and liabilities		5,215,567	5,191,574

The accompanying notes form an integral part of the consolidated statement of financial position as of 31 March 2019.

CONSOLIDATED STATEMENTS OF PROFIT AND LOSS FOR THE THREE-MONTH PERIODS ENDED 31 MARCH 2019 AND 2018

(Amounts expressed in thousands of Euros – tEuros) (Translation of statements of profit and loss originally issued in Portuguese - Note 33)

	Notes	Mar 2019	Mar 2018
Sales	4 and 20	-	8
Services rendered	4 and 20	139,084	144,911
Revenue from construction of concession assets	4 and 21	16,803	13,881
Gains / (losses) from associates and joint ventures	7	2,802	1,148
Other operating income	22	9,652	9,935
Operating income		168,341	169,883
Cost of goods sold		(160)	(433)
Costs with construction of concession assets	21	(12,338)	(9,656)
External supplies and services	23	(9,499)	(10,743)
Personnel costs	24	(13,537)	(13,361)
Depreciation and amortizations	5	(58,550)	(58,671)
Provisions		1	-
Impairments		(94)	(19)
Other expenses	25	(7,313)	(6,943)
Operating costs		(101,491)	(99,826)
Operating results		66,850	70,057
Financial costs	26	(17,526)	(17,946)
Financial income	26	1,981	972
Financial results		(15,545)	(16,974)
Profit before income tax and ESEC		51,305	53,083
Income tax expense	8	(13,673)	(14,677)
Energy sector extraordinary contribution (ESEC)	27	(24,390)	(25,333)
Net profit for the year		13,243	13,073
Attributable to:
Equity holders of the Company		13,243	13,073
Non-controlled interest		-	-
Consolidated profit for the year		13,243	13,073
Earnings per share (expressed in euro per share)	28	0.02	0.02

The accompanying notes form an integral part of the consolidated statement of profit and loss for the three-month period ended 31 March 2019.

CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME FOR THE THREE-MONTH PERIODS ENDED 31 MARCH 2019 AND 2018

(Amounts expressed in thousands of Euros – tEuros)

(Translation of statements of other comprehensive income originally issued in Portuguese - Note 33)

	Notes	Mar 2019	Mar 2018
Consolidated Net Profit for the period		13,243	13,073
Items that will not be reclassified subsequently to profit or loss:
Actuarial gains / (losses) - gross of tax		1,243	(312)
Tax effect on actuarial gains / (losses)	8	(373)	94
Other changes in equity		-	51
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations	7	2,964	(3,966)
Increase / (decrease) in hedging reserves - cash flow derivatives	12	(7,845)	2,686
Tax effect on hedging reserves	8 and 12	1,765	(564)
Gain/(loss) in fair value reserve - Investments in equity instruments at fair value through other comprehensive income	10	(2,680)	(10,721)
Tax effect on items recorded directly in equity	8 and 10	603	2,251
Other changes in equity		(17)	-
Comprehensive income for the period		8,903	2,592
Attributable to:
Equity holders of the company		8,903	2,592
Non-controlled interest		-	-
		8,903	2,592

The accompanying notes form an integral part of the consolidated statement of comprehensive income for the three-month period ended 31 March 2019.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE THREE-MONTH PERIODS ENDED 31 MARCH 2019 AND 2018

(Amounts expressed in thousands of Euros – tEuros)

(Translation of statements of changes in equity originally issued in Portuguese - Note 33)

		Attributable to shareholders
Changes in the year	Share capital Notes	Own shares	Share premium	Legal Reserve	Fair Value reserve (Note 10)	Hedging reserve (Note 12)	Other reserves	Other changes in equity	Retained earnings	Profit for the year	Total
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	-	-	-	-	-	-	-	-	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	1,438,412
Net profit of the period and other comprehensive income	-	-	-	-	(8,470)	2,122	(3,915)	-	(219)	13,073	2,592
Transfer to other reserves	-	-	-	-	-	-	-	-	125,925	(125,925)	-
At 31 March 2018	667,191		(10,728) 116,809	106,800	45,308	(7,580)	155,400	(5,541)	360,271	13,073	1,441,004
At 1 January 2019	667,191		(10,728) 116,809	113,152	57,711	(10,577)	166,620	(5,561)	253,505	115,715	1,463,837
Net profit of the period and other comprehensive income	-	-	-	-	(2,077)	(6,080)	2,947	-	870	13,243	8,903
Transfer to other reserves	-	-	-	-	-	-	-	-	115,715	(115,715)	-
At 31 March 2019	667,191		(10,728) 116,809	113,152	55,634	(16,657)	169,567	(5,561)	370,090	13,243	1,472,740

The accompanying notes form an integral part of the consolidated statement of changes in equity for the three-month period ended 31 March 2019.

CONSOLIDATED STATEMENTS OF CASH FLOW FOR THE THREE-MONTH PERIODS ENDED 31 MARCH 2019 AND 2018

(Amounts expressed in thousands of Euros – tEuros) (Translation of statements of cash flow originally issued in Portuguese - Note 33)

	Note	Mar 2019	Mar 2018
Cash flow from operating activities:
Cash receipts from customers		548,290	574,102 a)
Cash paid to suppliers		(423,709)	(397,176) a)
Cash paid to employees		(14,975)	(14,261)
Income tax received/paid		(1,594)	(503)
Other receipts / (payments) relating to operating activities		(18,462)	12,524
Net cash flows from operating activities (1)		89,551	174,687
Cash flow from investing activities:
Receipts related to:
Investment grants		569	3,018
Interests and other similar income		8	19
Dividends	7 and 10	1,477	1,380
Payments related to:
Financial investments		-	(12)
Property, plant and equipment		(20)	(64)
Intangible assets - Concession assets		(36,673)	(62,255)
Net cash flow used in investing activities (2)		(34,639)	(57,914)
Cash flow from financing activities:
Receipts related to:
Borrowings		1,279,000	949,999
Payments related to:
Borrowings		(1,328,271)	(1,001,339)
Interests and other similar expense		(19,549)	(23,905)
Net cash from / (used in) financing activities (3)		(68,820)	(75,245)
Net (decrease) / increase in cash and cash equivalents (1)+(2)+(3)		(13,909)	41,528
Effect of exchange rates		2	(99)
Cash and cash equivalents at the beginning of the year	13	34,096	60,449
Cash and cash equivalents at the end of the period	13	20,189	101,880
Detail of cash and cash equivalents
Cash	13	25	23
Bank overdrafts	13	(346)	(412)
Bank deposits	13	20,511	102,269
		20,189	101,880

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 three-month period ended 31 March 2019.

3. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE-MONTH PERIOD ENDED 31 MARCH 2019

(Translation of notes originally issued in Portuguese - Note 33)

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;

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 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.

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.

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.

In addition, on November 21, 2018, REN PRO, SA was incorporated, a company fully owned by REN, headquartered in Lisbon, whose purpose is to provide support services, namely administrative, logistical, communication and development support of the business, as well as business consulting, in a remunerated manner, either to companies that are in a group relation or to any third party, and IT consulting.

As of 31 March 2019, 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%; (ii) MIBGÁS, S.A.- 6.67%; and (iii) MIBGÁS Derivatives, S.A. – 9.7%.

1.1 Consolidation perimeter

The following companies were included in the consolidation perimeter as of 31 March 2019 ans 31 December 2018:

				Dec 2018
		% 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	100%	100%	100%	100%
Av. Estados Unidos da América, 55 - Lisboa	high tension)
REN Trading, S.A. Praça de Alvalade, nº7 - 12º Dto, Lisboa	Purchase and sale, import and export of electricity and natural gas	100%	100%	100%	100%
Enondas-Energia das Ondas, S.A. Mata do Urso - Guarda Norte - Carriço- Pombal	Management of the concession to operate a pilot area for the production of electric energy from ocean waves	100%	100%	100%	100%
Telecommunications segment: RENTELECOM - Comunicações S.A. 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, The Netherlands	Participate, finance, collaborate, conduct management of companies related to REN Group.	100%	100%	100%	100%
REN PRO, S.A. Av. Estados Unidos da América, 55 - Lisboa	Communication and Sustainability, Marketing, Business Management, Business Development and Consulting and IT Projects	100%	100%	100%	100%
Natural gas segment: REN Atlântico , Terminal de GNL, S.A. Terminal de GNL - Sines	Liquified Natural Gas Terminal maintenance and regasification operation	100%	100%	100%	100%
Owned by REN Serviços, S.A.: REN Gás, S.A. Av. Estados Unidos da América, 55 -12º - Lisboa	Management of projects and ventures in the natural gas sector	100%	-	100%	-
Aério Chile SPA 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. Estrada Nacional 116, km 32,25 - Vila de Rei - Bucelas	National Natural Gas Transport operator and natural gas overall manager	100%	-	100%	-
REN Gás Distribuição SGPS, S.A. Av. Estados Unidos da América, 55 - Lisboa	Management of holdings in other companies as an indirect form of economic activity	-	-	100%	-
REN Portgás Distribuição, S.A. Rua Linhas de Torres, 41 - Porto	Distribution of natural gas	100%	-	100%	-

Changes in the consolidation perimeter

- 2019

On January 22, 2019, a merger of the entities REN Gás, S.A. and REN Gás Distribuição SGPS, S.A. was effected by means of the global transfer of the assets of REN Gás Distribuição SGPS, S.A. to REN Gás, S.A..

