Red Electrica de España : Eléctrica releases its 3Q17 results.

Financial results

2 November 2017

Contents

1. Red Eléctrica: Financial highlights

   ................................................ 2

2. Profit performance 3

3. Cash flow and balance sheet per- formance 4

4 Significant events 5

Consolidated Income Statement 6

Consolidated Balance sheet………..7 Consolidated Cash Flow Statement.7 Financial calendar 8

Appendix 9

P a s e o d e l C o n d e d e l o s G a i t a n e s , 1 7 7 · 2 8 1 0 9 A l c o b e n d a s ( M a d r i d ) · w w w . r e e . e s

1. Red Eléctrica: Financial highlights Income statement

   January -September			July - September
   (in thousands of euros) 2017 2016  				2017 2016  
   Revenue	1,465,360	1,445,318	1.4	478,065	477,111	0.2
   Gross operating profit (EBITDA)	1,136,568	1,113,061	2.1	366,865	358,708	2.3
   Net operating profit (EBIT)	767,776	751,610	2.2	244,314	237,694	2.8
   Profit before tax	661,540	635,374	4.1	207,648	198,686	4.5
   Profit for the period	495,537	471,287	5.1	155,456	147,788	5.2

   Balance sheet

   (in thousands of euros) September 2017 December 2016  
   Non-current assets	9,133,655	9,256,765	(1.3)
   Equity	3,061,979	2,920,549	4.8
   Net financial debt*	4,859,843	4,949,456	(1.8)

   (*) Includes exchange rate derivatives.

   Other financial figures

   January -September			July - September
   (in thousands of euros) 2017 2016  % 2017 2016  %
   Operating cash flow after taxes	963,975	948,011	1.7	320,989	316,671	1.4
   Investments	295,964	458,073	(35.4)	97,803	93,226	4.9
   Dividends paid	463,189	432,834	7.0	334,772	312,752	7.0

2. Profit performance Revenue for the first nine months of 2017 was €1,465.4 million, up 1.4% year-on-year. This rise is principally due to remuneration from transmission facilities commissioned throughout 2016. It includes further revenues such as those from the provision of telecommunications services, amounting to €65.3 million, and regulated revenue from system operation in the amount of €42.0 million. EBITDA amounted to €1,136.6 million, showing growth of 2.1% year-on-year, the fruit of the consolida- tion of efficiency measures implemented by Red Eléctrica.

   Operating costs performed as follows:

   • Supply costs and other operating expenses for the first nine months rose 6.0% year-on-year, principally due to the inclusion of the investment in construction projects in Peru, in application of ac- counting standard IFRIC 12 and loss-related expenses. Without those elements, they would be simi- lar to 2016, thus highlighting the effort made by Red Eléctrica to improve efficiency.
   • Personnel expenses rose 2.8% to September. This rise is fundamentally due to growth in the aver- age headcount from last year.

     The final headcount was 1,813 employees at 30 September 2017, while the average headcount stood at 1,794 employees, up 1.8 % on the first nine months of 2016.

     January -September			July - September
     (in thousands of euros) 2017 2016  % 2017 2016  %
     Supplies and other operating expenses	277,736	262,058	6.0	94,316	101,191	(6.8)
     Personnel expenses	109,079	106,116	2.8	36,255	34,751	4.3
     Operating expenses	386,815	368,174	5.1	130,571	135,942	(4.0)

     Net operating profit (EBIT) stood at €767.8 million, up 2.2 % year-on-year. Financial profit (loss) was €-106.8 million, compared to €-114.8 million in the same period last year. The improvement seen is mainly owing to lower average interest rates.

     Finally, profit for the period totalled €495.5 million, up 5.1 % year-on-year. The average tax rate was

     25.1 % compared to 25.6 % in the same period last year.

3. Cash flow and balance sheet performance

1. This table is solely for the purpose of simplifying the consolidated cash flows table. It includes investments made by the Group in this period, the different with investment payments is fundamentally contained in Changes to assets and liabilities.

2. The difference between this figure and the change in Net Financial Debt shown on page 2 is owing to items that do not in- volve cash movements.

The Red Eléctrica Group's net financial debt at 30 September 2017 was €4,859.8 million, compared to €4,949.50 million at the end of 2016.