Gas Natural Fenosa : posted a net profit of 550 million euros and an EBITDA of 2.176 billion euros in the first half

• The EBITDA was 2.176 billion euros, 6.6% less in uniform terms without considering Electricaribe, due especially to the growth rate of the Electricity business in Spain.

• Last May, GAS NATURAL FENOSA, through Gas Natural Fenosa Renovables, was the winning bidder for a total of 667 MW of wind power in the auction held in Spain, with an estimated investment in the development of these projects of around 700 million euros.

• The EBITDA of the company's international activities was 1.119 billion euros, representing 51.4% of the consolidated total, and investments outside Spain rose by 41.7%, representing 60.4% of the total. In the last year 320,000 new gas supply points were added in Latin America, for a total of 7,921,000 supply points on the continent.

• In the first quarter the company issued bonds of 1 billion euros with a coupon of 1.375%. In April it issued another 1 billion euros and, in tandem, an offer to repurchase company bonds which, after the issue, were exchanged for the repurchased bonds. Liquidity was 9.607 billion euros, representing a maturities coverage in excess of 24 months.

• The Board of Directors approved an interim dividend for 2017 of 0.330 euros per share, to be paid fully in cash on 27 September.

• The company has launched a new EFFICIENCY PLAN for the 2018-2020 period, which expects to find additional savings of 275 million euros.

GAS NATURAL FENOSA obtained a net profit of 550 million euros in the first half of 2017, 14.7% less than the same period the previous year, while EBITDA was 2.176 billion euros, down 6.6% if excluding Electricaribe. EBITDA was conditioned by the evolution of the electricity business in Spain, in turn conditioned by climatological factors which caused a contraction in hydraulic production of 77.3%.

The gas distribution business made up 40.5% of EBITDA; electricity distribution, 25.1%; electricity activity, 19.5%; and gas activity, 15.5%.

EBITDA on the company's international activities grew by 1.3% and represented 51.4% of the consolidated total. The remaining 48.6% corresponded to the activity in Spain.

Overseas investments were up 41.7%

GAS NATURAL FENOSA invested 737 million euros in capital expenditure and intangible assets, a 17.2% increase on the same period in 2016, mainly due to increased investments in gas and electricity distribution in Latin America, and the electricity business.

By geographical area, foreign investments increased by 41.7% and represented 60.4% of the total.

At 30 June, the net interest-bearing debt was 15.818 billion euros and the borrowings ratio was situated at 46.4%. 91.5% of net debt is subject to long-term maturities and has an average lifespan of 5.6 years.

At 30 September, GAS NATURAL FENOSA's availability of liquidity was 9.607 billion euros, giving a maturities coverage in excess of 24 months.

Approval for the 2017 dividend payment

The company's Board of Directors has approved the interim dividend for 2017, with 0.33 euros per share to be paid out in cash on 27 September this year. This is in line with the dividend policy established for the 2016-2018 period, which planned for a 70% payout of a minimum of 1 euro per share, and an interim dividend in September of the current year. In total, it expects to pay out at least 1.001 billion euros against the profits for 2017, representing a dividend yield of approximately 5%, assuming a quoted price of around 20 euros per share.

Efficiency plan

Gas Natural Fenosa's current efficiency plan, covering the 2016-2018 period, is being strictly adhered to, and the expected savings of 150 million euros this year are fully identified. In fact, cumulative savings of 130 million euros have already been achieved in the first half of the year.

Continuing with this policy to drive internal efficiency in the current demanding economic climate, especially in the energy sector, Gas Natural Fenosa has launched an ambitious new efficiency plan that extends the time horizon and raises the economic goals of the present 2016-2018 plan.

The plan sets a target of cumulative gross savings of 275 million euros a year in the 2018-2020 period.

Efficiencies, and thus high generated value, are found more in the regulated business and at the corporate level. This notable commitment is based on the development and application of new technologies, specifically the digitisation of operations, specification of processes through automation, and other tools associated with Big Data.

The plan is expected to contribute decisively to the transformation of the Group's businesses: Generation, Markets, Distribution and Marketing, to new competitive models oriented to the end customer.

This new efficiency plan is the fourth presented since 2009, demonstrating that the organisation has the skills and experience needed for successful and timely implementation.

Gas distribution in Spain

EBITDA from the gas distribution business in Spain came to 439 million euros at 30 June, up by 3.5% from the same period last year. This increase is mainly associated with the LPG business after the purchase of supply points in the last quarter of 2016.