- 2018

On July 2, 2018, REN sold the liquefied petroleum gas (LPG) business to ENERGYCO II, S.A. and, additionally, on November 21, 2018, REN PRO, S.A., a company fully owned by REN, was incorporated.

1.2 Approval of the consolidated financial statements

These consolidated financial statements were approved by the Board of Directors at a meeting held on 3 May 2019. The Board of Directors believes that the consolidated financial statements fairly present the financial position of the companies included in the consolidation, the consolidated results of their operations, their consolidated comprehensive income, the consolidated changes in their equity and their consolidated cash flows in accordance with the International Financial Reporting Standards for interim financial statements as endorsed by the European Union (IAS 34).

2 BASIS OF PRESENTATION

The consolidated financial statements for the three-month period ended 31 March 2019 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 2018.

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 31 March 2018, current liabilities in the amount of 876,052 thousand Euros are greater than current assets, which total 543,991 thousand Euros.

However, in addition to the consolidated results and cash flows estimated for 2019, the Group has, as of 31 March 2019, credit lines in the form of commercial paper available for use in the amount of 738,000 thousands Euros, with a substantial part with guaranteed placement (Note 16).

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

The consolidated financial statements are presented in thousands of Euros - tEuros.

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 2019.

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 IFRIC and SIC 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 2018, as explained in the notes to the consolidated financial statements for 2018. The 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 2019:

IFRS 16 – Leases

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

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.

IFRIC 23 - Uncertainty Over Income Tax Treatments

Clarifies how the recognition and measurement requirements of IAS 12 - Income Tax are applied when there is uncertainty about the tax treatment. The future adoption of this standard is not expected to have significant impacts on REN's consolidated financial statements.

Amendments to IAS 28: Long-term Interests in Associates and Joint Ventures

These amendments clarify that long-term investments in associates and joint ventures, which are not being measured by the equity method, are accounted under IFRS 9. This clarifies that long-term investments in associates and joint ventures are subject to the IFRS 9 impairment rules (3-step model of expected losses), before being considered for impairment testing of the global investment in an associate or when there are indicators of impairment. The future adoption of this standard is not expected to have significant impacts on REN's consolidated financial statements.

Annual Improvements to IFRS Standards (cycle 2015-2017)

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

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.

There are no standards, interpretations, amendments and revisions endorsed by the European Union with mandatory application in future economic exercises at the date of 31 March 2019.

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

The following standards, interpretations, amendments and revisions, with mandatory application in future years, 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.
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.
Amendment to IFRS 3: Business Combinations	01/jan/20	These amendments: (i) clarify that to be considered a business, an acquired set of activities and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs; (ii) narrow the definitions of a business and of outputs by focusing on goods and services provided to customers and by removing the reference to an ability to reduce costs; (iii) add guidance and illustrative examples to help entities assess whether a substantive process has been acquired.
Amendments to IAS 1 and IAS 8: Definition of Material	01/jan/20	The changes in Definition of Material all relate to a revised definition of 'material' which is "Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity".

These standards and interpretations were not yet endorsed by the European Union and consequently REN has not adopted them on the 31 March 2019 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.

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 three-month period ended 31 March 2019 were as follows:

	Electricity	Gas	Telecommunications	Others	Eliminations	Consolidated
Sales and services provided	87,938	51,892	1,509	8,407	(10,662)	139,084
Inter-segments	358	1,987	-	8,318	(10,662)	-
Revenues from external customers	87,580	49,905	1,509	90	-	139,084
Revenue from construction of concession assets	12,110	4,693	-	-	-	16,803
Cost with construction of concession assets	(8,704)	(3,634)	-	-	-	(12,338)
Gains / (losses) from associates and joint ventures	-	-	-	2,802	-	2,802
Personnel costs	(9,342)	(9,207)	(581)	(2,485)	12,116	(9,499)
Employee compensation and benefit expense	(4,599)	(2,965)	(70)	(5,904)	-	(13,537)
Other expenses and operating income	3,420	325	(4)	(108)	(1,454)	2,178
Operating cash flow	80,823	41,104	855	2,712	-	125,493
Investment income - dividends	-	-	-	-	-	-
Non reimbursursable expenses
Depreciation and amortizations	(38,545)	(19,950)	(8)	(47)	-	(58,550)
Provisions	-	-	-	1	-	1
Impairments	-	-	-	(94)	-	(94)
Financial results
Financial income	336	1,682	8	37,864	(37,910)	1,981
Financial costs	(10,893)	(5,574)	(0)	(38,969)	37,910	(17,526)
Profit before income tax and ESEC	31,721	17,262	855	1,467	-	51,305
Income tax expense	(8,719)	(4,686)	(201)	(66)	-	(13,673)
Energy sector extraordinary contribution (ESEC)	(17,434)	(6,955)	-	-	-	(24,390)
Profit for the year	5,568	5,620	654	1,401	-	13,243

Results by segment for the three-month period ended 31 March 2018 were as follows:

	Electricity	Gas	Telecommunications	Others	Eliminations	Consolidated
Sales and services provided	90,834	55,755	1,569	8,879	(12,119)	144,919
Inter-segments	79	3,719	-	8,321	(12,119)	-
Revenues from external customers	90,755	52,036	1,569	558	-	144,919
Revenue from construction of concession assets	8,709	5,173	-	-	-	13,881
Cost with construction of concession assets	(5,418)	(4,238)	-	-	-	(9,656)
Gains / (losses) from associates and joint ventures	-		- -	1,148	-	1,148
Personnel costs	(9,766)	(10,874)	(345)	(3,375)	13,617	(10,743)
Employee compensation and benefit expense	(4,753)	(3,088)	(66)	(5,454)	-	(13,361)
Other expenses and operating income	4,219	(613)	(4)	456	(1,497)	2,559
Operating cash flow	83,824	42,114	1,154	1,654	-	128,747
Investment income - dividends	-		- -	-	-	-
Non reimbursursable expenses
Depreciation and amortizations	(38,857)	(19,760)	(7)	(47)	-	(58,671)
Provisions	-		- -	-	-	-
Impairments	-		- -	(19)	-	(19)
Financial results
Financial income	153	3,047	8	37,323	(39,559)	972
Financial costs	(11,772)	(7,066)	-	(38,666)	39,559	(17,946)
Profit before income tax and ESEC	33,347	18,334	1,156	244	-	53,083
Income tax expense	(9,954)	(5,193)	(272)	741	-	(14,677)
Energy sector extraordinary contribution (ESEC)	(18,123)	(7,210)	-	-	-	(25,333)
Profit for the year	5,270	5,932	884	985	-	13,073

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 three-month period ended 31 March 2019 were as follows:

	Electricity	Gas	Telecommunications	Others	Eliminations	Consolidated
Segment assets
Group investments held	-	759,472	-	1,708,304	(2,467,776)	-
Property, plant and equipment and intangible assets	2,529,764	1,621,038	40	352	-	4,151,194
Other assets	586,010	338,511	7,550	6,382,401	(6,250,100)	1,064,373
Total assets	3,115,774	2,719,021	7,590	8,091,057	(8,717,876)	5,215,567
Total liabilities	2,453,375	1,424,854	5,102	6,109,560	(6,250,065)	3,742,827
Capital expenditure - total	12,110	4,693	-	-	-	16,803
Capital expenditure - property, plant and equipment (Note 5)	-	-	-	-	-	-
Capital expenditure - intangible assets (Note 5)	12,110	4,693	-	-	-	16,803
Investments in associates (Note 7)	-	-	-	165,958	-	165,958
Investments in joint ventures (Note 7)	-	-	-	2,699	-	2,699

