EDP-Energias — Earnings Release 2017

Mar 2, 2018

EBITDA +6% at €3.99bn, benefiting from the gain on Naturgas disposal (+€0.5bn one-offs) Recurring EBITDA -5% to €3.52bn, penalised by severe drought in Iberian peninsula (-€0.3bn)

+0.6GW additions of wind and solar capacity

Efficiency savings of €141m (26% above 2017 target for OPEX IV Programme)

Net debt -13% or -€2.0bn YoY, to €13.9bn by Dec-17; Adjusted Net Debt/EBITDA 3.7x

Net interest costs -13% YoY (avg. cost of debt from 4.4% to 4.1%)

Net Profit +16% YoY to €1.11bn Recurring Net Profit -8% YoY to €845m

Dividend Per Share 2017: €0.19(1)

Full cash payment expected in May

	Previous Guidance	4Q17 highlights	Actual
Recurring EBITDA	€3.5-3.6bn	▪ Low hydro impact in 4Q17:	€3.52bn
Recurring Net Profit(1)	€850-900m	~€100m on recurring EBITDA	€845m
Net Debt	€14.0-14.5bn	▪ €0.3bn VAT refund in Spain ▪ €0.6bn tariff deficit sales ▪ €0.3bn full cash in of 2017 TEI's	€13.9bn

Drought in Iberia implied recurring EBITDA and Net Profit at the low-end of the guidance range

(1) Assumes €69m of extraordinary energy tax in Portugal as non-recurring item

Recurring EBITDA	YoY 	Weight on Recurring EBITDA Key highlights
39% EDPR	+0.20bn +17%	▪ +9% avg. capacity mostly US, Mexico and Brazil ▪ 1st farmdown in UK wind offshore project (CfD awarded in Sep-17)
27% Regulated Networks Iberia	-0.04bn -4%	▪ Gas distribution: -€83m YoY, to €128m, following disposals in Jul/Oct-17 ▪ Electricity distribution +6% YoY (+€0.05bn) on efficiency and previous years adjustments
17% EDP Brasil	+0.08bn +14% +8% EUR, BRL	▪ Benefitting from a more integrated hedging strategy in energy markets ▪ Forex: +7% impact
17% Generation & Supply	-0.41bn -42%	▪ Hydro production vs. average hydro year: -€0.3bn in 2017 vs. +€0.05bn in 2016 ▪ Higher fuel costs (coal), adverse regulatory changes (end of CMECs, higher clawback levy)
	-0.2bn -5%	Renewables capacity growth, efficiency improvements and Brazil's good risk management mitigated severe drought and deconsolidation of gas networks in Iberia

Negative impact on recurring EBITDA: ~€300m in 2017 (of which ~€100m in 4Q17)

(1) Source: REN; based on historical average of last 40 years; (2) Net production deviation vs. avg. hydro year : -7TWh in 2017; -2.4TWh in 4Q17; (3) Source: IPMA

	Change 2018 vs. 2017
Distribution Regulated Revenues(1)	-€0.15bn	▪ ERSE's proposal Oct-13th ▪ Final figures annouced on Dec-15th ▪ Regulatory framework now stable for 2018-20 ▪ Focus on efficiency levers: grid losses, Opex, digitalisation
Clawback	-€0.06bn	▪ Change in clawback levy since Aug-17 ▪ Questionable and disproportional level of taxes and levies justify the several ongoing appeals in courts

Already reflected on earnings consensus

Growth on renewables and Brazil balanced with value crystallisation under a controlled financial leverage

⁽¹⁾ Net of TEIs; (2) Includes EDPR Capex in rest of the world; (3) Includes net investments at EDPR level in Brazil

Strong visibility on growth improving competitiveness of generation portfolio at attractive returns

⁽¹⁾ Based on attributable installed capacity in UK offshore (77% of 950MW) and France (43% of 992MW)

Greenfield Transmission Lines	▪ 5 transmission lines with 1,297km to be built until 2021/2022 ▪ Expected capex: R\$3.1bn (~€800m), expected ROE 12%-14% (real terms) ▪ Potential upside from funding costs and anticipation of construction schedule
Celesc	▪ Distribution concession in Santa Catarina State ▪ Up to R\$0.4bn investment for 33.3% stake(1) at EV/RAB of 0.7x; involvement in management ▪ Potential upside from efficiency improvements and eventual privatisation process

Portfolio restructuring: eventual consideration of small size opportunities

Track record on efficiency improvements; sound regulatory frameworks; favourable interest rate cycle

Focus on profitability and shareholder return with a firm commitment on dividend policy: €0.19/share as a floor (payout of 62% in 2017)

Installed capacity breakdown by technology: Dec-17 (GW, YoY Chg.)

(GWh, YoY Chg.)

