4.OUR PERFORMANCE

FINANCIAL PERFORMANCE

EDP BRASIL

EBITDA

615M
+4% VS 2016

EDP Brasil impact in EDP Group's EBITDA increases 4% to €615 million impacted by the appreciation of the Brazilian real against the EUR. In local currency, EDP Brasil's EBITDA decreased 5% YoY (-R$118 million) to R$2,217 million in 2017, impacted by the gain of R$278 million in 2016 on the sale of Pantanal mini-hydro plants. Adjusted by this effect, EBITDA would have increased 8% YoY (+R$161 million).

• Generation and supply EBITDA increased by R$91 million to R$1,491 million, reflecting: for supply, the positive impact of higher volumes and margins; for Pecém, the booking of an insurance revenue in 2016 and the negative impact of higher PLD YoY; and for hydro, the negative impact of GSF at 82% and PLD at R$323/MWh in 2017 (vs. R$94/MWh in 2016).

• Distribution EBITDA increased by R$64 million YoY to R$831 million in 2017, mostly due to (i) the positive impact of 2016's tariff revisions on regulated gross profit, (ii) the YoY positive impact of energy overcontracting, partly offset by the YoY impact of a gain in 2016 with the update on the concessions assets' residual value.

OPERATIONAL PERFORMANCE

GENERATION ACTIVITY

• Volumes sold with hydro PPAs were down 6% YoY, mostly due to the end of some PPAs in Peixe Angical hydro plant in January 2016..

• In December 2017, EDP in Brasil concluded group 1 (175MW) of São Manoel (700MW, 33% EDP), partnership with Furnas and CTG. This plant will start its commercial operations in May-18.

INSTALLED CAPACITY

(GW)

2016

71%
Hydro
29%
Coal

2017

71%
29%

Net electricity generation

(GW)

2016

2017

Hydro

4,448
4,004

Coal

4,432
4,597

DISTRIBUTION ACTIVITY

• Electricity distributed increased slightly in 2017 by 1.1% vs. 2016. Volumes of electricity sold decreased 7% YoY in 2017, translating a 24% reduction of demand in regulated industrial clients. At the same time, volumes distributed to industrial clients in the free market increased 14% YoY to 11TWh in 2017, reflecting the migration of industrial clients from fully regulated tariffs to the liberalised market.

• As for the quality of service in 2017, EDP São Paulo obtained a DEC of 7.9 hours and a FEC of 5.0 times, which corresponds, respectively, to a decrease of 12% over the year 2016 in both indicators, as a result, essentially, of more favorable atmospheric conditions. EDP Espírito Santo presented a DEC of 8.6 hours, that is, a reduction of 7% in the year, and a FEC of 5.3 times, 7% less than in 2016.

2016

km of network

91,576

Distribution overhead lines

91,337

Distribution underground lines

239

Electricity distributed (Gwh)

24,425
2017

km of network

91,538

Distribution overhead lines

91,293

Distribution underground lines

245

Electricity distributed (Gwh)

24,704

SUPPLY ACTIVITY

• The number of customers in the regulated market increased by 2% YoY. Despite this increase, the volume sold did not follow this trend, penalized by the migration of customers from the regulated market to the free market and the milder weather conditions.

• In the free market the number of clients rose 24% in the year. In terms of marketed volume, the increase was 37% reflecting better market conditions and the integrated management strategy between generation and marketing activities.

2016

Electricity customers

3,315,679

Customers in liberalised market

272

Customers in last resort market

3,315,407

Electricity supplied (Gwh)

27,712

Electricity supplied in liberalised market

12,980

Electricity supplied in last resort market

14,731
2017

Electricity customers

3,376,425

Customers in liberalised market

337

Customers in last resort market

3,376,088

Electricity supplied (Gwh)

31,501

Electricity supplied in liberalised market

17,804

Electricity supplied in last resort market

13,697