Assets and liabilities by segment at 31 December 2018 as well as investments on tangible assets and intangible assets were as follows:

	Electricity	Gas	Telecommunications	Others	Eliminations	Consolidated
Segment assets
Group investments held	-	1,048,895	-	1,806,895	(2,855,790)	-
Property, plant and equipment and intangible assets	2,556,204	1,636,523	48	404	-	4,193,180
Other assets	542,992	537,379	7,618	6,374,865	(6,464,460)	998,394
Total assets	3,099,196	3,222,798	7,666	8,182,164	(9,320,250)	5,191,574
Total liabilities	2,398,236	1,509,250	3,940	6,280,771	(6,464,460)	3,727,737
Capital expenditure - total	85,608	36,167	-	173	-	121,948
Capital expenditure - property, plant and equipment (Note 5)	-	-	-	173	-	173
Capital expenditure - intangible assets (Note 5)	85,608	36,167	-	-	-	121,775
Investments in associates (Note 7)	-	-	-	165,207	-	165,207
Investments in joint ventures (Note 7)	-	-	-	2,635	-	2,635

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 three-month period ended 31 March 2019, the changes in tangible and intangible assets were as follows:

	1 January 2019					Changes		31 March 2019
	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	107	(107)	-	-	-	-	-	-	107	(107)	-
Transport equipment	1,008	(572)	437	-	(65)	-	(57)	59	943	(570)	374
Office equipment	404	(288)	116	-	(3)	-	(12)	3	401	(297)	104
Property, plant and equipment in progress	27	(19)	8	-	-	-	(1)	-	27	(20)	7
Assets in progress	-	-	-	-	-	-	-	-	-	-	-
	1,546	(985)	561	-	(68)	-	(70)	62	1,478	(994)	485
		1 January 2019				Changes				31 March 2019
	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	8,161,166	(4,073,426)	4,087,740	420	(663)	2,719	(58,480)	430	8,163,642	(4,131,476)	4,032,166
Concession assets in progress	104,880	-	104,880	16,383	-	(2,719)	-	-	118,543	-	118,543
	8,266,046	(4,073,426)	4,192,619	16,803	(663)	-	(58,480)	430	8,282,185	(4,131,476)	4,150,709
Total of property, plant and equipment and intangible assets	8,267,591	(4,074,411)	4,193,180	16,803	(731)		- (58,550)	492	8,283,663	(4,132,470)	4,151,194

The changes in tangible and intangible assets in the in the year ended 31 December 2018 were as follows:

	1 January 2018					Changes	31 December 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	-	(152)	-	-	-	107	(107)	-
Transport equipment	1,112	(365)	748	138	(242)	-	(360)	153	1,008	(572)	437
Office equipment	1,791	(386)	1,405	35	(1,422)	-	(44)	142	404	(288)	116
Property, plant and equipment in progress	27	(14)	13	-	-	-	(5)	-	27	(19)	8
Assets in progress	910	-	910	-	(910)	-	-	-	-	-	-
	4,099	(871)	3,227	173	(2,726)	-	(409)	295	1,546	(985)	561
		1 January 2018				Changes				31 December 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	4,158	(1,311)	86,146	(234,646)	(524)	8,161,166	(4,073,426)	4,087,740
Concession assets in progress	72,499	-	72,499	117,617	910	(86,146)	-	-	104,880	-	104,880
	8,144,672	(3,838,256)	4,306,417	121,775	(401)	-	(234,646)	(524)	8,266,046	(4,073,426)	4,192,619
Total of property, plant and equipment and intangible assets	8,148,770	(3,839,128)	4,309,644	121,948	(3,127)	-	(235,055)	(229)	8,267,591	(4,074,411)	4,193,180

	Mar 2019	Dec 2018
Electricity segment:
Power line construction (150 KV, 220 KV and others)	4,253	24,108
Power line construction (400 KV)	1,933	13,394
Construction of new substations	161	290
Substation Expansion	3,757	29,906
Other renovations in substations	535	5,460
Telecommunications and information system	909	5,807
Pilot zone construction - wave energy	47	208
Buildings related to concession	190	2,702
Other assets	324	3,733
Gas segment
Expansion and improvements to gas transmission network	452	6,362
Construction project of cavity underground storage of natural gas in Pombal	97	1,703
Construction project and operating upgrade - LNG facilities	421	3,277
Natural gas distribution projects	3,723	24,825
Others segment
Other assets	-	173
Total of additions	16,803	121,948

The main additions verified in the periods ended 31 March 2019 and 31 December 2018 are made up as follows:

The main transfers that were concluded and began activity during the periods ended 31 March 2019 and 31 December 2018 are made up as follows:

	Mar 2019	Dec 2018
Electricity segment:
Power line construction (150 KV, 220 KV and others)	-	12,610
Power line construction (400 KV)	-	1,957
Substation Expansion	748	26,221
Other renovations in substations	-	3,965
Telecommunications and information system	-	5,153
Buildings related to concession	-	1,442
Other assets under concession	-	1,215
Gas segment:
Expansion and improvements to natural gas transmission network	-	4,724
Construction project of cavity underground storage of natural gas in Pombal	-	1,734
Construction project and operating upgrade - LNG facilities	-	3,556
Natural gas distribution ans transmission projects	1,972	23,570
Total of transfer	2,719	86,146

The intangible assets in progress at 31 March 2019 and 31 December 2018 are as follows:

	Mar 2019	Dec 2018
Electricity segment:
Power line construction (150KV/220KV e 400KV)	56,485	50,298
Substation Expansion	36,332	32,015
New substations projects	5,502	6,113
Buildings related to concession	2,196	2,006
Other projects	2,889	1,700
Gas segment:
Expansion and improvements to natural gas transmission network	7,474	6,906
Construction project of cavity underground storage of natural gas in Pombal	2,441	2,350
Construction project and operating upgrade - LNG facilities	502	106
Natural gas distribution projects	4,725	3,386
Total of assets in progress	118,543	104,880

Borrowing costs capitalized on intangible assets in progress in the period ended 31 March 2019 amounted to 566 thousand Euros (2,017 thousand Euros as of 31 December 2018), while overhead and management costs capitalized amounted to 3,899 thousand Euros (17,408 thousand Euros as of 31 December 2018) (Note 21).

The net book value of the intangible assets acquired through finance lease contracts at 31 March 2019 and 31 December 2018 was as follows:

	Mar 2019	Dec 2018
Cost	6,671	6,525
Accumulated depreciation and amortization	(2,792)	(2,481)
Net book value	3,879	4,044

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 31 March 2019 and 31 December 2018 is detailed as follows:

	Year of	Acquisition		Mar 2019	Dec 2018
Subsidiaries	acquisition	cost	%
REN Atlântico, Terminal de GNL, S.A.	2006	32,580	100%	2,547	2,642
REN Portgás Distribuição, S.A.	2017	503,015	100%	1,235	1,235
				3,782	3,877

The movement in the Goodwill caption for the period ended 31 March 2019 was:

Subsidiaries	At 1 January 2018	Increases	Decreases	Correction to purchase price	At 31 December 2018	Increases	Decreases	At 31 March 2019
REN Atlântico, Terminal de GNL, S.A.	3,020		- (377)		- 2,642		- (95)	2,547
REN Portgás Distribuição, S.A.	16,082	-	-	(14,847)	1,235	-	-	1,235
	19,102	-	(377)	(14,847)	3,877	-	(95)	3,782

7 INVESTMENTS IN ASSOCIATES AND JOIN VENTURES

At 31 March 2019 and 31 December 2018, the financial information regarding the financial interest held is as follows:

			31 March 2019
	Activity	Head office	Share capital	Current assets	Non-current assets	Current liabilities	Non-current liabilities	Revenues	Net profit/(loss)	Share capital	Total comprehensive income	%	Carrying amount	Group share of profit / (loss)
Equity method:
Associate:
OMIP - Operador do Mercado			2,610	1,008	28,500	309	-	218		103 29,199	29,302 40		10,694	877
Ibérico (Portugal), SGPS, S.A.	Holding company	Lisbon
Electrogas, S.A.	Gas Transportation	Chile	18,929	11,041	44,674	16,877	11,360	8,007		4,426 27,478	31,904 42.5		155,264	1,861
Joint venture:													165,958	2,738
Centro de Investigação em Energia	Research &
REN - STATE GRID, S.A.	Development	Lisbon	3,000	6,132	39	754	13	500	129	5,405	5,534 50		2,699	65
													168,658	2,802
			31 December 2018
	Activity	Head office	Share capital	Current assets	Non-current assets	Current liabilities	Non-current liabilities	Revenues	Net profit/(loss)	Share capital	Total comprehensive income	%	Carrying amount	Group share of profit / (loss)
Equity method: Associate:
OMIP - Operador do Mercado
Ibérico (Portugal), SGPS, S.A.	Holding company	Lisbon	2,610	1,179	26,180	353	-	1,117	(1,360)	27,006	25,646	40	9,817	(531)
Electrogas, S.A.	Gas Transportation	Chile	18,573	6,178	44,843	5,834	11,069	30,695		15,764 34,118	49,882	43	155,390	6,495
													165,207	5,964
Joint venture:
Centro de Investigação em Energia REN - STATE GRID, S.A.	Research & Development	Lisbon	3,000	6,015	83	806	16	1,447	(353)	5,276	4,923	50	2,635	(176)
													167,841	5,787

Associates

The changes in the caption "Investments in associates" during the period ended at 31 March 2019 and 31 December 2018 was as follows:

Investments in associates
At 1 de january de 2018	159,216
Effect of applying the equity method	5,964
Changes in equity	6,914
Dividends of Electrogas	(6,917)
Others	29
At 31 December 2018	165,207
Effect of applying the equity method	2,738
Changes in equity	2,964
Dividends of Electrogas	(4,933)
Others	(17)
At 31 March 2019	165,958

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 three-month period ended 31 March 2019 was 4,933 thousand Euros.

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 31 March 2019 and 31 December 2018 was as follows:

Investments in joint ventures
At 1 January 2018 Capital subscribed	2,811
Effect of applying the equity method	(176)
At 31 December 2018 Capital subscribed	2,635
Effect of applying the equity method	65
At 31 March 2019	2,699

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 31 March 2019 and 31 December 2018, the financial information of the joint venture was as follows:

		31 March 2019
	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.	5,593	6	13	(44)	(1)	(3)
	31 December 2018
	Cash and cash	Current financial	Non-current financial	Depreciations and		Income tax- (cost) /
	equivalents	liabilities	liabilities	amortizations	Financial costs	income
Joint venture:
Centro de Investigação em Energia
REN - STATE GRID, S.A.	5,201	6	16	(493)	(1)	(7)

8 INCOME TAX

REN is taxed based on the special regime for the taxation of group companies ("RETGS"), which includes all companies located in Portugal that REN detains directly or indirectly ate least 75% of the share capital, which should give at more than 50% of the 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. Consequently, the Company's tax returns for the years from 2016 to 2019 are still subject to review.

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 31 March 2019 and 31 December 2018.

In 2019, 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 31 March 2019, was updated for each Company included in the consolidation perimeter, using the average tax rate expected in accordance with future perspective of taxable profits of each company recoverable in the next periods.

Income tax registered in the three-month period ended 31 March 2019 and 2018 was as follows:

	Mar 2019	Mar 2018
Current income tax	15,380	24,540
Adjustaments of income tax from previous years	-	(755)
Deferred income tax	(1,708)	(9,109)
Income tax	13,673	14,677

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

	Mar 2019	Mar 2018
Consolidated profit before income tax	51,305	53,083
Permanent differences:
Positive / (negative) equity variation	-	3,490
Non deductible costs	393	540
Non taxable income	(1,528)	1,586
Timing differences:
Tariff deviations	8,522	28,190
Provisions and impairment	(13)	-
Revaluations	(1,140)	(548)
Pension, helthcare assistence and life insurance plans	(412)	(948)
Derivative financial instruments	(5)	(2)
Others	(12)	(13)
Taxable income	57,110	85,376
Income tax	11,879	17,222
State surcharge tax	2,425	5,707
Municipal surcharge	872	1,417
Autonomous taxation	204	195
Current income tax	15,380	24,540
Deferred income tax	(1,708)	(9,109)
Adjustments of income tax from previous years	-	(755)
Income tax	13,673	14,677
Effective tax rate	26.6%	27.7%

Income tax

The caption "Income tax" payable and receivable at 31 March 2019 and 31 December 2018 is made up as follows:

	Mar 2019	Dec 2018
Income tax:
Corporate income tax - estimated tax	(15,380)	(50,405)
Corporate income tax - payments on account	2,325	85,367
Income withholding tax by third parties	186	895
Income recoverable / (payable)	34,013	(487)
Income tax recoverable	21,144	35,371

Deferred taxes

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

	Mar 2019	Dec 2018
Impact on the statement of profit and loss:
Deferred tax assets	(928)	(1,833)
Deferred tax liabilities	2,636	(7,706)
	1,708	(9,540)
Impact on equity:
Deferred tax assets	1,392	(3,310)
Deferred tax liabilities	603	(6,404)
	1,996	(9,714)
Net impact of deferred taxes	3,703	(19,254)

The changes in deferred tax by nature were as follows:

Change in deferred tax assets – March 2019

	Provisions and Pensions Impairments		Derivative financial Tariff deviations instruments		Revalued assets	Others	Total
At 1 January 2019	2,818	29,403	38,621	1,259	18,360	2,034	92,495
Increase/decrease through reserves	-	(373)	-	1,765	-	-	1,392
Reversal through profit and loss	(58)	(745)	(715)	(41)	-	-	(1,559)
Increase through profit and loss	-	373	-	-	236	22	631
Change in the period	(58)	(745)	(715)	1,724	236	22	465
At 31 March 2019	2,760	28,658	37,906	2,983	18,595	2,056	92,959

Change in deferred tax assets – December 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
Perimeter changes	727	61	713	-	12,752	(108)	14,145
Increase/decrease through reserves	-	(5,546)	-	492	-	1,744	(3,310)
Reversal through profit and loss	(64)	(1,558)	(15)	(161)	(2,662)	-	(4,461)
Increase through profit and loss	-	-	2,410	1	-	217	2,627
Change in the period	(68)	(7,104)	2,394	331	(2,756)	1,961	(5,242)
At 31 December 2018	2,818	29,403	38,621	1,259	18,360	2,034	92,495

Deferred tax assets at 31 March 2019 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 – March 2019

	Tariff deviations	Revaluations	Fair value	Investments in equity instruments at fair value through other comprehensive income	Others	Total
At 1 January 2019	37,784	21,398	37,855	12,926	3,682	113,644
Increase/decrease through equity	-	-	-	(603)	-	(603)
Reversal trough profit and loss	(1,948)	(140)	(342)	-	(205)	(2,634)
Change in the period	(1,948)	(140)	(342)	(603)	(205)	(3,239)
At 31 March 2019	35,836	21,258	37,513	12,323	3,477	110,405

Evolution of deferred tax liabilities – December 2018

	Tariff deviations	Revaluations		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	-	-	-	2,136	4,268	6,404
Reversal trough profit and loss	-	(1,458)	(1,385)	-	(595)	(3,439)
Increase through profit and loss	11,145	-	-	-	-	11,145
Change in the period	11,145	(1,458)	(1,385)	2,136	3,673	14,110
At 31 December 2018	37,784	21,398	37,855	12,926	3,682	113,644

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 66/2016
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

The accounting policies for financial instruments in accordance with the IFRS 9 categories have been applied to the following financial assets and liabilities:

- March 2019

	Notes	Credits and other receivables	Fair value - hedging derivative financial instruments	Fair value - Trading derivatives	Fair value - Equity instruments through other comprehensive income	Other financial assets/liabilities	Total carrying amount	Fair value
Assets
Cash and cash equivalents	13	-	-	-	-	20,536	20,536	20,536
Trade and other receivables	11	570,262	-	-	-	-	570,262	570,262
Other financial assets		-	-	-	-	51	51	51
Investments in equity instruments at
fair value through other	10	-	-	-	159,872	-	159,872	159,872
comprehensive income
Income tax receivable	8	21,144	-	-	-	-	21,144	21,144
Derivative financial instruments	12	-	24,971	-	-	-	24,971	24,971
		591,406	24,971	-	159,872	20,587	796,835	796,835
Liabilities
Borrowings	16	-	-	-	-	2,656,295	2,656,295	2,741,559
Trade and other payables	19	-	-	-	-	580,600	580,600	580,600
Drivative financial instruments	12	-	18,452	2,874	-	-	21,326	21,326
		-	18,452	2,874	-	3,236,895	3,258,221	3,343,485