Electricity Production breakdown by technology 2017

Installed Capacity +6% YoY: +1GW new hydro in Portugal; +0.6GW wind and solar (mostly US) Electricity production: -46% in hydro (-56% in Iberia) implied +29% thermal production (+30% in Iberia)

Avg. capacity increase driven by US, Mexico and Brazil

Positive impact from 1st farm down in UK wind offshore project

Electricity EBITDA +6% YoY on lower OPEX (-1% YoY) and adjustments from previous years

EDP Brasil Recurring EBITDA

(R\$m)

Integrated hedging strategy in energy markets

	2016	2017
GSF (hydro volume)	Medium	Low
PLD (spot price)	Low	High
Distribution volume surplus
Gen. PPAs volume deficit
Gen. & Supply volume free

Integrated and active management of contracted/uncontracted volumes all over the value chain

Recurring EBITDA Generation & Supply Iberia (€m)

				2016	2017	YoY
-44%	 603	Avg. selling price to customers (€/MWh)	63	62	-1%
1,067		Hydro weight (%)	45%	22%	-23pp
			Avg. fuel cost (gen. mix)(1) (€/MWh)	20	34	+70%
			Regulatory costs (€m)	147	237	+61%
		CMEC deviation revenues (€m)	169	108	-36%
2016	2017
Strong increase of sourcing costs due to very weak hydro and higher fuel/regulatory costs
			Avg. selling price to customers -1% YoY vs. Avg. fuel cost +70% YoY

Operating costs 2017

Opex IV corporate-wide efficiency programme: €141m savings in 2017, 26% above target

¹⁶ (1) Excludes gas networks and HR restructuring costs; (2) Excluding gas networks; (3) Avg. IPC 2017 vs. 2017; (4) Avg. IPCA 2017 vs. 2016; (5) Measures taken until Sep-17

Net Interest Cost

(€m)

Marginal and average cost of debt

(%, 2016-2017)

Clear downward trend on marginal cost of debt: room for further decline in avg. cost of debt

¹⁷ (1) 4Q16 and 4Q17 net interest costs exclude non-recurring costs with debt repurchase programmes (2) Based on EDP 5Y bond yield in EUR, USD and CDI as at 31-Dec-16 and 31-Dec-17 multiplied by the proportion of debt denominated in EUR, USD and BRL, respectively

Financial Results & Associates: 2017 vs. 2016

(€m of net cost)

One-offs(1)

• Net interest costs: -13% YoY
• Lower revenues from regulatory receivables due to lower interest rates
• Lower capitalised interest following full commissioning of hydro plants in Portugal
• Other: Forex & energy derivatives (-€35m in 2017 vs. -€18m in 2016)

13% decline of interest costs partially offset by lower financial revenues and negative forex

¹⁸ (1) In 2017 (+€27m), including gain on sale of equity stake in REN (+€25m), debt prepayment costs and other (-€52m); in 2016 (-€137m) including impairment on BCP, S. Manoel and EDPR (-€74m), cost with debt prepayment (-€76m), +€11m gain on the sale of equity stake in Tejo Energia

Recurring net profit strongly penalised by extreme low hydro production in Iberia

(1) Restructuring costs (-€21m), regulatory-driven costs/provisions (-€61m); debt prepayment fees and others (-€33m); impact from US fiscal reform (+€44m)

Change in Net Debt: Dec-17 vs. Dec-16

(€bn)

Portfolio reshuffling improving Adj. Net Debt/EBITDA to 3.7x, even including negative hydro impact

(1) EBITDA - Maintenance capex - Interest paid - Income taxes + Chg. in work. capital excluding regulatory receivables; (2) Expansion capex, Net financial investments (incl. shareholder loans transferred in asset rotation deals), TEI proceeds, Chg. in work. capital from equip. suppliers; acquisitions and disposals; and changes in consolidation perimeter. (3) Net Debt ex-Reg Receivables and trailing recurring EBITDA

Financial liquidity as of Dec-17 (€bn)			EDP consolidated debt maturity profile as of Dec-17 (€bn)
		EDP S.A., EDP Finance B.V. and Other EDP Brasil
Cash & Equivalents:		€2.4bn	Avg. Debt Maturity: 4.8Y			4.8
Available Credit Lines:		€4.2bn			3.4
on Oct-22(1) Revolving Credit Facility maturing		€3.3bn		2.3		2.0
Other RCF's and Credit Lines		€0.9bn	1.2				1.5	1.5
				0.3		0.3
Total Liquidity		€6.6bn	0.3
			2018	2019	2020	2021	2022	2023	≥2024
4Q17 main events	€0.5bn 10Y bond issue @1.6%	€0.6bn of tariff deficit securitization		Repurchase of USD0.5bn of notes		Completion of USD0.5bn of TEIs

€6.6bn available liquidity by Dec-17 covers refinancing needs beyond 2019

21 (1) The maturity of a €3.3bn RCF was extended from Jun-19 to Oct-22 in Oct-17

IR Contacts

Miguel Viana, Head of IR Sónia Pimpão João Machado Maria João Matias Sérgio Tavares Noélia Rocha

E-mail: ir@edp.pt Phone: +351 210012834

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www.edp.com/en/investors/investor-information/results

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