Regulated gas sales in Spain rose by 4.8%, to 98,913 GWh. Residential demand decreased by 1,499 GWh (-6%) from the same period the previous year. Growth in demand was mainly in the industrial market with an increase of 8% (+3,715 GWh) in the sector under 60 bars and an increase of 10% (+2,301 GWh) in the industry of over 60 bars.

At 30 June, the company had 5,336,000 supply points (+0.6%) and a distribution network of 53,042 kilometres (+2.6%).

Gas distribution in Latin America

EBITDA from gas distribution in Latin America stood at 414 million euros, an increase of 9.8%, due to the performance of some Latin American currencies against the Euro, especially in Colombia (+9.2%), Brazil (+16.6%) and Chile (+7.1%).

By country, EBITDA recorded in Brazil is worth particular mention: 130 million euros, representing 31.4% of the total. Mexico, with 92 million, accounted for 22.2% of the total whilst Colombia and Chile contributed 72 and 103 million euros to EBITDA, respectively.

Sales from gas activity in Latin America stood at 137,720 GWh and the distribution network in Latin America grew by 1,823 kilometres in the last 12 months to a total of 83,689 kilometres at the end of the first half of this year.

GAS NATURAL FENOSA has 7,921,000 supply points in Latin America, following the addition of 320,000 new points in the last year. There were significant increases in Mexico (116,000 supply points) and Colombia (110,000 supply points).

Gas distribution in Italy

EBITDA of the gas distribution business in Italy was in line with the first half of 2016 at 29 million euros due to revenue holding steady in the first months of 2017 after the WACC update, as recognised by the Italian regulator in 2016.

Gas distribution activity stood at 2,397 GWh, an increase of 9.5% due to favourable weather conditions. At 30 June, the distribution network reached 7,291 km. At the close of the half year, the company had 460,340 supply points in Italy, slightly above the same period in the previous year.

Electricity distribution in Spain

EBITDA from electricity distribution reached 302 million in the first half of the year, 0.3% less than in the same period last year as a result of implementing efficiency measures into the business, with positive impacts in subsequent periods.

At 30 June, supplied energy stood at 15,977 GWh, 0.3% less than in the same period of 2016. At the end of the period, the company had 3,712,000 supply points, a net increase of 10,492 points in the first half of 2017. At 30 June this year, 92% of the meters installed were already smart and 87% of billing was done remotely.

Downtime equivalent to installed capacity (TIEPI) was 67 minutes, higher than that registered at the end of the first half of 2016, due to the meteorological conditions, especially the severe storms which occurred in Galicia in early February. This region contributed 89% of this indicator.

Electricity distribution in Latin America

EBITDA from electricity distribution in Latin America, which includes Argentina, Chile, Panama, and electricity transmission in Chile, came to 228 million euros in the first half of this year, down 32.9%. Excluding Colombia's contribution to EBITDA in the first half of 2016, EBITDA increased by 6.5%, due in part to the appreciation of the Chilean peso.

The distribution business in Argentina and Chile (CGE) contributed 173 million euros to EBITDA, with an increase of 13 million euros, disregarding the exchange rate effect. For its part, Panama recorded an EBITDA of 55 million euros (-14.1%).

Electricity distribution sales in Latin America decreased by 37.2% to 10,951 GWh, essentially due to the deconsolidation of Electricaribe, effective on 31 December 2016. Without this effect, distribution sales would have increased by 1.2%. Overall, supply points at the end of the first half year totalled 3,676,000.

Electricity distribution in Moldova

EBITDA from electricity distribution in Moldova was 16 million euros at 30 June, 36% less due to the adjustment applied by the regulator to the approved tariff in March this year, and to the reform of the tariff distribution method from May.

Sales from electricity activity stood at 1,356 GWh (+3.0%) and the number of supply points stood at 883,000 (+1.1%) at the end of the financial year.

Gas: Infrastructure

EBITDA of infrastructure activity, which includes the operation of the Maghreb-Europe gas pipeline and the exploration, production, storage and regasification of gas, increased by 4.8% to 153 million euros, mainly due to the increase in the international transport tariff of the Maghreb-Europe gas pipeline and the positive effect of the USD exchange rate.