- December 2018

	Notes	Credits and other receivables	Fair value - hedging derivative financial instruments	Fair value - Trading derivatives	Fair value - Equity instruments through other comprehensive income	Other financial assets/liabilities	Total carrying amount	Fair value
Assets
Cash and cash equivalents	13	-	-	-	-	35,735	35,735	35,735
Trade and other receivables	11	477,372	-	-	-	-	477,372	477,372
Other financial assets		-	-	-	-	45	45	45
Investments in equity instruments at
fair value through other	10	-	-	-	162,552	-	162,552	162,552
comprehensive income
Income tax receivable	8	35,371	-	-	-	-	35,371	35,371
Derivative financial instruments	12	-	21,010	-	-	-	21,010	21,010
		512,743	21,010	-	162,552	35,780	732,086	732,086
Liabilities
Borrowings	16	-	-	-	-	2,706,340	2,706,340	2,765,151
Trade and other payables	19	-	-	-	-	515,196	515,196	515,196
Drivative financial instruments	12	-	10,877	2,076	-	-	12,952	12,952
		-	10,877	2,076	-	3,221,536	3,234,489	3,293,299

Loans obtained, as referred to in Note 3.6 to the annual consolidated financial statements for the period ended December 31, 2018 are measured, initially at fair value and subsequently at amortized cost, except for those which it has been contracted derivative fair value hedges (Note 12) which are measured at fair value. Nevertheless, REN proceeds to the disclosure of the fair value 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 are calculated by the method of discounted cash flows, using the curve of interest rate 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 -0.356% and 0.8375% (maturities of one day and fifteen years, respectively).

The fair value of borrowings contracted by the Group at 31 March 2019 is 2,741,559 thousand Euros (at 31 December 2018 was 2,765,151 thousand Euros), of which 410,407 thousand Euros are recorded partly at amortized cost and includes an element of fair value resulting from movements in interest rates (at 31 December 2018 was 403,336 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 31 March 2019 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.

			Mar 2019				Dec 2018
		Level 1	Level 2	Level 3	Total	Level 1		Level 2 Level 3	Total
Assets:
Investments in equity instruments at fair value through other comprehensive
income	Shares	102,881	53,409	-	156,290	105,562	53,409	-	158,971
Financial assets at fair value	Cash flow hedge derivatives	-	11,999	-	11,999	-	10,940	-	10,940
Financial assets at fair value	Fair value hedge derivatives	-	12,971	-	12,971	-	10,070	-	10,070
		102,881	78,379	-	181,261	105,562	74,419	-	179,981
Liabilities:
Financial liabilities at fair value	Loans	-	410,407	-	410,407	-	406,336	-	406,336
Financial liabilities at fair value	Cash flow hedge derivatives	-	18,452	-	18,452	-	10,877	-	10,877
Financial liabilities at fair value through profit and loss	Trading derivatives	-	2,874	-	2,874	-	2,076	-	2,076
		-	431,733	-	431,733	-	419,288	-	419,288

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 31 March 2019, 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 2018. A description of the risks can be found in Section 4 - Financial Risk Management of the consolidated financial statements for the year ended 2018.

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

The assets recognised in this caption at 31 March 2019 and 31 December 2018 corresponds to equity interests held on strategic entities for the Group, which can be detailed as follows:

		Head office		Book value
	City	Country	% owned	Mar 2019	Dec 2018
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%	102,881	105,562
Hidroeléctrica de Cahora Bassa ("HCB")	Maputo	Mozambique	7.50%	53,409	53,409
Coreso, S.A.	Brussels	Belgium	7.90%	164	164
MIBGAS, S.A.	Madrid	Spain	6.67%	203	202
MIBGÁS Derivatives, S.A.	Madrid	Spain	9.70%	48	48
				159,872	162,552

The changes in this caption were as follows:

	OMEL	HCB	REE	Coreso	MIBGÁS	MIBGÁS Derivatives	Others	Total
At 1 January 2018	3,167	51,591	101,311	164	202	-	5	156,439
Acquisitions	-	-	-	-	-	48	-	48
Fair value adjustments	-	1,818	4,251	-	-	-	-	6,069
Others	-	-	-	-	-	-	(5)	(5)
At 31 December 2018	3,167	53,409	105,562	164	202	48	-	162,552
At 1 January 2019	3,167	53,409	105,562	164	202	48	-	162,552
Fair value adjustments	-	-	(2,681)		- 1	-	-	(2,680)
At 31 March 2019	3,167	53,409	102,881	164	203	48	-	159,872

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 31 March 2019.

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 31 March 2019, REN also holds a 6.67% financial interest in the share capital of MIBGÁS, SA, acquired during the first half of 2016, 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.

On March 31, 2019, REN also holds a 9.70% financial interest, acquired for the amount of 48 thousand Euros, of the share capital of MIBGÁS Derivatives, SA, the management company of the organized futures market natural gas, spot products of liquefied natural gas and spot products in underground storage in the Iberian Peninsula.

As there are no available market price for these investments (OMEL, MIBGÁS, MIBGÁS Derivatives and Coreso) and as it is not possible to determine the fair value of the period using comparable transactions, these investments are recorded at acquisition deducted of impairment losses, as describe in Note 3.6 of the consolidated financial statements for the year ended 2018.

REN understands that there is no evidence of impairment loss regarding the investments of OMEL, Coreso, MIBGÁS and MIBGÁS Derivatives at 31 March 2019.

				The adjustments to fair value of available-for-sale financial assets are recognised in the equity caption "Fair value reserve".
This caption at 31 March 2019 and 31 December 2018 is made up as follows:

	Fair value reserve
	(Note 15)
1 January 2018	53,778
Changes in fair value	6,069
Tax effect	(2,136)
31 December 2018	57,711
1 January 2019	57,711
Changes in fair value	(2,680)
Tax effect	603
31 March 2019	55,634

In the period ended 31 March 2019 the total amount of associated companies' dividends received and included in the cash flows statement was 1,477 thousand Euros, relative to dividends recognised during the year ended 31 December 2018.

11 TRADE AND OTHER RECEIVABLES

Trade and other receivables at 31 March 2019 and 31 December 2018 are made up as follows:

		Mar 2019		Dec 2018
	Current	Non-current	Total	Current	Non-current	Total
Trade receivables	389,412	6,005	395,417	294,602	6,005	300,607
Impairment of trade receivables	(2,942)	-	(2,942)	(2,942)	-	(2,942)
Trade receivables net	386,470	6,005	392,475	291,660	6,005	297,665
Tariff deviations	85,955	64,084	150,039	116,561	44,241	160,802
State and Other Public Entities	27,748	-	27,748	18,904	-	18,904
Trade and other receivables	500,173	70,089	570,262	427,126	50,246	477,372

The most relevant balances included in the trade receivables caption as of 31 March 2019 are: (i) the receivable of EDP – Distribuição de Energia, SA in the amount of 86,006 thousand Euros (80,037 thousand Euros at 31 December 2018); (ii) the receivable of Galp Gás Natural, S.A., in the amount of 16,247 thousand Euros (11,547 thousand Euros at 31 December 2018); and (iii) the amount of 25,191 thousand Euros, as defined by the regulator ERSE in the context of sustainability measures of the National Electric System (31,638 thousand Euros at 31 December 2018).

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 15,807 thousand Euros (22,722 thousand Euros at 31 December 2018) and the amount to invoice to EDP – Distribuição de Energia, S.A., of 186 thousand Euros (7,975 thousand Euros at 31 December 2018) regarding the CMEC, also reflected in the caption "Suppliers and other accounts payable" (Note 19).

