3

3. Our strategy

vision

A global energy company, leader in value creation, innovation and sustainability.

Listens

risks and opportunities

Global energetic model
- Energetic decarbonization
- Maturer renewable energy sources
- Decentralized generation
- Low energy prices and capacity warranties
- Energetic efficiency

Macro Enviroment
- Politic and regulatory pressure
- Weak global economic growth

Cultural and technological transformation
- Social and cultural change
- Digital Transformation

Financial Markets
- Volatility
- Interest rates increase

processes

positioning

Global energetic model
- diversified business model/ operational growth
in low risk profile activities and renewables
- High efficiency and low number of years of the assets portfolio
- R&D and continuous improvement culture
- Iberia: balanced positioning between generation and supply
- Brazil and EUA: PPA regimen

Macro Enviroment
- Iberia and Brazil: financial sustainable markets
- Limited exposure to demand shifts

Cultural and technological transformation
- Digital and CRM transformation focus
- Generational renovation based on new skills and as a support to a diversified workforce for a digital utility

Financial Markets
- Credit market: high financial liquidity
- Forex: investment hedging
- Rating investment grade positioning
- Part of the assets inflation indexed

executes

strategic pillars

-Oriented growth
-Financial deleveraging
- Low risk profile maintenance
- Efficiency reinforcement
- Attractive returns

sets
route

EDP strategically positions itself with a low-risk and cross-diversified resilient profile, creating conditions for the execution of a strategy to create value in the face of the challenges of a context of low ecological footprint and behavioral and technological changes of its Stakeholders, as well as the expected changes in context. The strategic architecture communicated by EDP in May 2016 reinforced the commitment of balanced growth with financial deleveraging and the maintenance of an attractive return to shareholders, based on the strategic pillars followed since 2006 and which have proved adequate - controlled risk, superior efficiency and focused growth.

Strategic priorities for the period 2016-2020

  • FOCUSED GROWTH
  • EBITDA
    CAGR 20151-20+3%

  • CONTINUE FINANCIAL DELEVERAGING
  • Net debt/EBITDA
    2020
    ~3x

  • KEEP LOW RISK PROFILE
  • % EBITDA Regulated /
    LT Contracted
    ~75%

  • REINFORCE EFFICIENCY
  • OPEX / Gross profit
    2020
    26%

  • DELIVER ATTRACTIVE RETURNS
  • EPS
    CAGR 20151-20
    DPS floor at €0,19 /share
    increase vs 2015
    +4%+3%

1- Based on recurrent and weather adjusted EBITDA and Net Profit in 2015