At 30 June, the gas transport business operated in Morocco through the companies EMPL and Metragaz represented a volume of 49,433, a decrease of 5.5%. Of this figure, 28,992 (-10.3%) were transported by GAS NATURAL FENOSA through the company Sagane and 20,441 GWh for Portugal and Morocco.

Gas: Marketing

EBITDA from the global gas procurement and wholesale and retail supply business came to 272 million euros, in line with the same period last year. Net sales were 5.349 billion euros, a 22.5% increase.

Between January and June, wholesale supply by GAS NATURAL FENOSA reached 160,943 GWh, an increase of 13.2%, mainly due to the contribution of the international business (+24.1%), which reached 86,141 GWh, thanks to the momentum of international LNG supply. Marketing to end customers in the Spanish gas market reached 74,802 GWh, a 2.7% increase over the previous year.

Sales in France by Gas Natural Europe, the marketing subsidiary in Europe, came to 19.5 TWh during the period, with customers ranging from industrial companies to local authorities and the public sector. Sales in Belgium, the Netherlands and Germany stood at 9.0 TWh in the same period.

The company also operates in the wholesale market in Italy and Ireland where it sold a volume of 4.8 TWh and 0.8 TWh, respectively, during the first half year of the year.

In the Portuguese market, GAS NATURAL FENOSA remains the second-largest operator in the country, and the largest foreign operator, with a market share of over 15% and a sales volume of 3.1 TWh between January and June. In the industrial market, where its business is mainly focused, its market share stands above 17%.

Within the retail market, sales reached 17,878 GWh (-4.6%) with 12.3 million active gas, electricity and maintenance service contracts at 30 June, of which 579,000 are in Italy. GAS NATURAL FENOSA's combined supply of electricity and gas already reaches more than 1.5 million households in Spain.

Electricity in Spain

EBITDA for the electricity activity in Spain (generation, wholesale and retail supply and voluntary price for the small consumer) came to 190 million euros, below the 376 million euros recorded in the same period of 2016. The evolution of EBITDA has been conditioned by climatological factors, with a contraction in hydraulic production for the company of 77.3%, as well as by an increase in taxes due to high market prices.

In the national market, demand for electricity in the second quarter reached 60,883 GWh, 1.6% higher than the same quarter in 2016 and continuing the positive growth trend of the last four quarters. In the year as a whole, demand was 1.1% higher than the first half of 2016 (1.6% without taking the leap year effect into account).

The weighted average cost for the quarter was €47.79/MWh, above the €30.28/MWh for the same quarter in 2016. In cumulative values, the weighted average cost of the daily market was €52.89/MWh, higher than the cumulative values at 30 June 2016.

GAS NATURAL FENOSA generated 13,161 GWh between January and June, a 3.1% increase. Of this figure, 11,895 GWh corresponded to generation under the traditional regime (+5.5%), while renewable generation and cogeneration stood at 1,266 GWh. The company's accumulated market share in power generation stood at 16.5%

By technology, conventional hydraulic production stood at 737 GWh (-77.3%) due to weather conditions; nuclear production was 2,185 GWh (+3.8%); combined cycles was 6,141 GWh (+23.2%) and coal thermal plants totalled 2,832 GWh, compared to 936 GWh in the same period of the previous year.

Electricity sales for the first half year were 17,284 GWh (-4.5%), including marketing in the liberalised market and the market of last resort (PVPC).

Gas Natural Fenosa Renovables ended the half year with a consolidated total installed capacity of 1,147 MW, of which 979 MW came from wind power, 110 MW from mini-hydroelectric production and 58 MW from cogeneration and photovoltaic plants. Last May, Gas Natural Fenosa Renovables was the winning bidder for a total of 667 MW of wind power in an auction held in Spain. The estimated investment in the development of these projects and the awarded power supply is a maximum of 700 million euros.

International Electricity

EBITDA on International Electricity reached 148 million euros in the first quarter, up 19.4%, mainly due to higher EBITDA in Mexico (+27.7%). The electricity generated in all assets increased by 4.7% in the period to 9,065 GWh.

At 30 June, the company had an installed capacity of 2,702 MW and guaranteed projects in Australia, Chile and Brazil, where it will construct an additional 471 MW by 2020.

Barcelona, 26 July 2017.

Consolidated balance account

Consolidated balance sheet

Main aggregates

Distribution business

* Maghreb-Europe Gas Pipeline

Electricity Business

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