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:

	Mar 2019	Dec 2018
Begining balance	(2,942)	(3,043)
Perimeter changes	-	453
Increases	-	(352)
Reversing	-	-
Ending balance	(2,942)	(2,942)

12 DERIVATIVE FINANCIAL INSTRUMENTS

At 31 March 2019 and 31 December 2018, the REN Group had the following derivative financial instruments contracted:

		31 March 2019
			Assets	Liabilities
	Notional	Current	Non-current	Current	Non-current
Derivatives designated as cash flow hedges
Interest rate swaps	600,000 TEUR	-	-	-	18,452
Interest rate and currency swaps	72,899 TEUR	-	11,999	-	-
		-	11,999	-	18,452
Derivatives designated as fair value hedges
Interest rate swaps	400,000 TEUR	-	12,971	-	-
		-	12,971	-	-
Trading derivatives
Trading derivatives	60,000 TEUR	-	-	-	2,874
		-	-	-	2,874
Derivative financial instruments		-	24,971	-	21,326

		31 December 2018
		Assets		Liabilities
	Notional	Current	Non-current	Current	Non-current
Derivatives designated as cash flow hedges
Interest rate swaps	600,000 TEUR	-	-	-	10,877
Interest rate and currency swaps	72,899 TEUR	-	10,940	-	-
		-	10,940	-	10,877
Derivatives designated as fair value hedges
Interest rate swaps	400,000 TEUR	-	10,070	-	-
		-	10,070	-	-
Trading derivatives
Trading derivatives	60,000 TEUR	-	-	-	2,076
		-	-	-	2,076
Derivative financial instruments		-	21,010	-	12,952

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 swaps and cross currency swap, contracted to hedge the risk of fluctuation of future interest and foreign exchange rates, whose counterpart are financial foreign and national entities financial entities with a solid credit rating.

The amounts presented above include the amount of interest receivable or payable at 31 March 2019 relating to these derivatives financial instruments, in the total net amount of 424 thousand Euros (2,136 thousand Euros receivable as of 31 December 2018).

The main features of the derivatives financial instruments contracted associated with financing operations at 31 March 2019 and 31 December 2018 are detailed as follows:

					Fair value at	Fair value at
	Notional	REN pays	REN receives	Maturity	31 March 2019	31 December 2018
Cash flow hedge:
Interest rate swaps	600,000 TEuros	[0.75%;1.266%]	[-0.310%;0.00%] - Floating Rates	[Jun-2024; Feb-2025]	(18,452)	(10,877)
Interest rate and currency swaps	72,899 TEUR	5.64% (floating rate starting 2019)	2.71%	2024	11,999	10,940
					(6,453)	64
Fair value hedge:
Interest rate swaps	400,000 TEuros	[-0.233%;0.066%] - floating rates	[0.611%; 1.724%]	[Oct-2020; Feb-2025]	12,971	10,070
					12,971	10,070
Trading: Interest rate swaps	60,000 TEUR	Floating rates, to be determined in the future	[0.00%;0.99%]	2024	(2,874)	(2,076)
					(2,874)	(2,076)
				Total	3,645	8,058

The periodicity of paid and received flows of the derivative financial instruments portfolio is quarterly and semi-annual contracts to the cash flow hedge contracts and biannual and annual basis for derivative designated as a fair value hedge.

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

	2020	2021	2022	2023	2024	Following years	Total
Interest rate swap (cash flow hedge)	-	-	-	-	300,000	300,000	600,000
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	-	-	-	372,899	660,000	1,132,899

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 31 March 2019, the notional amount of derivatives is 600,000 thousand Euros (600,000 thousand Euros as of 31 December 2018). This is 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 transform floating interest rate loans into fixed interest rates, and credit risk is not being hedged. The fair value of interest rate swaps at 31 March 2019 is negative 18,452 thousand Euros (at 31 December 2018, 10,877 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 31 March 2019 was 11,999 thousand Euros positive (10,940 thousand Euros positive at 31 December 2018).

The underlying foreign exchange change (borrowing) for the period ended 31 March 2019, in the amount of, approximately, 894 thousand Euros negative (2,180 as of 31 March 2018), was offset by a positive change in the hedging instrument in the statement of profit and loss.

The inefficient component of the fair value hedge amounted to 8,257 thousand Euros positive (7,321 thousand Euros positive at 31 December 2018). Consequently, the effect recorded in the income statement for the three-month period ended 31 March 2019 amounts to 936 thousand Euros.

The amount recorded in reserves relating to the above mentioned cash flow hedges was 21,493 thousand Euros (13,647 thousand Euros at 31 December 2018).

The movements recorded in the hedging reserve were as follows:

	Fair value	Deferred taxes impact
1 January 2018	(12,281)	2,580	(9,702)
Changes in fair value and ineffectiveness	(1,366)	492	(875)
31 December 2018	(13,647)	3,071	(10,577)
1 January 2019	(13,647)	3,071	(10,577)
Changes in fair value and ineffectiveness	(7,845)	1,765	(6,080)
31 March 2019	(21,493)	4,836	(16,657)

Fair value hedge

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

As of 31 March 2019, the notional amount of derivatives nominated as fair value hedge reached 400,000 thousand Euros (400,000 thousand Euros in 31 December 2018). The risk covered is the fixed rate indexer to debt issued. The covered risk is related with fair value changes of the debt issues according to the interest rate fluctuations. The objective of this hedging is to convert loans at fixed interest rates into variable interest rates, the credit risk not being hedged.

The fair value of these interest rate swaps at 31 March 2019 was 12,971 thousand Euros positive (10,070 thousand Euros positive as of 31 December 2018).

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

At 31 March 2019, the fair value change related with the 400,000 thousand Euros debt related with interest rate risk amounted to 4,071 thousand Euros negative (1,336 thousand Euros positive as of 31 March 2018), causing an inefficient component of around 41 thousand Euros (positive) (70 thousand Euros positive as of 31 March 2018).

Trading derivatives

REN has an interest rate forward start swap with a start date on 2019 and end date 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 IFRS 9, is hedging the economic risk of changes in the forward interest rates for the above mentioned period.

As of 31 March 2019, the notional amount of this negotiation derivative is 60,000 thousand Euros (60,000 thousand Euros as of 31 December 2018). This is a hedging of interest rate risk associated with future cash flows of variable interest rate associated with the Group finance liabilities. The hedged risk is the indexer of the variable rate 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 31 March 2019 amounts to 2,874 thousand Euros negative (2,076 thousand Euros negative as of 31 December 2018).

The fair value changes of this negotiation derivative are recorded in the profit and loss statement. As of 31 March 2019, the amount related with the fair value of the trading derivative was an expense of 798 thousand Euros (income of 66 thousand Euros as of 31 March 2018).

13 CASH AND CASH EQUIVALENTS

The amounts considered as cash and cash equivalents in the consolidated statements of cash flows for the period ended 31 March 2019 and 31 December 2018 are made up as follows:

	Mar 2019	Dec 2018
Cash	25	-
Bank deposits	20,511	35,735
Cash and cash equivalents in the statement of financial position	20,536	35,735
Bank overdrafts (Note 16)	(346)	(1,638)
Cash and cash equivalents in cash flow statement	20,189	34,096

14 EQUITY INSTRUMENTS

As of 31 March 2019 and 31 December 2018, REN's subscribed and paid up share capital is made up of 667,191,262 shares of 1 euro each.

	Mar 2019		Dec 2018
	Number of shares	Share Capital	Number of shares Share Capital
Share Capital	667,191,262	667,191	667,191,262	667,191

At 31 March 2019, 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 three-month period ended 31 March 2019.

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.

15 RESERVES AND RETAINED EARNINGS

The caption "Reserves" in the amount of 321,695 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 31 March 2019 this caption amounts to 113,152 thousand Euros;
• Fair value reserve: includes changes in the fair value of available for sale financial assets (55,634 thousand Euros positive), as detailed in Note 10;
• Hedging reserve: includes changes in the fair value of hedging derivative financial instruments when cash flow hedge is effective (negative 16,657 thousand Euros) as detailed in Note 12;
• 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; (iii) changes in equity of associates recorded under the equity method and (iv) share-based plan. On 31 March 2019, this caption amounts to 169,567 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.

16 BORROWINGS

The segregation of borrowings between current and non-current and by nature, at 31 March 2019 and 31 December 2018 was as follows:

	Mar 2019			Dec 2018
	Current	Non-current	Total	Current	Non-current	Total
Bonds	30,000	1,712,531	1,742,531	30,000	1,738,207	1,768,207
Bank Borrowings	50,160	555,661	605,822	200,134	556,430	756,564
Commercial Paper	312,000	-	312,000	180,000	-	180,000
Bank overdrafts (Note 13)	346	-	346	1,638	-	1,638
Finance Lease	1,345	2,526	3,871	1,557	2,776	4,333
	393,851	2,270,719	2,664,570	413,329	2,297,413	2,710,742
Accrued interest	19,060	-	19,060	24,555	-	24,555
Prepaid interest	(6,185)	(21,151)	(27,336)	(6,482)	(22,474)	(28,956)
Borrowings	406,727	2,249,568	2,656,294	431,401	2,274,939	2,706,340

The borrowings settlement plan was as follows:

	2019	2020	2021	2022	2023	2024	Following years	Total
Debt - Non current	-	330,318	114,261	99,125	608,582	207,285	911,146	2,270,719
Debt - Current	363,080	30,771	-	-	-	-	-	393,851
	363,080	361,089	114,261	99,125	608,582	207,285	911,146	2,664,570

Detailed information regarding bond issues as of 31 March 2019 is as follows:

31 March 2019
Issue date			Outstanding		Periodicity of
	Maturity	Inicial amount	amount	Interest rate	interest payment
'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 30,000	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 31 March 2019, the Group has five commercial paper programs in the amount of 1,050,000 thousand Euros, of which 738,000 thousand Euros are available for utilization. Of the total amount 530,000 thousand Euros have a guaranteed placement.

Bank loans are made up mostly of loans contracted with the European Investment Bank (EIB), which at 31 March 2019 amounted to 410,822 thousand Euros (at 31 December 2018 it was 409,388 thousand Euros).

The Group also has credit lines negotiated and not used in the amount of 87,500 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 20,413 thousand Euros (21,617 thousand Euros in 31 December 2018) 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, fair value changes concerning interest rate risk were recognized directly in statement of profit and loss, in an amount of 4,071 thousand Euros (negative) (at 31 March 2018 was 1,336 thousand Euros (positive)) (Note 12).

The Company's financial liabilities have the following main types of covenants: Cross default, Pari Passu, Negative Pledge, 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 90% above the minimum.

The bank loans with BEI include also covenants related with rating and other financial ratios in which the Group may be called upon to present an acceptable guarantee in the event of rating and financial ratios below the established values.

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

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

Minimal payments regarding lease contacts and the carrying amount of the finance lease liabilities as of 31 March 2019 and 31 December 2018 are made up as follows:

	Mar 2019	Dec 2018
Finance lease liabilities - minimum lease payments
No later than 1 year	1,372	1,583
Later than 1 year and no later than 5 years	2,558	2,813
	3,930	4,396
Future finance charges on finance leases	(59)	(63)
Present value of finance lease liabilities	3,871	4,333
	Mar 2019	Dec 2018
The present value of finance lease liabilities is as follows
No later than 1 year	1,345	1,557
Later than 1 year and no later than 5 years	2,526	2,776
	3,871	4,333

17 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 award, retirement award and a death subsidy (referred to as "Other benefits"). The Group also grants their employees life assurance plans. The long service award is applicable to all Group companies.

At 31 March 2019 and 31 December 2018, the Group had the following amounts recorded relating to liabilities for retirement and other benefits:

	Mar 2019	Dec 2018
Liability on statement of financial position
Pension plan	54,360	56,904
Healthcare plan and other benefits	41,419	41,384
	95,779	98,288

During the three-month period ended 31 March 2019 and 2018, the following operating expenses were recorded regarding benefit plans with employees:

	Mar 2019	Mar 2018
Charges to the statement of profit and loss (Note 24)
Pension plan	792	1,074
Healthcare plan and other benefits	311	324
	1,103	1,398

The amounts reported to 31 March 2019 and 2018 result from the projection of the actuarial valuation as of 31 December 2018 and 2017, for the three-month period ended 31 March 2019 and 2018, considering the estimated increase in salaries for 2019 and 2018, respectively.

The actuarial assumptions used to calculate the post-employment benefits are considered by the REN Group and the entity specialized in the actuarial valuation reports to be those that best meet the commitments established in the Pension plan, and related retirement benefit liabilities, and are as follows:

	Dec 2018 Dec 2017
Annual discount rate	1.80%	1.80%
Expected percentage of serving employees elegíble for early retirement
(more than 60 years of age and 36 years in service) - by Collective work agreement	20.00%	20.00%
Expected percentage of serving employees elegible for early retirement - by Management act	10.00%	20.00%
Rate of salary increase	2.50%	2.50%
Pension increase	1.50%	1.50%
Future increases of Social Security Pension amount	1.30%	0.80%
Inflation rate	1.50%	1.50%
Medical trend	1.50%	1.80%
Management costs (per employee/year)	€290	€306
Expenses medical trend	1.50%	1.50%
Retirement age (number of years)	66	66
Mortality table	TV 88/90	TV 88/90

18 PROVISIONS FOR OTHER RISKS AND CHARGES

The changes in provisions for other risks and charges in the periods ended 31 March 2019 and 31 December 2018 were as follows:

	Mar 2019	Dec 2018
Begining balance	8,852	9,035
Changes in the perimeter	-	(20)
Increases	-	511
Reversing	-	(210)
Utilization	(56)	(464)
Ending balance	8,796	8,852
Non-current provision	8,796	8,852
	8,796	8,852

At 31 March 2019, 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 486 thousand Euros related to the on-going restructuring process.

19 TRADE AND OTHER PAYABLES

The caption "Trade and other payables" at 31 March 2019 and 31 December 2018 was made up as follows:

	Mar 2019		Dec 2018
	Current	Non current	Total	Current	Non current	Total
Trade payables
Current suppliers (Note 9)	163,936	-	163,936	208,416	-	208,416
Other creditors
Other creditors (Note 9)	202,061	54,536	256,597	54,935	49,474	104,409
Tariff deviations (Note 9)	43,666	74,515	118,182	56,814	63,608	120,423
Fixed assets suppliers (Note 9)	15,534	-	15,534	52,213	-	52,213
Tax payables (Note 9) (i)	19,505	-	19,505	24,404	-	24,404
Deferred income
Grants related to assets	17,776	251,850	269,626	17,803	254,661	272,465
Accrued costs
Holidays and holidays subsidies (Note 9)	6,846	-	6,846	5,331	-	5,331
Trade and other payables	469,325	380,901	850,226	419,917	367,743	787,661

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

The caption "Trade and other payables" includes: (i) the amount of 20,942 thousand Euros, regarding the management of CAEs from Turbogás and Tejo Energia (54,796 thousand Euros at 31 December 2018); (ii) the amount of 12,015 thousand Euros of investment projects not yet invoiced (14,603 thousand Euros at 31 December 2018); (iii) the amount of 15,807 thousand Euros (22,722 thousand Euros at 31 December 2018) from the activity of the Market Manager (MIBEL – Mercado Ibérico de Electricidade); and (iv) the amount of 186 thousand Euros of "CMEC – Custo para a Manutenção do Equilíbrio Contratual" to be invoiced by EDP – Gestão da Produção de Energia, S.A. (7,975 thousand Euros at 31 December 2018), also reflected in the caption "Trade receivables" (Note 11).

This transaction sets a pass-through in the consolidated income statement of REN.

The caption "Other creditors" includes: (i) the amount of 24,581 thousand Euros (25,682 thousand Euros at 31 December 2018) 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 24,390 thousand Euros (Note 27) (at 31 March 2018 was 25,333 thousand Euros).

20 SALES AND SERVICES RENDERED

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

	Mar 2019	Mar 2018
Goods:
Domestic market	-	8
	-	8
Services:
Electricity transmission and overall systems management	86,736	88,587
Natural gas transmission	20,000	24,292
Natural gas distribution	14,687	15,906
Underground gas storage	11,348	7,609
Regasification	3,870	3,546
Telecommunications network	1,509	1,561
Trading	838	2,168
Others	96	1,242
	139,084	144,911
Total sales and services rendered	139,084	144,919

21 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 as of 31 March 2019 and 31 December 2018 were made up as follows:

	Mar 2019	Mar 2018
Revenue from construction of concession assets
Acquisitions	12,338	9,656
Own work capitalised :
Financial expenses (Note 5)	566	410
Overhead and management costs (Note 5)	3,899	3,815
	16,803	13,881
Cost of construction of concession assets
Acquisitions	12,338	9,656
	12,338	9,656

22 OTHER OPERATING INCOME

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

	Mar 2019	Mar 2018
Recognition of investment subsidies in profit and loss	4,463	4,503
Underground occupancy tax	3,967	3,687
Supplementary income	285	472
Disposal of unused materials	570	1,165
Others	367	108
	9,652	9,935

23 EXTERNAL SUPPLIES AND SERVICES

The caption "External supplies and services" for the three-month period ended 31 March 2019 and 2018 is made up as follows:

	Mar 2019	Mar 2018
Fees relating to external entities i)	2,154	3,447
Electric energy costs	2,183	1,613
Maintenance costs	1,678	1,165
Cross border interconnection costs ii)	828	1,226
Insurance costs	672	689
Security and surveillance	469	499
Gas transport subcontracts	378	798
Travel and transportation costs	165	259
Advertising and communication costs	183	222
Other	789	824
External supplies and services	9,499	10,743

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.

24 PERSONNEL COSTS

Personnel costs are made up as follows:

	Mar 2019	Mar 2018
Remuneration:
Board of directors	727	692
Personnel	9,158	8,789
	9,885	9,481
Social charges and other expenses:
Social security costs	1,976	1,900
Post-employement and other benefits cost (Note 17)	1,103	1,398
Social support costs	524	541
Other	49	42
	3,653	3,880
Total personnel costs	13,537	13,361

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

25 OTHER OPERATING COSTS

Other operating costs are made up as follows:

	Mar 2019	Mar 2018
ERSE operating costs i)	2,553	2,432
Underground occupancy tax	3,967	3,641
Donations and quotizations	471	541
Taxes	250	128
Others	72	201
	7,313	6,943

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

26 FINANCIAL COSTS AND FINANCIAL INCOME

Financial costs and financial income are made up as follows:

	Mar 2019	Mar 2018
Financial costs
Interest on bonds issued	12,512	12,569
Other borrowing interests	2,596	3,737
Interest on commercial paper issued	912	947
Derivative financial instruments	1,069	10
Other financing expenditure	438	683
	17,526	17,946
Financial income
Derivative financial instruments	910	797
Other financial investments	1,071	150
Interest income	-	25
	1,981	972

27 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 82-B / 2014 , of 31 December, Law 7-A / 2016, of 30 March, Law 114/2017, of 29 December and Law 71/2018, 31 December.

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 ECES is levied on the value of the assets with reference to the first day of the financial year 2019 (1 January 2019) 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 ECES 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 2019) 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 24,390 thousand Euros (Note 19) (for the three-month period ended 31 March 2018 was 25,333 thousand Euros) against a cost in the statement of profit and loss.

28 EARNINGS PER SHARE

Earnings per share were calculated as follows:

		Mar 2019	Mar 2018
Consolidated net profit used to calculate earnings per share	(1)	13,243	13,073
Number of ordinary shares outstanding during the period (note 14)	(2)	667,191,262	667,191,262
Effect of treasury shares (note 14) (average number of shares)		3,881,374	3,881,374
Number of shares in the period	(3)	663,309,888	663,309,888
Basic earnings per share (euro per share)	(1)/(3)	0.02	0.02

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

29 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.

30 CONTINGENT ASSETS AND LIABILITIES

30.1 Contingent liabilities

Tejo Energia - Produção e Distribuição de Energia Eléctrica, SA ("Tejo Energia") has announced to REN - Rede Eléctrica Nacional, SA ("REN Eléctrica") and REN Trading SA ("REN Trading") its intention to renegotiate the Energy Acquisition Agreement (CAE), in order to reflect in the amounts payable to this producer the costs incurred with (i) financing of the social tariff and (ii) with tax on petroleum products and energy and with the rate of carbon. Turbogás - Produtora Energética S.A. also stated its intention to renegotiate the CAE, in order to reflect in the amounts payable the costs incurred with the financing of the social tariff. According to the CAE, Tejo Energia and Turbogás act as producers and sellers and REN Trading as purchaser of the energy produced in power plants. REN Eléctrica is jointly liable with REN Trading, regarding the execution of the CAE with Tejo Energia and Turbogás.

According to the information received, the total costs incurred by these companies by 2018 amount to about 62 million Euros. On the part of REN, it was transmitted the need for the regulator - ERSE - to monitor the negotiations, considering the regulated nature of the contracts in question.

30.2 Guarantees given

At 31 March 2019 and 31 December 2018, the REN Group had given the following bank guarantees:

Beneficiary	Scope	Mar 2019	Dec 2018
European Investment Bank (EIB)	To guarantee loans	237,374	238,143
General Directorate of Energy and Geology	To guarantee compliance with the contract relating to the public service concession	23,032	23,032
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	8,416	5,229
Municipal Council of Seixal	Guarantee for litigation	3,133	2,777
Portuguese State	Guarantee for litigation	2,185	2,185
Municipal Council of Maia	Guarantee for litigation	1,564	1,564
Municipal Council of Odivelas	Guarantee for litigation	1,119	1,119
Municipal Council of Matosinhos	Guarantee for litigation	-	817
Municipal Council of Porto	Guarantee for litigation	368	368
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
EP - Estradas de Portugal	Guarantee for litigation	169	95
Others (loss then 100 thousand Euros)	Guarantee for litigation	146	220
		294,316	292,359

31 RELATED PARTIES

Main shareholders and shares held by corporate bodies

At 31 March 2019 and 31 December 2018, the shareholder structure of Group REN was as follows:

	Mar 2019		Dec 2018
	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	46,611,245	7.0%	46,611,245	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.	24,355,192	3.7%	25,365,000	3.8%
Great-West Lifeco, Inc.	17,794,967	2.7%	17,794,967	2.7%
Own shares	3,881,374	0.6%	3,881,374	0.6%
Others	258,794,682	38.8%	257,784,874	38.6%
	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 31 March 2019 amounted to 604 thousand Euros (580 thousand Euros in 31 March 2018), as shown in the following table:

	Mar 2019	Mar 2018
Remuneration and other short term benefits	390	366
Management bonuses (estimate)	214	214
	604	580

Transaction of shares by the members of the Board of Directors

There were no transactions carried out by members of the corporate bodies, in view of the consolidated financial statements of REN, as of December 31, 2018.

Transactions with group or dominated companies

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

In the consolidation process the amounts related to such transactions or open balances are eliminated (Note 3.2) in the 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

During the three-month periods ended 31 March 2019 and 2018, Group REN carried out the following transactions with reference shareholders, qualified shareholders and related parties:

Revenue

	Mar 2019	Mar 2018
Sales and services provided
Invoicing issued - REE	643	596
Invoicing issued - Centro de Investigação em Energia REN - State Grid	85	95
	728	691

Expenses

	Mar 2019	Mar 2018
External supplies and services
Invoicing received - REE	2,058	1,540
Invoicing received - Centro de Investigação em Energia REN - State Grid	-	1
Invoicing received - CMS Rui Pena & Arnaut1	35	64
	2,093	1,605

1 Entity related to the Administrator José Luis Arnaut

Balance

The balances at 31 March 2019 and 31 December 2018 resulting from transactions with related parties were as follows:

	Mar 2019	Dec 2018
Trade and other receivables
Centro de Investigação em Energia REN - State Grid - Other receivables	5	25
REE - Trade receivables	200	193
	205	218
Trade and other payables
Centro de Investigação em Energia REN - State Grid - Other payables	1	165
REE - Trade payables	238	1,051
CMS - Rui Pena & Arnaut - Trade payables 1	30	16
	269	1,232

1 Entity related to the Administrator José Luis Arnaut

32 SUBSEQUENT EVENTS

After the date of the statement of financial position, there were no events that give rise to additional adjustments or disclosures in the consolidated financial statements of the Company for the three-month period ended in 31 March 2019.

33 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

Rodrigo Costa

The Board of Directors

(Chairman of the Board of Directors and Chief Executive Officer)	(Member of the Board of Directors)
João Faria Conceição	Jorge Magalhães Correia
(Member of the Board of Directors and Chief Operational Officer)	(Member of the Board of Directors)
Gonçalo Morais Soares	Manuel Sebastião
(Member of the Board of Directors and Chief Financial Officer)	(Member of the Board of Directors and Chairman of the Audit Committee)
Guangchao Zhu	Gonçalo Gil Mata
(Vice-President of the Board of Directors designated by State Grid International Development Limited)	(Member of the Board of Directors and of the Audit Committee)

Mengrong Cheng

(Member of the Board of Directors)

Li Lequan

(Member of the Board of Directors)

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

José Luis Arnaut

Omar Al Wahaibi

(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.